Consolidating Deal Points: Once More, With Feeling

In this 2015 post I suggested that “instead of addressing each deal point in a separate sentence, you can often consolidate them.” When you do that, instead of using two main verbs to cover two deal points, you need only one main verb. But the example I used to illustrate this point ended up being hijacked by a substantive issue. So allow me to try again.

You’re drafting a contract between Acme and the Licensee under which the Licensee will develop pharmaceutical products. Regarding regulatory approvals, the idea is that the Licensee will make all filings and will make all decisions regarding where to file.

Here, using grossly simplified language, is how you might express the first task:

The Licensee shall make all regulatory filings.

How do you express the latter element? Here are some possibilities:

  • The Licensee shall decide in which countries to file for regulatory approval. [This is language of obligation; it seems uneconomical, given that the previous sentence uses language of obligation.]
  • The Licensee will decide in which countries to file for regulatory approval. [This is language of policy, but it doesn’t work, as language of policy isn’t for expressing party actions.]
  • The Licensee has authority to decide in which countries to file for regulatory approval. [This is language of discretion masquerading as language of policy.]
  • The Licensee may decide in which countries to file for regulatory approval. [This is language of discretion, but it doesn’t work, as the Licensee will have to decide.]
  • Acme shall not decide in which countries to file for regulatory approval. [Language of prohibition doesn’t work, as Acme won’t even be in a position to make this sort of decision.]
  • The Licensee will not be required to consider Acme’s views regarding in which countries the Licensee should file for regulatory approval. [This language of discretion is OK, but seems like overkill.]

So here’s what I’m inclined to use:

The Licensee shall make all regulatory filings in those countries in which it elects to seek Regulatory Approval for a Product.

See what I did there? Instead of addressing separately the notion of Acme being the one to decide where to file, I built that into the provision expressing the obligation to file. It’s more economical.

Here’s another example, with my modifications marked:

Acme shall also grant the Buyer a rebate equal to the difference in the price paid by the Buyer and a lower price paid for units of the Product by another Acme customer. Any such rebate must be [,] with that rebate being calculated from the date Acme first sells units of the Product at that lower price.

I might be able to come up with a taxonomy of this sort of consolidation, but I suspect that it will remain up to individual drafters to spot circumstances in which it can be applied.

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.