Defined terms add value—they allow you to state a concept more concisely and consistently than you might otherwise. But they come at a cost: Using an autonomous definition breaks up reading—you force the reader to read both the autonomous definition and the related provision. Integrated definitions add a bit of clutter in the form of the defined-term parenthetical. All the initial capitals that come with defined terms make a contract harder to read. And each time you read a defined term, you’re required to do a bit of extra work—in your mind, you have to connect the defined term to the definition.
So in using defined terms, it’s important to weigh the benefit against the cost. But in traditional contract drafting, drafters tend to consider only the benefit. When redrafting traditional contracts prose, usually you can eliminate a significant number of defined terms.
Weighing the benefit against the cost is a function of the economy the defined term offers and how often it’s used. Here’s an example:
First, consider the economy of the defined term compared with the definition. The defined term (Agreement Term) is two words; the definition (term of this agreement) is four words. That’s an unimpressive ratio. One way to improve that would be to shorten the defined term to Term; as a defined term, Agreement Term is unorthodox and awkward.
But you then have to consider how often the defined term would be used. Given that the definition is short, the defined term would have to be used often for the benefit to outweigh the cost.
In this case, the contract is a 12-page employment letter in which Agreement Term is used only twice. One instance could be replaced with term of this agreement. As for the second instance (continuation of your Base Salary in effect at the time of termination for a period of twelve (12) months following the Agreement Term), you could replace following the Agreement Term with after termination. The defined term isn’t worth the trouble.
That’s a small victory for efficient drafting. And those small victories add up to something meaningful.
(I wrote this from the perspective of the drafter! If you spot this sort of issue when reviewing a contract, fixing it could get annoying, in terms of the time it takes and the discussions it prompts. In reviewing a contract, generally it’s best to limit yourself to commenting on anything that doesn’t reflect your understanding of the deal or that might cause confusion, and this kind of inefficient use of defined terms doesn’t create either of those problems. Once you start making changes aimed at tidying up the drafting, where do you stop? See this recent post about that.)
More times than I can count, I have found defined terms which simply aren’t used.
“Lead Party” in https://www.phe.gov/about/amcg/otar/Documents/articles-collab-temp.pdf
As someone involved in transactions daily between various parties performing various tasks, I’m confronted constantly by a kaleidoscope of bad practices including this link, where senselessness is proposed as best practice.
I’d kill for garden variety inefficiency in defined terms. Grateful to have a perspective from beyond the din of battle.
Yes, there a several defined-term pathologies. The one this blog post is about is perhaps the most prevalent. The one you mention is another, more glaring one. Technology would help address it, but somehow no product has caught on.
The silly one I just saw (in Series Seed documents sent out by a biglaw lawyer) was this – “‘State of Incorporation’ means Delaware.”
So you have a sentence “The Company was incorporated in the State of Incorporation” instead of just saying “the Company was incorporated in Delaware.”
Also showing up frequently was “the Secretary of State of the State of Delaware” instead of just “the Secretary of State of Delaware.”
I guess if I send out documents without proofreading or performing a critical review, I could charge $800/hour too.
The “State of Incorporation” is indeed lame.
I think “the secretary of state of the state of Delaware” (lowercase except for “Delaware,” because it’s a Chicago Manual of Style world!) is a thing. It’s how the Delaware Code says it. I’d be inclined to say “the Delaware secretary of state.”
Sure, sounds great in theory, until you have to refer to the “secretary of state of the Commonwealth of Pennsylvania/Kentucky” ;-)
Commonwealth ofI know – even though Pennsylvania, Kentucky, and Massachusetts are commonwealths, the office is always “secretary of state”. But Ken’s approach – to say “Pennsylvania Secretary of State” fits all cases nicely.
A few days ago, Ken posted a question from a reader who wanted to know when it might be ok to mark up another side’s messy draft. This post reminded me that autonomous definition sections are fertile ground. You can sometimes save a page or more by chopping unused terms, shortening byzantine definitions, and unstuffing terms that are packed with substantive provisions.
Yes, making defined terms more efficient does fall squarely in that topic. Of course, when you’re dealing with defined-term glitches that can cause confusion and result in fights, they’re a higher priority.