Further Adventures in the Categories of Contract Language: How to Express Invoicing

[Updated 11 Dec. 2021: For more on this topic, see this July 2018 post and this April 2020 post.]

For a while now, I’ve asked myself what category of contract language to use when providing for one party to invoice the other. Here are the possibilities:

Language of obligation: Widgetco shall invoice Acme monthly in arrears for purchases under this agreement.

That doesn’t make sense, as it suggests that Acme could bring a claim for breach if Widgetco doesn’t invoice Acme monthly.

Language of discretion: Widgetco may invoice Acme monthly in arrears for purchases under this agreement.

That’s not right either, as it suggests that each month Widgetco might say to itself, Yes, Acme owes us money, but do we really want to issue an invoice this month? Instead, invoicing is a matter of routine.

Language of policy: Widgetco will invoice Acme monthly in arrears for purchases under this agreement.

Nope. Language of policy (using will) is for stating the ground rules of a contract—stuff that is or will be, without anyone’s intervention. By contrast, invoicing requires party action.

Language of obligation used to express a condition: For Widgetco’s invoices for purchases under this agreement to be valid, Widgetco must issue them to Acme no sooner than monthly in arrears.

It’s cumbersome. And more to the point, it would be odd to have a condition to validity be the only way you address invoicing.

So here’s my current favorite:

Language of declaration: Acme acknowledges that Widgetco invoices purchasers of widgets monthly in arrears.

Boom. It reflects the reality that Widgetco’s invoicing of Acme isn’t something unique to this transaction. Instead, it’s a function of Widgetco’s invoicing system. Of course, you won’t find a single contract that uses anything like this, but that certainly doesn’t worry me.

What do you think?

(For the complete analysis of the categories of contract language, see chapter 3 of A Manual of Style for Contract Drafting.)

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.