“Is Eligible For”: An Example of a Buried-Actor Policy

A feature of my categories-of-contract-language framework is something I used to call “passive-type policies” but in the fourth edition of MSCD (forthcoming) call “buried-actor policies.”

In this 2016 post I wrote about is subject to as an example of a buried-actor policy. Here’s another: is eligible for.

Consider how it’s used in this sentence:

The Employee is eligible for a target bonus (a “Target Bonus”) equal to 50% of his Base Pay for threshold performance and additional amounts paid for exceptional performance as determined by the Compensation Committee.

It would be clearer to say instead The Company shall pay the Employee … if ….

The same goes for is not eligible for:

The Agent’s expenses are not eligible for reimbursement by Acme.

I’d revise that to read Acme is not required to reimburse the Agent’s expenses.

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.

4 thoughts on ““Is Eligible For”: An Example of a Buried-Actor Policy”

  1. You’ll notice a lack of symmetry between your “is eligible” and “is not eligible” formulations. In the latter, the company still has discretion to reimburse, whereas in the former the company is obligated to pay. I wonder if the use of “eligible” is a a product of the drafter’s unease in making an obligation out of “mere” qualification. Bonus plans in particular usually have various hoops through which the executive must jump to get the payment.

  2. A few comments:

    1/ I read *is eligible to* as *might*or *could*. *Anyone who has purchased a lottery ticket is eligible to [read: might] win*. It creates no obligation to pay anyone anything — the winning number might be one for which no ticket was issued.

    2/ I read *is ineligible to* as “won’t* or *can’t*. *Anyone who has not purchased a lottery ticket is ineligible to [read: won’t] win*.

    3/ *Is eligible to* is a statement of a possible, *is ineligible to* of an impossible, future event. Neither belongs to any category of contract language, and neither should appear in MSCD-compliant contracts.

    4/ *Acme shall pay the Employee a target bonus if…* is a conditional obligation (language of obligation using a condition), and as such is MSCD-compliant, but it’s not the same thought as *The Employee is eligible….*

    5/ Similarly, MSCD deems *Acme is not required to reimburse the Agent* language of discretion, so it’s MSCD-compliant, but that text expresses a different thought from *The Agent is ineligible for reimbursement from Acme*.

    6/ If Acme has discretion to pay the agent despite the agent’s ineligibility, that discretion comes from another source than the phrase *is not required to pay*. Though MSCD-compliant, that phrase grants nothing.

    • I think point 1 is the intent and point 4 is definitely NOT the intent of the quoted language in Example 1. This is one of those situations when a drafter might deliberately use passive voice to hide the actor. I interpret that language as being acceptable drafting if the intent of the drafter is expressly to avoid saying “The Company may pay Employee a Bonus” and definitely to avoid “The Company is not required to pay Employee a Bonus.”

      Now, *should* it be written that way? No, it’s a shitty non-promise, which is what MSCD has helped us all smoke out when they’re hidden like this. It’s a failure of leadership to try to get over on your employees by tricking them on day 1.

  3. In general, I would prefer to define Expenses to be Reimbursed, although “to be” may be criticized. At least it is better than “Reimbursable”. If there is no Expenses to be Reimbursed, it seems strange to say a party is not required to do something. It can be deleted at all. All obligation must be listed in contract. Non-obligation is not required to be specified. Just too much non-obligation.


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