[Updated 13 June 2017: Prompted by this more recent post, I’ve had a change of heart. I think this should be language of declaration: The parties acknowledge that this agreement does not address the law that governs disputes arising out of this agreement or the subject matter of this agreement. Why? Because it doesn’t really make sense to state as a ground rule of the contract that which the contract doesn’t cover. But perhaps I’m being pedantic. And in any event, there’s no possibility of confusion.]
I’m not keen on using is silent on (and its variants) in contracts to mean does not address. Here are some examples:
The Ground Lease is silent on whether Borrower can deliver insurance proceeds to a lender.
On any matter upon which this Agreement is silent, the DLLCA shall control.
… and to the extent an Award Agreement is silent on terms necessary for compliance, such terms are hereby incorporated by reference into the Award Agreement.
And here’s another example that’s of greater interest.
The Parties agree to remain silent in regard to Governing Law.
First, there’s the question of whether that’s the best way to express the intended meaning. I’d say instead something along the following lines: This agreement does not address the law that governs disputes arising out of this agreement or the subject matter of this agreement.
Beyond that, what do you think of making this sort of provision part of a deal?
Before re-writing it, I would want to know what [the parties think] the last example means. Eg:
(1) we’re not going to state the governing law in this document [what value does such a statement have over just not stating a governing law, but not drawing attention to it?]
(2) we agree that the contract does not include any term on governing law [ditto; slightly wider than (1) as includes oral/collateral/implied terms]
(3) we agree that this agreement will not be governed by any system of law [unlikely, suggests not a binding agreement; is it trying to override eg the Rome Convention?]
(4) we each reserve the right to argue for or against any particular system of law applying (ie if the contract ever comes before a court) [very legalistic]
“Next contestant, Mrs. Sybil Fawlty from Torquay. Specialist subject – the bleeding obvious.”
I suggest that 1 and 2 are functionally the same. 3 reminds me of nutters who claim they’re not subject to the government’s taxing authority. And I think 4 follows from 1 and 2.
As regards saying it at all, there might be some value in signalling to the reader (before signing and after) that omitting a governing-law provision wasn’t an oversight.
Ken, I think your flippant answers aren’t addressing the real concern Mark is raising, especially with regards to #4. And while I’m not sure of the judicial outcome, contractually its problematic. Because, I think the parties stating that they intend to be silent on a particular topic (but then having to deal with the issue the moment one of them takes the other to court), is going to create some interesting pre-trial motions.
I agree that “silence” is the wrong phrasing, regardless. But I also am not sure that we have to affirmatively state that we’ve considered a particular area of dispute and have chosen not to address it. In fact, in the interests of clarity and brevity, I’m kinda’ surprised to see you as a potential advocate. Oh, and at the risk of pointing out the obvious, this is why we have the UCC and INCOTERMS.
“Flippant answers”? Nothing flippant about 1, 2, and 4. And with 3, I was aiming for mildly droll. In any event, I’m comfortable with the tone I maintain on this blog, thanks.
A provision that expressly states silence on an issue is somewhat paradoxical.
It reminds me a little of “this page intentionally left blank”.
Anent ‘[t]he Parties agree to remain silent in regard to Governing Law’:
1/ Category of contract language? In form, language of agreement; in substance unclear because the drafter’s goal is unclear: obligation, prohibition, policy?
2/ How long does the vow of silence last? If the parties end up in litigation where the governing law is an issue, must both sides leave it entirely to the judicial authority, without argument from either?
3/ It makes no sense to set out to improve a text without knowing what the drafter is trying to say, which is hard to suss out when your only clue is a short text about which all you know is that it probably does not express what the drafter is trying to say.
4/ I like ‘is silent on’. It’s simple and direct. Purge verbiage.
5/ It’s easy to imagine parties declining to negotiate governing law and just letting the judge know the parties left it up to her to discern the governing law. Like ‘this page intentionally blank’, it’s a courtesy to readers.