Recently in my contract-drafting course at Penn Law I drilled my students in the categories of contract language. (I suggest that understanding categories of contract language is essential to controlled drafting. The topic is analyzed exhaustively in MSCD chapter 2, and you can get a sense of it by looking at posts on this blog in the “Categories of Contract Language” category.)
Here’s the “after” version of a provision I used in my class to illustrate verb use in language of policy relating to a contingent future event:
This agreement will terminate if the Market Price falls below $1.00.
One of my students suggested that the verb be changed to terminates, that using will terminate leaves it unclear when exactly the contract terminates—right when the Market Price falls below $1.00, or at some point afterwards?
I responded that changing the verb to terminates would have no bearing on that issue. And that in standard English, an if … then structure with will indicates cause and effect, with the cause triggering the effect.
It follows that I wouldn’t use immediately this context. As I say in MSCD 12.23 with respect to analogous examples, “A drafter might be inclined to use instead immediately … , but even without immediately the reasonable reader would conclude that the result in question would occur at once.” Any anyway, immediately doesn’t quite capture cause-and-effect.
And I don’t use automatically either. Besides being unnecessary, it conveys that no intervention by the parties is required, but it has no bearing on timing.
6 thoughts on “Why I Don’t Use “Immediately” or “Automatically” to Reinforce “If … Then” Causality”
From my hazy memory of studying the computer language, BASIC, in 1980, it might go something like this:
1. X = Market Price in dollars
2. GET X
3. If X < 1 then GOTO 21
21. PRINT This contract has terminated
By analogy, I can see that a similar structure might work for contracts, although as a minimum I would prefer to use the word "then" to make clear the immediacy of the termination, eg
If the Market Price falls below $1.00 then this Agreement will terminate.
I can certainly see the logic of this structure, but given the fallibility of judges (who may or may not be "reasonable readers"), I would be inclined to use the word "automatically" before terminate. Otherwise if termination is disputed there are bound to be questions of "how does the agreement terminate? Is a party required to give notice of termination,?" etc.
Mark: I don't think presence or absence of "then" affects meaning. Regarding the utility of "automatically" to indicate that notice isn't required, let me ponder. If caselaw suggests that it's best to address the issue, maybe it would be preferable to say "without either party having to give notice," or some such. Ken
This Agreement will terminate when the Market Price falls below $1.00.
or the somewhat wordier
This Agreement will terminate upon the Market Price falling below $1.00.
That’s ugly when there’s only one event, but typically you see it in a list:
This Agreement will terminate upon the first to occur of:
(a) the Market Price falling below $1.00;
(b) an Event Of Default (as defined in Section X);
(c) the death of either party; or
(d) the five-year anniversary of the Effective Date And Time.
Although I personally agree with you on the "will terminate" issue, some courts take a hard line on those issues and demand the present tense, like the Federal Circuit in interpreting patent assignments. See Arachnid, Inc. v. Merit Indus., Inc., 939 F.2d 1574, 1580-81 (Fed. Cir. 1991) (holding that 'will be assigned' does not create 'a present assignment of an expectant interest')).
@MaxKennerly – The Fed. Cir. said a similar thing in the Stanford v. Roche case.
However, one difference between these cases and the clause at issue: the subject of the verb. The subject in Ken's clause is the "Agreement" whereas both Arachnid and Stanford addressed a person. I think it's reasonable to assume there is no way that the Agreement can take some subsequent act so it just has to happen upon occurrence of the event. This is in contrast to the Arachnid and Stanford cases in which the court expressly states that the person (the inventor) needed to do something else (assign his or her rights) and the obligation hadn't been fulfilled until that thing occurs.
That said, the question really is why even let there be an argument? Using present tense and "upon" seems to eliminate the argument without too much extra work: "This Agreement terminates upon the Market Price falling below $1.00."