“Closing” and “The Closing”

[Updated September 26, 2013]

Last week was a quiet one, at least in terms of my online activities, as I spent most of it in Florida, where I gave two “Drafting Clearer Contracts” seminars for a company.

There was a give-and-take during the seminars. I particularly like it when someone at a seminar spots a nuance that I’ve had at the back of my mind but haven’t gotten around to investigating. That happened during these seminars, when one of the participants pointed out the following language in my PowerPoint presentation:

At Closing the Company shall …

After the Closing the Redeemed Member will …

Why, asked the participant, did the first refer to “Closing” and the second to “the Closing”?

I’ve wondered that myself, but I had yet looked at it closely. Well, here goes …

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USAGE

Drafters seem to alternate between closing and the closing. For example, the following extracts are from a single contract that I selected at random on the SEC’s EDGAR system:

Closing

… the consummation of the transactions referenced above shall take place (the “Closing”) within five (5) business days following the satisfaction, or waiver, of all conditions to Closing

Prior to Closing, MedClean shall complete the following actions …

Such representations and warranties shall survive the Closing Date and shall remain operative in full force and effect for a period of eighteen months from the date of Closing regardless of any investigation at any time made by or on behalf of BMTS

Until Closing, BMTS shall conduct its business only in the usual, regular and ordinary course, in substantially the same manner as previously, and

The Closing

All representations and warranties of MedClean or BMTS in this Agreement or any other Transaction Agreement shall survive the Closing until eighteen (18) months following the date of the Closing (the “Survival Date”) …

… no MedClean Indemnitee and no BMTS Indemnitee will be entitled, after the Closing, to any recovery under this Agreement for special, exemplary, punitive, consequential, or indirect damages;

Until the Closing or the termination of this Agreement in accordance with its terms …

ANALYSIS

One of the fun parts about playing linguist is that I get to screw things up royally, then try again.

In my initial analysis, I assumed that haphazard use of the with closing was because closing is a gerund (in other words a noun formed from a verb by adding -ing) and gerunds can function as verbs or as nouns. Note the following two examples, from The Cambridge Grammar of the English Language, 81–83, one using the before the gerund, the other not:

  • He was expelled for killing the birds [gerundial-participle form of verb]
  • She had witnessed the killing of the birds [gerundial noun]

That’s a topic explored further in this Grammar Girl article.

But in noting in his comment that you can have the same haphazard use of the with the word completion, Mark Anderson made me realize that I had overthought the issue. I’ve in fact already considered the phenomenon in question: MSCD 17.27 observes that “Drafters often place an extraneous the in front of some abstract nouns; the result is ponderous prose.” And abstract nouns derived from verbs (for example, satisfaction) that are good candidates for dropping the the.

And that’s what we have with closing. As a gerund, it’s derived from a verb.

But dropping the doesn’t work with closing in all contexts. After all, you’d say “Acme shall hold the Closing.” So I float the following trial balloon—if closing is preceded by a preposition, it’s feasible to consider dropping the the.

But do you want to drop the the? If closing is used as a defined term and is defined using the, I’m not sure you do. But I now need to call in the linguistics reinforcements. Watch this space.

A RELATED ISSUE

While we’re at it, let’s look more closely at one of the examples that initially caught that seminar participant’s eye: “At Closing the Company shall …”

I’m not concerned here about lack of the. Instead, the issue is that in saying “At Closing” I ignored one of my own guidelines, stated in MSCD 10.29–30:

Because a time of day marks the boundary between blocks of time and occupies no time itself, it’s impossible for something to take place at a point in time. Instead, it will take place before or after, or it will straddle the point in time.

It follows that providing in a contract for an act to occur at a given time is to invite confusion, as it’s not clear how much time before or after that time the party in question has to perform the act.

As I discussed in this 2010 post, closing is ambiguous, in that it can mean (1) the moment that a transaction is consummated or (2) “the time spent hanging around a conference room dealing with closing formalities.” As I said in that post, the latter meaning isn’t helpful; it would be preferable to use closing to convey only the first meaning.

But if you give closing the first meaning, closing would mark the boundary between the preclosing and postclosing worlds, so nothing could take place at closing. What I’d say instead would depend on the circumstances.

 

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.