Last week, something I saw in a contract I was reviewing prompted me to fire off the following tweet:
"Acme hereby waives the right to" = "Acme shall not": use language of prohibition, not language of performance?
— Ken Adams (@AdamsDrafting) August 6, 2016
As is often the case, it has to do with the categories of contract language. The phrase hereby waives the right to and its variants (for example, hereby waives any right to) constitute language of performance. There’s always an alternative that shows slightly more clearly and concisely what’s actually going on.
Using Instead Language of Prohibition
For one thing, Acme hereby waives the right to sell the Shares means that Acme is prohibited from doing so. It would be simpler and more concise to say Acme shall not sell the Shares—it confuses matters to use different verb structures to say the same thing. Here’s an example from EDGAR of this sort of use of hereby waives the right to:
Upon any exchange or transfer of bonds of the ___________ Series , the Company may make a charge therefor sufficient to reimburse it for any tax or taxes or other governmental charge, as provided in Section 12 of the Mortgage , but the Company
hereby waives any right to[shall not] make a charge in addition thereto for any exchange or transfer of bonds of the ___________ Series.
But you generally see hereby waives the right to used in a more limited context, namely in provisions relating to how a party conducts itself in adversarial proceedings. (See this post for a discussion of a subcategory of such provisions, what I call won’t-dispute provisions.) Here are some examples:
Notwithstanding the foregoing, the Company hereby waives the right to assert an “inevitable disclosure” argument in any legal proceeding against Employee after the termination of his employment.
Purchaser hereby waives its right to pursue any other remedy at law or in equity …
Each party stipulates that the payment obligation in this Section 15 is reasonable in light of the anticipated harm and the difficulty of estimation or calculation of actual damages and hereby waives the right to contest such payment as an unreasonable penalty or otherwise.
The Members hereby waive any right to stay or dismiss any action or proceeding under or in connection with this Agreement brought before the foregoing courts on the basis of …
Each [of the agents] agrees that it shall not (and hereby waives any right to) contest or support any other Person in contesting …
But I don’t see how these examples differ from initial examples I offer in this post. In other words, I don’t see how one can distinguish the right to sell shares or to make a charge in connection with exchange or transfer of bonds, one the one hand, from the right to assert an argument in a legal proceeding. If in the former it makes sense to use language of prohibition to express surrender of a right, then it makes sense in the latter too. That much is essentially acknowledged in the fifth example of the group immediately above, as it combines hereby waives any right to with language of prohibition (it shall not).
The most common example of this kind of use of hereby waives the right to is for waiving the right to trial by jury:
Each party hereby waives its right to a trial by jury in any proceedings arising out of this agreement.
How might one express this using language of prohibition? Well, rule 38 of the Federal Rules of Civil Procedure provides that a party may secure a jury trial by filing a jury trial demand and completing proper service on opposing parties. So you could say Each party shall not demand a trial by jury.
But this raises a cost-benefit issue. When it comes to jury trials, the waiver language is universal. I’m not convinced it’s worth rocking the boat by using language of prohibition instead.
Using Instead Language of Discretion
But wait, there’s more!
The phrase hereby waives the right to is also used when what you’re really saying is that the other party doesn’t have to do something. So say that instead:
Acme hereby waives any right to[Photoco is not required to permit Acme to] inspect or approve of any finished Photographs whether printed or electronic, that may be used now or in the future …
… provided that
Executive hereby waives the right to recover any monetary damages or other relief against any Releasees[the Releasees will not be required to pay monetary damages or other relief to Executive]. Executive hereby waives his right to receive[The Company will not be required to pay the Executive] any such severance not explicitly set forth in this Agreement … The Borrower hereby waives its right to elect to make[The Lender is not required to accept] payments under this Agreement in a currency other than Dollars …
the Mortgagor hereby waives its right to require the Mortgagee to[the Mortgagee is not required to] comply with any contrary terms and provisions of this Mortgage in such circumstance … [language of discretion, is not required to]
Using Instead a Different Vehicle of Language of Prohibition
But when hereby waives the right to is followed by a noun, it’s simpler to use an alternative vehicle for prohibition, is not entitled to, as in the following examples:
hereby waives his right to[is not entitled to] conversion rights with respect to any shares of the Company ’s common stock owned or to be owned by the undersigned … [Language of discretion]
hereby waives any right to[is not entitled to] partition of the Partnership property.
In the first example, the focus is very much on the shareholder, so it would be cumbersome to make the Company the focus. That’s something something discussed in MSCD 3.227. And in the second example, there is no other side to the transaction, just partners, so there is no language-of-discretion alternative to is not entitled to.
So here’s what I recommend:
The concept of waiver of the right to jury trial is so entrenched that it’s not worth monkeying with: stick with hereby waives the right to a trial by jury.
In other contexts, hereby waives the right to isn’t much of a nuisance, but it is elegant variation—something you don’t want in contracts. (Go here for Wikipedia on elegant variation.) We have other verb structures that express the same meaning more clearly and economically. I recommend you use them.