I’ve already had occasion to consider the distinction between obligations and conditions. (Click here and here.) Well, here’s another thought: If satisfaction of a condition would trigger an obligation on the part of another party, then instead of using a condition to express that concept you may want to use languagage of discretion using will not be required to. (For more about is not required to, see MSCD 3.62.)
Consider the following three examples. (I refer to the first as a “pseudo-obligation” because although it reads like an obligation, if quizzed on the matter the drafter would probably fess up to not having planned on drafting an obligation.) Which do you prefer, the second or the third?
The Consultant shall submit to the Company no later than 90 days after termination of any Project a claim for reimbursement of expenses that the Consultant incurred in connection with that Project.
In order to be reimbursed for expenses it incurs in connection with any Project, the Consultant must submit to the Company no later than 90 days after termination of that Project a claim for reimbursement of those expenses.
Language of Discretion
If the Consultant fails to submit to the Company no later than 90 days after termination of any Project a claim for reimbursement of expenses the Consultant incurred in connection with that Project, the Company will not be required to reimburse the Consultant for any such expenses.
7 thoughts on ““Will Not Be Required To” as an Alternative to Conditions”
The third, softer, “discretionary” one is probably more palatable to Consultant’s contract reviewer.
D.C.: I’m not sure I’d describe the third option as “softer.” I think it expresses more directly the consequences of the Consultant’s failing to timely file a claim for reimbursement. Ken
“Will not be required to” sounds a lot like “may.” The questions then is (i) whether the company can in good faith withhold payment of expenses sent 91 days later.
Company will reimburse Consultant for all documented expenses incurred in performance of the Project submitted to the Company no later than 90 days after termination of the Project.
Option 1 is not a “pseudo-obligation”–it’s just poor drafting. There’s no such thing as a “pseudo obligation.” I know what you mean, but why make up silly terms when there’s no need?
My question on reading option 1 is, “what if the Consultant doesn’t submit claims?” Well, nothing happens, and nothing is intended to happen. This isn’t a legal obligation–this sentence just sets up a legal obligation. So the first step is to replace “shall” with “may”. But if we use “may”, then why do we need a 90 day time frame? What purpose does it serve? None. Take it out.
Then, if we want to get across the point that the Company (1) does have to pay timely invoices and (2) does not have to pay stale invoices, we need to say this. Pretty simple. Concept (1) is an obligation. Concept (2) is not an obligation of the Company, but a waiver by the Consultant. The waiver is important because if the contract is silent, we look at the default under applicable law–which probably would give the Consultant common law claims for reimbursement.
So it turns out that we need two sentences: The first is more of a “recital” setting up the second, which will be an obligation and a waiver.
Consultant may submit claims to the Company for reimbursement of expenses that the Consultant incurred in connection with a Project (each a “Claim”). The Company agrees to pay Claims with respect to a Project that are submitted within 90 days after the termination of such Project; and Consultant waives its right to reimbursement of Claims not timely submitted.
Mike: Regarding using may not instead of will not be required to, MSCD 3.62 says “May not, meaning in this context “is authorized not to,” is not a viable alternative, because it is too ambiguous for comfort; see 3.71.”
I assumed, when offering my three alternatives, that they’d be preceded in the contract by a provision obligating the Company to reimburse the Consultant’s expenses. Incorporating in that obligation the time limit would be economical. But given the intended harsh consequence of going over the 90-day limit, I think it would be a good idea to be explicit about it. A court might conclude that it doesn’t follow from an obligation to reimburse for expenses that are timely submitted that the Consultant gets nothing on the 91st day. This involves “expectation of relevance,” something I discuss in this post.
I’m presuming that Company’s obligation to reimburse is stated in another place in the agreement, since neither option 2 or 3 states any obligation on Company’s part to pay, but rather only states instances where Company need not pay. [Michael: You assume correctly. Ken]
With that caveat, I prefer Option 3 (the ‘is not required’), both because the logic is clearer, but also because it doesn’t obligate Company to forgo paying on the 91st day if it chooses to nonetheless give Consultant a break. Option 2 would put Company in the position of having to waive a condition (‘must submit’) if Company chose to ‘do the right thing,’ and thereby set itself up for all of the panoply of evils that flow from waiving conditions. Option 3 carries no such risk, since a payment on the 91st day requires no such waiver under Option 3.
Paul: I made up that term so as to give the provision in question a simple label. It looks like an obligation but that’s presumably not what the drafter had in mind, hence “pseudo-obligation.” I’m not offering it as a grand intellectual construct.
I suggest that it’s redundant to use both “may submit” and “agrees to pay” (I’d say “shall pay”); the former follows from the latter. And the idea of a waiver is interesting, but in your proposed language you’re having the Consultant waive a right it’s not clear it has.