Do We Really Need the Defined Term “Contract”?

Last week I noticed this tweet by @BlakeReagan2:

https://twitter.com/BlakeReagan2/status/472438086580707328

It has been a while since I’ve used contract as a defined term, so I grabbed the following examples at random from the U.S. Securities and Exchange Commission’s EDGAR system:

Contract” means all legally enforceable contracts, agreements, understandings, arrangements and commitments, whether written or oral, excluding Purchase Orders.

Contract” means any agreement, contract, license, lease, commitment, arrangement or understanding, written or oral.

Contract” means any written agreement, license, contract, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment or undertaking.

Contract” means any contract, subcontract, agreement, commitment, note, bond, mortgage, indenture, lease, license, sublicense, permit, franchise or other instrument, obligation or binding arrangement or understanding of any kind or character, whether oral or in writing.

Contract” means any contract, agreement, commitment, arrangement, undertaking or understanding of any kind whatsoever, written or oral, together with all related amendments, modifications, supplements, waivers and consents.

zzzzzzzzzzzzzzz. What! Oh, sorry, I must have nodded off.

These definitions raise two issues. First, do we need to define contract? Don’t we know what a contract is? Here’s the definition of contract in the ninth edition of Black’s Law Dictionary:

contract, n. (14c) 1. An agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law <a binding contract>. … 2. The writing that sets forth such an agreement <a contract is valid if valid under the law of the residence of the party wishing to enforce the contract>.

(Incidentally, I hope that the tenth edition of Black’s Law Dictionary uses a better example to illustrate the second meaning, as the example provided in the ninth edition in fact illustrates the first meaning, not the second. I would have used “He ripped up the contract in a fit of rage,” or some such. Black’s is certainly fallible.)

Well, we might need a definition of contract, as all of the quoted definitions except the first includes agreement, without any further qualification. People can reach all sorts of agreements, such as an agreement to go to the movies on Saturday; only those that are legally enforceable constitute contracts. Mind you, I don’t know what Black’s means by “otherwise recognizable at law.” Can an agreement be recognizable at law but not enforceable?

The second issue with the quoted definitions is why the heck are we inundated with references to different kinds of contracts? This is a great example of what I call “needless elaboration.”

So I suggest that if you feel the urge to create a defined term for contract, use the following:

Contract” means a legally enforceable agreement, whether written or oral.

Even though the reference to “written or oral” is, strictly speaking, itself needless elaboration, I included it because I don’t want to get into a fight over whether an oral contract is a contract. But I don’t feel it necessary to refer to amendments.

Further tweaks might be justified, depending on the context. Take for example the way the first example excludes purchase orders.

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.