Dubious Contract Word of the Day: Cognizant

Recently I encountered cognizant in a contract. It’s a foppish word meaning “knowledgeable of something, especially through personal experience.” It’s not that common in contracts, but it’s not an utter rarity either—it’s in a few dozen contracts filed on EDGAR in the past year.

Below is an example of cognizant used in a contract to convey the established meaning; I’d use aware instead:

The Contributor recognizes that an investment in the Securities involves substantial risk and the Contributor is fully cognizant of and understands [read aware of] all of the risk factors related to such Securities.

Cognizant is also a clunky term of art in federal contracting. Here’s a definition I found online:

The term “cognizant agency” means any Federal or State agency that has conducted and issued an audit report of a consulting firm’s indirect cost rate established in accordance with the FAR cost principles (48 CFR 31) (as defined in 23 CFR 172.3).

Obviously, in that context cognizant is the appropriate word to use: if you want to invoke the arrangement provided for by statute, it would be reckless not to use the statute’s terminology. The following would appear to be a contract example of that use of the word:

The recipient must submit its annual indirect cost proposal directly to the cognizant agency for negotiating and approving indirect costs. If the DOE awarding office is the cognizant agency, submit the annual indirect cost proposal to the DOE Award Administrator identified in Block 12 of the Notice of Financial Assistance Award.

But I suspect that, as is often the case, this bit of terminology has jumped the reservation. For example, in the following extract, from a patent license agreement, is cognizant simply bureaucratese meaning “pertinent”?

The transfer of such items may require a license from the cognizant agency of the United States Government and/or written assurances by Company that Company shall not export data or commodities to certain foreign countries without prior approval of such agency.

That is all.

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.