Here’s what Garner’s Modern American Usage has to say about generally:
generally has three basic meanings: (1) “disregarding insignificant exceptions” <the quality of the acting is generally very high>; (2) “in many ways” <he was the most generally qualified applicant>; and (3) “usually” <he generally leaves the office at five o’clock>.
In contracts, the word generally appears in standard phrases such as generally accepted accounting principles. But more, uh, generally, it exhibits the problem that afflicts usually and substantially—all three words are vague in a way that goes beyond the vagueness of words such as promptly. (For more about usually, see the immediately preceding post, here.)
Consider the following, from a definition of “Event of Default”:
… the Borrower fails generally to pay its debts as they become due …
What level of failure would allow the lender to say that the borrower has generally failed to pay its debts? Who knows.
You could say instead fails to pay a debt when due, but that would cover inadvertent failure to pay a single insignificant bill, even if the borrower thereafter quickly pays the amount owed.
What level of failure to pay your bills constitutes default would always require that you take into account context, so I’m considering deleting generally and otherwise letting the chips fall where they may.
Any suggestions?
See my comment under “usually,” which discusses the socially beneficial functions of vagueness. In the case of “generally failing to pay debts,” I think the proper gloss, which can be made explicit, is that the debtor has failed to pay nearly all its debts (maybe there are a few strategic exceptions, which would probably be disallowed as preferences under bankruptcy law). One might reasonably ask why a lender cares about any debts other than the ones the borrower owes it, but since they almost always purport to do so, the issues will need some sort of textual resolution. Almost any percentage you come up with will be arbitrary, but maybe that sort of thing works–75 percent? 50 percent? I’ve never had an argument over something like that, but then again, I haven’t represented anyone whose success or failure to pay debts has been seriously in question.
Except you’re stuck with at least one instance of it if you use ISDA master swaps agreements. That’s one of the defined events of default. See, e.g., http://www.isda.org/press/pdf/Summary_of_Short_term_commentary_nov26.pdf
Sure, the language I take issue with is pretty standard. But that doesn’t mean it’s optimal.