Here’s an example of what MSCD calls “passive-type policies”: Interest is payable at a rate of 8% per year.
Here’s part of what MSCD 3.244 has to say about passive-type policies:
Some policies are characterized by adjectives such as exercisable and payable and have a structure that’s analogous to the passive voice. This manual refers to such policies as “passive-type policies.” Passive-type policies have two shortcomings. First, as with passive verb phrases (see 3.11), the agent can be expressed by a by-agent, but in contracts the agent is often omitted (see [8-7] and [8-8]), leaving unstated the party responsible for performing the action.
I’m happy to announce another passive-type-policy structure, use of is/are subject to plus abstract noun. Here are some examples, the first three using change, the remaining three using termination:
The specific goals are determined annually by the Committee and are subject to change by the Committee.
The Executive’s position and assignments are subject to change.
… as detailed in its Associate Handbook, the provisions of which are subject to change on a prospective basis.
This Agreement is subject to termination by mutual agreement at any time.
Such authorization is subject to termination at any time by the Board of Trustees of the Trust for any reason.
The employment of each Employee is subject to termination upon up to thirty (30) days’ prior written notice under the termination notice provisions included in the applicable engagement Contract with such Employee or applicable Law.
In each case, the fix is the same: if something is subject to [abstract noun], that means a party may [verb].
*Subject to* is a dubious formulation, expressing a subordination that isn’t always clear. Maybe it should be banned in favor of a clearer alternative whenever the temptation to use it arises.
The *may* fix, though, has passivity problems, too, in that *may* is the equivalent of *is permitted to*, a passive formulation lacking a stated by-agent.
Every grant of discretion using *may* has a grantor and a grantee, but rarely does the contract expressly identify the grantor.
For example, consider *The Board may terminate the Employee at any time for any reason*.
It means *The Employee hereby grants the Board license to terminate the Employee at any time for any reason*.
That said, it is probably the best practice to use the *may* formulation for grants of discretion. After all, who can the grantor be but the counterparty, so why waste words expressing the obvious?
That practical program leaves dangling the question of categories of contract language. If varying formulations (subject to, is permitted to, hereby grants discretion to, may) have identical meanings, do they belong to the same category of contract language? Or do they belong to different categories because they express that same meaning in different forms?