A few days ago a reader asked me about a recommendation he saw online to the effect that it might be a good idea to use a footnote to explain why a negotiated contract provision had been written in a particular way.
And another reader just asked me about using footnotes in a contract. Someone in his company had proposed including a footnote to elaborate on the meaning of a particular word.
I recommend that you never use footnotes in a contract. Just say in a regular provision whatever needs saying.
Using a footnote to suggest that what’s in the footnote is of lesser significance is analogous to using the phrase in particular to highlight a provision (see MSCD 13.343). Treat all provisions the same; leave it to the reader to attribute significance.
Using a footnote to elaborate on the meaning of a word, phrase, or provision is analogous to using the phrase for the avoidance of doubt (see MSCD 13.220 or this 2006 blog post). Say something once clearly rather than trying once, failing, and then taking another crack at it.
I’m leaving a comment here so that I’ll get email notifications of other comments. (Ken already knows my views on these subjects.)
You’re welcome to offer an example.
I suspect I may have written the online suggestion of using footnotes, as mentioned in your original post; see http://www.oncontracts.com/contract-simplification/#Explanatory_Footnotes, from 2003.
Here’s a modestly-successful example of using explanatory footnotes in contracts: In a prior life, I was vice president and (solo) general counsel of a newly-public software company, which I had helped the founders to start. I found myself spending a lot of time on the phone explaining to customers’ contract negotiators why our standard license-agreement form (which was extremely customer-friendly) was written in certain ways.
To address that problem, I added a fair number of explanatory footnotes to our contract form. That seemed to reduce, by quite a bit, the amount of time we had to spend in “legal” negotiations.
Needless to say, the sales people weren’t unhappy about that. And we never once had an issue about anything that I’d said in a footnote.
More generally, Ken, I’m of the view that a contract is above all a tool of persuasion. Computer programs don’t need to explain themselves to the computers that will carry them out; contracts often do.
People — business people, lawyers, judges, jurors — might not always be willing to do X just because the contract (supposedly) requires it. Business people’s personal incentives might go the other way, and their eager-to-please lawyers might come up with “creative” reasons why they don’t have to do X after all.
Sometimes a few extra words of explanation in a contract can help nudge those folks in the “right” direction. Even if that’s not the case, the extra explanation can raise the level of fear that a judge or jury might rule against them.
Granted, there’s always a risk of inconsistency or of unintended consequences. Very often, though, the client will deem that to be an acceptable business risk.
I guess an initial question is whether you want to include the footnotes in the signed copy or whether they’re just for drafts, although I suspect the either way the footnotes would end up featuring in any dispute.
Sure, a contract party might need to be persuaded that it makes sense for them to enter into a contract. But I go around the world telling people that contracts aren’t for persuading people: they contain only instructions.
I don’t recall where we discussed this previously, but I don’t feel any burning need to root around for it.
> I go around the world telling people that contracts aren’t for persuading people: they contain only instructions.
That’s a point on which you and I differ. I used to feel much the same way you do, until I spent a number of years doing litigation and saw up close how people would rationalize doing what they *wanted* to do no matter what the piece of paper said they were supposed to do.
I should note another difference: you’re way more deferential to the conventional wisdom than I am. What’s in my contracts is clear to one and all, so I don’t need to explain anything.
> What’s in my contracts is clear to one and all,
> so I don’t need to explain anything.
Yeah, I used to feel that way too — until the first time I had to go to court over a provision that two separate law firms said was ironclad in my client’s favor, but that the other side claimed only made sense under their interpretation (which was ridiculous).
My language is different from your language, so I don’t accept that our outcomes have to be the same. And I’ve seen too much crappy contract language generated by “blue-chip law firms” to set much store by what they say unless I verify it.
I think we should now leave the floor to others!
I think D.C. is making the epistemological point–rather similar to a common-law lawyer’s riposte to the civil-law conceit that a clear statute will obviate the need for case law–that there’s no such thing as language so clear that even a highly motivated party can’t argue for a contrary meaning. And he’s right about that, but in the end I don’t think it matters, because even with footnotes a highly motivated party will continue to obstruct in exactly the way D.C. describes, knowing that eventually it can settle in a way that saves it money over capitulating to the “obvious” meaning. And the sad fact is that courts are too willing to let parties get away with this by not imposing sanctions on counsel for making frivolous arguments.
The main point, though, is that one should strive for maximum clarity in the body of the document. And I agree with Ken that a contract is not a persuasive tool. The document is meant for the parties, not for the judges; it’s a contract, not a brief.
Vance: Thank you for making a point that I’ve been mulling over: If someone wants to wage a scorched-earth litigation battle, no amount of clarity will stop them. Ken
I agree that a more persuasive contract is a better contract, all other things being equal, but I’m not sure what footnotes achieve in that regard that normal provisions can’t. Persuasiveness and clarity are very closely linked concepts – a clear contract will generally be a persuasive one – and adding glosses (e.g. by footnotes) can create uncertainty as much as it can remove it, by effectively giving an issue multiple treatments that may conflict.
If included in the final contract, footnotes also raise the question of their status. Are they provisions like the rest of the agreement? Or are they somehow lesser, and if so in what way? It seems like a whole new issue for lawyers to argue over.
I’m with you, except that I still don’t buy the idea of a persuasive contract. A rational contract party would be persuaded by favorable deal terms, not by rhetorical accretions.
Wright: No rock throwing!
I realize that if a footnote says that “for the avoidance of doubt” a word or phrase means such-and-such, that’s comparable to an email message that makes the same point. But a significant different is that the email message would come into play only if there’s confusion leading to dispute, whereas the footnote is part of the contract.
Regarding the notion of a contract provision being a form of persuasion, one might as well say that Windows 8, or a book, is a form of persuasion, as it’s there to persuade me to buy it. The initial discussion was whether it’s appropriate to have contract language itself seek to persuade the reader.
Yes, expediency is all. If the other side says that it will sign the contract only if I don a pink nightgown and sing “La Marseillaise,” I’ll do so. But that doesn’t mean that my doing so makes any intrinsic sense.
Ken
Ken,
I had wanted to chime in on your April 9 blog post about pandering to judges, but never seemed to get around to it. This post presents another opportunity, which I don’t want to pass up.
As a general matter, I reject footnotes in contracts. I avoid “for the avoidance of doubt.” I cringe, shudder, and wince at rhetorical emphasis in contracts. I am a contract-drafting purist.
But I have difficulty on a regularly basis trying to reconcile the ideals of my contract-drafting “rules” with some of the trappings of the real world. Suppose that, as a practical matter–and as a psychological matter–some of the redundancy in contract-drafting can be shown to have an impact on how the parties to a contract behave (as some commenters to this post have pointed out). Suppose, for example, that an explanatory footnote or a
“for the avoidance of doubt” affects behavior, whether it’s behavior of a party to a contract, a judge, or an attorney counseling someone whether or not to institute litigation. Suppose that, if I write in big bold font, “The Receiving Party shall hold the Confidential Information in the utmost and strictest of confidence” it ends up increasing my chances that the Receiving Party will not disclose Confidential Information, more so than if I simply stated “The Receiving Party shall not disclose any Confidential Information.” Shouldn’t I be taking these psychological considerations into account, even if they fly in the face of my contract-drafting ideology, at
least to the extent that, in any given instance (not in the general case), adding the rhetoric does not do injustice to the other provisions of my
contract (or at least to the extent that any injustice done is outweighed by
the practical benefit of the rhetoric)?
I struggle with this dissonance often, and I acknowledged as much in my blog post, An Initial Thought on the Impact of Formatting and Contract Psychology, here:
http://www.draftingpoints.com/2013/01/29/an-initial-thought-on-the-impact-of-formatting-and-contract-psychology/
Ken (and others), as always, excellent dialogue on your blog.
Vinny: Welcome back!
If a little bit of theater is in order in a particular context, then go for it. But once it’s anything other than exceptional and you start loading up on “utmost,” “whatsoever,” “under no circumstances,” and so on, suddenly a fog descends and reader’s mind starts to wander.
You want to make sure they don’t disclose confidential information? Make the cost of doing so sufficient that they’ll think hard before doing so.
Ken
I agree with not using footnotes to elaborate on the meaning, but what about using footnotes to indicate changes to a standard template? For example, when I worked primarily with software licensing, services and hardware agreements, our corporate counsel suggested highlighting any changes to the standard template in the footnote, i.e. “Section 6.6., 8.9(a), etc”. This way, upon quick review for non-standard language, one could quickly be alerted what sections have been documented as negotiated changes.
I assume you have in mind footnotes for purposes of internal review, with the footnotes being stripped out before the draft is sent to the other side. Sure, that seems fine, although using track changes might be a simpler alternative.