“Irrevocable Obligation”

Here, from EDGAR, are instances of obligations being referred to as irrevocable:

“Reimbursement Obligation” means the absolute, unconditional, and irrevocable obligation of the Borrower to reimburse the Issuing Bank for any drawing honored by the Issuing Bank under a Letter of Credit.

The obligation of Borrower to make payments hereunder and to observe and perform all of its other obligations under this Agreement are (subject to the terms of this Agreement) unconditional and irrevocable obligations of Borrower and accordingly shall not be conditional on performance by any Lender Party of any obligations save such as may be specified in this Agreement as required to be performed in order to give rise to a relevant obligation of Borrower thereunder.

Each of the obligations of the Guarantor under this deed is unconditional and irrevocable.

A Notice of Conversion shall constitute an irrevocable obligation of the Converting Partner to convert the applicable number of such Converting Partner ‘s Series HA Class B Units as of the Conversion Effective Date and the Converting Partner shall not be permitted to withdraw the Notice of Conversion , at any time, without the express prior written consent of the General Partner , which the General Partner may withhold in its discretion.

The Board intends the Plan to be permanent, but reserves the right at any time to modify, amend or terminate the Plan, provided, however, that benefits credited as provided herein shall constitute an irrevocable obligation of the Company.

I recommend that you never use the word irrevocable in connection with obligations, as it doesn’t make sense. You revoke something that benefits the other guy, not something imposed on you.

While I’m at it, I recommend that you not refer to obligations as unconditional or absolute, as it’s not clear enough what those terms mean.

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.

6 thoughts on ““Irrevocable Obligation””

  1. Since “irrevocable” is often used in the context of a letter of credit or an option, it certainly does impose an obligation on the issuer of those items. I agree, though, that an “irrevocable” obligation to repay a loan is conceptually incoherent, since the obligation to repay is based on the lender’s having made the loan–to think it was otherwise would be to negate the law of consideration. I see language like this as just another skirmish in the psychological warfare of contracts, where one party tries to bully the other into thinking it never has a defense to an obligation, regardless of how egregious the other party’s behavior is.

  2. Ken:

    I see this as overflow from areas where it makes sense to say whether something is revocable or not. As Vance points out, a letter of credit can be revocable or irrevocable, so it makes sense to say which. To some extent, it makes sense to say the same for some intellectual property licenses. It might also make sense in the last example above, as a carve-back to the right to modify, amend, or terminate. (Better drafting would replace the entire “provided, however” clause with a straightforward exception.) And then sloppy drafting applies the term beyond the places it makes sense.

  3. Saying that an obligor’s obligation to an obligee is ‘irrevocable’ means that no conduct of the obligee can relieve the obligor of the obligation. Not bad faith, not giving a release, not waiver, not estoppel, not failure of a condition subsequent.

    An ‘irrevocable obligation’ isn’t facially nonsensical, but such language is of doubtful enforceability and would never serve a practical purpose except the one Vance identifies — bullying the obligor.

    • AWB:

      Huh, I don’t think that saying “irrevocable” even remotely implies that conduct of the obligee can’t relieve the obligor of the obligation. I guess it depends on who loses the ability to revoke. Typically, one would think of the person taking an action (such as agreeing to do something in the future) as the person who could revoke the action. One talks of revoking an offer or a gift or permission or acceptance, for example. The person receiving the obligation would be rejecting (an offer or a gift or permission [if it were conditional, I suppose] or acceptance [again if it were conditional]). So I don’t see your interpretation of “irrevocable” as being consistent with normal use of English, at least in the US.

      Plus, it would be kind of silly that, if both the obligor and the obligee agree to revoke the obligation, their prior statement that it was irrevocable means they can’t. That’s usually only the scenario where there is a third party relying on the obligation. And even then, I’d say that the third party wouldn’t talk about the obligation being “irrevocable.” I’d think they would use some other word, or better yet, say what they mean as a primary obligation, rather than referencing some obligation and saying it is irrevocable.


      • Dear Chris,

        If ‘irrevocable’ means ‘not able to be revoked, changed, or undone; unalterable’ (Collins online dictionary), not even the obligee can let the obligor off the hook.

        The lesson, I think, is not ‘the word can’t mean that’, but rather ‘don’t use the word unless you truly mean to entrench the obligation against alteration’.

        An analogy might be contractual provisions about whether and how a contract can be amended.



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