“Herein” (And I Need a Label for This Kind of Ambiguity)

I’ve previously entertained you with court opinions addressing confusion over what part of a contract is being referred to in a contract provision. Who can forget the confusion over a “hereunder”? (See this post). Or over “except as provided below”? (See this post.)

Well, I have another treat for you. (Yes, I know, I’m too generous.)

The case is Bayerische Landesbank, New York Branch v. Aladdin Capital Mgmt. LLC, 692 F.3d 42 (2d Cir. 2012) (PDF here). (I learned about it from this Paul Hastings newsletter.) This time, it’s “herein” that created the problem. It occurs in section 29 of the contract in question (emphasis added):

This Agreement is made solely for the benefit of the Issuers and the Portfolio Manager, their successors and assigns, and no other person shall have any right, benefit or interest under or because of this Agreement, except as otherwise specifically provided herein. The Swap Counterparty shall be an intended third party beneficiary of this Agreement.

I’ll spare you the context. All that matters is that the court reversed, holding as follows:

The “herein” in “except as otherwise specifically provided herein” is not defined. While it might be read to refer, as Aladdin argues, to only section 29, it could just as reasonably be read to refer, as Bayerische argues, to the [contract] as a whole.

So I think that by now we’ve gotten the message: Don’t use hereinhereunder, and other here– and there– words. Not only are they archaic, they create confusion. (The one exception is hereby used in language of performance, as in Acme hereby grants the license to Smith.) And when referring to parts of a contract, don’t use just above or below.

While I’m at it, allow me to adjust my ambiguity taxonomy. I’ve previously grouped this kind of ambiguity with what I call antecedent ambiguity—the ambiguity that arises when in a contract you point to something else in the contract and it’s not clear what you’re pointing to. (Go here for an example.) Well, that’s different from this kind of ambiguity.

And that means I have to find another name for this kind of ambiguity. I await your suggestions.

[Updated February 8, 2014: OK, how about “contract-reference ambiguity”?]

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.