Some of my hard-core readers have probably grown disenchanted with this blog. “Oooh, Mr. Globetrotter went to Denmark!” “Oooh, Mr. Fancypants is doing the artificial-intelligence thing!”

Well, I still got it, bitchez.

Courtesy of Fabian Schäfer, SAP’s Chief Expert in Legal Information Management Check, out the following (emphasis added):

AFFILIATE shall mean a corporation, company or other entity, now or hereafter, directly or indirectly, owned or controlled by, or owning or controlling, or under common control with by one of the PARTIES, but such corporation, company or other entity shall be deemed to be an AFFILIATE only so long (subject to sentence three (3) of this definition) as such ownership or control exists. For purposes of this definition “control” of a corporation, company or other entity shall mean to have, directly or indirectly, the power to direct or cause the direction of the management and policies of a corporation, company or other entity, whether (i) through the ownership of voting securities entitling to the right to elect or appoint, directly or indirectly, the majority of the board of directors, or a similar managing authority, (ii) by contract or (iii) otherwise. For a period to be agreed upon (but if so required by ACME not being more than one year), any company, business or business unit which is acquired by, merged into or divested by ACME or a ACME AFFILIATE during the term of this AGREEMENT, notwithstanding the fact that such entity might not meet the criteria of “control” set forth by sentence 1 of this definition for the period to be agreed upon.

What, Fabian asked, do I think of cross-referring not to a section, but to a sentence within a section?

I hadn’t thought of that before. *stunned look on face* It’s certainly a commonplace practice. Here are some examples trawled from Edgar:

“outstanding,” when used with reference to Notes, shall, subject to the provisions of Section 8.04, mean, as of any particular time, all Notes authenticated and delivered by the Trustee under this Indenture , except: … Notes repurchased by the Company pursuant to the penultimate sentence of Section 2.10.

Subject to the provisions of the last sentence of this Section 13(b) and of Section 13(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to indemnification hereunder; provided, however, that the Company shall notify Indemnitee of any such decision to defend within 15 calendar days following receipt of notice of any such Proceeding under Section 13(a) above.

Each Borrower unconditionally and irrevocably agrees that, in connection with any Letter of Credit issued for the support of any Subsidiary ’s obligations as provided in the first sentence of this paragraph, such Borrower will be fully responsible for the reimbursement of LC Disbursements in accordance with the terms hereof, the payment of interest thereon and the payment of fees due under Section 2.12(b) to the same extent as if it were the sole account party in respect of such Letter of Credit (such Borrower hereby irrevocably waiving any defenses that might otherwise be available to it as a guarantor or surety of the obligations of such Subsidiary that is an account party in respect of any such Letter of Credit ).

You can even cross-refer to less than a complete sentence:

During the term of this Agreement , subject to the proviso in the final sentence of this Section 3.C, the Executive shall receive the following benefits (together, the “Other Benefits”): …

And how about this, from a 293-word sentence:

… equal to the sum of (a) eighty-nine and nine tenths percent (89.9%) of the aggregate Property Cost for the Construction Period Property (excluding any such Property Cost with respect to which a Full Recourse Event of Default exists, which is fully recoverable as referenced in the first parenthetical phrase of this Section 5.4), exclusive of …

So what do I think of this sort of cross-reference? Well, you do what you gotta do, but having to count sentences is a real imposition. I’d have thought that in most circumstances you could avoid this sort of thing by being adroit in how you tell the story and how you divide up text.

For example, here are three alternatives to the cross-reference in the first extract above (after the definition Fabian provided):

• It might be worthwhile creating a defined term—Purchased Notes?—to avoid having to say “Notes repurchased by the Company pursuant to the penultimate sentence of Section 2.10,” even if you use the defined term only once.

• But it would be simpler to cross-refer to the entire section. Only one sentence provides for the company to repurchase notes, so it’s not as if referring to the entire section might create confusion.

• But if you cite the entire section, you force the reader to read the entire section if they wish to read the part that relates to the section containing the cross-reference. The reader-friendly thing to do would be make the part in question its own subsection.

But here’s the kicker: The sentence of section 2.10 that provides for the company to repurchase notes (“… the Company may … repurchase Notes in the open market or otherwise …”) is the #@$%^& second sentence, not the third (and penultimate) sentence. (Go here for a copy, if you wish to check for yourself. It’s an indenture dated 28 June 2018, with Wright Medical Group, Inc. as the issuer and The Bank of New York Mellon Trust Company, N.A., as trustee. Hi guys.)

So perhaps the best reason not to cross-refer to sentences is that in a draft that’s being negotiated, cross-references to sentences can become inaccurate. It’s unrealistic to expect harried outside counsel, or anyone else, to think to count sentences one last time before preparing the final version. And as Fabian mentioned to me, it’s hard to conceive of this sort of cross-reference ever being automated.

This article in the ABA Journal contains Bryan Garner’s version of part of a particularly impenetrable consulting agreement.

His focus is layout, and in his redraft he in effect offers an enumeration scheme for contracts. (The image above is the first part of it.) But it treats the constituent elements inconsistently.

Consider first the subsections, using the (A) hierarchy. Subsection 3.3(A) is just a heading; all the other subsections in section 3.3 contain text in addition to the heading.

Then there’s the next level, using the (1) hierarchy. In section 3.3(A), the elements of the (1) hierarchy are treated as sub-subsections, each with a heading. In section 3.3(B), they’re treated as a set of tabulated enumerated clauses, each with a heading. In section 3.3(C), they’re treated as a set of tabulated enumerated clauses, without headings. One element, three different treatments.

This sort of inconsistency makes the reader’s job harder. The simplest indictment of Garner’s enumeration scheme is that it would be a nuisance to automate.

I have views on contract layout. The related chapter in A Manual of Style for Contract Drafting devotes 22 pages to the subject. It’s perhaps the most boring chapter in the book, because I make a point of explaining every decision underlying the two MSCD enumeration schemes. (For a taste of one of them, see this blog post.) Both schemes have been automated, thanks to the Numbering Assistant, by PayneGroup. (More about that here.)

By the way, Garner’s redraft in the ABA Journal necessarily reflects his notions of what that consulting agreement says and how to say it. I have some thoughts on that, but I’ll spare you: they wouldn’t make for thrilling reading.

My enumeration schemes are an important part of my repertoire. There’s the one in MSCD, then there’s the hanging-indent scheme I unleashed in this 2015 post.

But despite my control-freakery, I’ve not paid a lot of attention to two aspects of my scheme, namely point size and spacing. I went with the Word default, which was then Calibri 11 point, with 10 points after and single spacing.

Well, the Word default has now shifted to 8 points after with multiple line spacing at 1.08.

And to complicate matters, the Numbering Assistant, developed by Payne Group, now uses 12 points after headings. That’s relevant because as a favor to me, Payne Group has long incorporated the “articles” and “sections” variants of my scheme—now schemes—as options in the Numbering Assistant. That gives my readers a simple way to adopt whichever of my schemes appeals to them. (Go here for more about my relationship with the Numbering Assistant.) But having 12 points after headings and 10 points after everything else is odd.

So I feel I have to do something. As a way to start thinking about this, I’ve prepared three simplified versions of my hanging-indent scheme:

• The old Word default (11 point Calibri, with 10 points after and single spacing) (PDF here)
• The new Word default (11 point Calibri, with 8 points after and multispace spacing at 1.08) (PDF here)
• An alternative format (12 point Calibri, with 12 points after and multispace spacing at 1.15) (PDF here)

Here are my current thoughts on these choices:

If I want the Numbering Assistant to continue to make sense as a way to apply my schemes, I should shift to 12 point Calibri. So I asked around. According to the Payne Group, among those law firms that use Calibri, some use 11 point and others use 12 point. Deborah Savadra, aka @legalofficeguru, told me that her own preference would be somewhat larger than 11 point (at least 12 point).

Regarding points after, Payne Group presumably opted for 12 points after because that’s what most law firms use. (Generally, I don’t make it a habit of limiting myself to what law firms do.) Deborah told me she favors points-after that matches the font point size.

Regarding line spacing, Payne Group has told me that most law firms use single spacing, although a few of those that use Calibri as their default font style using 1.15 line spacing. Here’s what Deborah told me:

I’ve come to appreciate the merits of 1.15 spacing (which is what Microsoft’s standard was before 1.08), even if it was designed more for web than paper publishing. Long stretches of grey text wear the eye out, and that first glance at a densely-packed document can create a powerful first impression, positive or negative. A little extra negative space between the lines in longer documents is, I think, a good thing.

(Go here for Deborah’s post on Lawyerist about line spacing.) I also consulted Matthew Butterick, he of Typography for Lawyers, who volunteered that he “would always vote against single line spacing.”

So, dear reader, which of the above arrangements should use? Or should I do something else entirely? I invite you to vote in the poll below. And comment if you see fit.

You can turn any standard contract into a letter agreement by adjusting the opening and closing. (MSCD contains a chapter on letter agreements.) In what contexts might that make sense?

In particular, recently I’ve had occasion to read “offer letters” between a company and an employee. They’re letter agreements. More often than not, they use you and your for the employee.

The alternative is a standard employment agreement—with title, introductory clause, and so on—that uses the Employee or some other defined term to refer to the employee.

So, employment-law people, which do you prefer, and why?

Here’s a related question: It appears routine for companies to require that new employees sign both an offer letter and a separate confidentiality agreement. Why not combine them in one document?

[Updated 7:45 a.m. EDT, 1 Aug. 2016: Well, that was quick! The verdict is in: offer letters for at-will employees, contracts for everyone else. See this tweet, this tweet, this tweet. and this tweet. (Thanks, guys!) Presumably, for employees who aren’t at-will you could combine everything in one contract, but a company might find it easier to have all employees sign the same confidentiality agreement.]

The basic unit of contract prose is, surprise surprise, the sentence. One issue of contract layout is that of aggregation—how do you group sentences into sections and, if necessary, articles? The other is that of division—when is it appropriate to break up a sentence?

Division involves enumerated clauses. A contract sentence might consist of introductory text and a series of parallel elements. It might make such a sentence easier to read if you enumerate the parallel elements. And if the parallel elements are long enough, it might make them easier to read if you treat each of them as if it were a separate paragraph—if you were to tabulate them.

This post relates to introductory text.

If the enumerated clauses are anything other than short and simple, the introductory text will likely include the following and end with a colon. Today I had occasion to consider the position of the following in introductory text.

The obvious place to put the following is at the end of the introductory text, as in this example (example A):

The license granted to Acme under section 6.1 includes the right to sublicense, on condition that the terms of the sublicense include the following:

But consider this example (example B):

The Committee Chair must do the following with respect to each meeting of the Committee:

And this one (example C):

Acme shall transfer to Widgetco each of the following, with its certificate of title attached:

I suggest that the position of the following in examples B and C is unobjectionable.

Now consider this example (example D):

If any of the following occurs and the Licensor notifies Acme that it wishes to terminate [is terminating] this agreement in accordance with this section 6 , including [and includes] in that notice its reason for wishing to terminate [terminating] this agreement, this agreement will terminate when Acme receives that notice:

I suggest that in this example, the following is too remote from the tabulated enumerated clauses that follow. Instead of the following, I used a new defined term, Licensor Termination Event, and put immediately below this sentence a subsection containing the autonomous definition of that defined term. Here’s what the revised sentence looks like:

If a Licensor Termination Event occurs and the Licensor notifies Acme that it wishes to terminate [is terminating] this agreement in accordance with this section 6 , including [and includes] in that notice its reason for wishing to terminate [terminating] this agreement, this agreement will terminate when Acme receives that notice.

So I offer the following general proposition: It’s OK for the following not to be placed at the end of the introductory text preceding a colon and a set of enumerated clauses if the following occurs in a single independent clause or the last independent clause in a compound sentence. The independent clause can either stand on its own or have one or more subordinate clauses, as in examples B and C. (Go here for Wikipedia on sentence clause structure.) But the following is too remote when it’s separated from the colon by one or more other independent clauses, as in example D.

You’re welcome.