In this November 2011 post I introduced language of intention. It makes sense to use language of intention to articulate those aspects of a contract relationship that are subject to judicial scrutiny, meaning that the parties cannot establish them definitively in the contract.
For the heck of it, here’s another example of language of intention, namely the basic version of Koncision’s severability provision (discussed in this February 2011 post), retooled to turn it into language of intention:
Any reservations about using language of intention in this context?
Added November 12, 2012: By the way, I’m not endorsing standard severability provisions. The idea of accepting that part of the deal could be lopped off is problematic, in that it could conceivably result in a party’s getting a raw deal. My more complete severability provision, included in the post linked to above, tries to address that as follows:
But if modifying or disregarding the unenforceable provision would result in failure of an essential purpose of this agreement, the entire agreement is to be held unenforceable. The parties acknowledge that enforcement of section Y as written is an essential purpose of this agreement.
That reduces the risk of a severability provision having unexpected consequences.
Looking at this example, I wonder whether intend is a strong enough word. Letters of intent are used to state non-binding intentions, and I am used to statements of intent being non-binding. Sometimes the phrase “present intention” is used to emphasise the point that intentions ca change overnight.
Is this example more of a request to the court to interpret and adjust the clause to give effect to an intention?
Mark: Yes, it’s exactly that. Ken
Ken:
I share some of Mark’s concern. I can see an argument made by a good lawyer for a desperate client that the language was “just an expression of intention, not legally binding.” It’s not a very good argument, because you presumably would not put airy-fairy wishing into a clearly binding agreement.
Still, it struck me ad oddly as it appears to have struck Mark.
Chris
A few comments:
1/ If language of intention is aimed at a court, it might be well to say so, and avoid the coy passive voice.
2/ A request to the court to rewrite the contract might fail on the ground that courts don’t rewrite parties’ contracts. (For example, Connecticut courts won’t “blue pencil” overbroad noncompetition agreements.) To get around this, a severability clause should state the parties’ conditional intention, so the court isn’t rewriting, but just interpreting.
3/ I can’t give chapter and verse, but doesn’t the UCC have a provision by which a court (under certain circumstances) can fill in a missing provision in a contract in a reasonable way to save the whole contract from failure? If so, the letter or spirit of that provision might inform a severability clause.
4/ Would a party be able to appeal from a judicial modification of an otherwise unenforceable provision on the ground that a more minimal change to achieve enforceability would have been possible?
5/ There seems to be an internal contradiction between (a) a change to make a provision enforceable and (b) that change not being permitted by law. If a change is not permitted by law, then by definition it doesn’t make the provision enforceable.
6/ All that said, here’s my stab at it:
7/ “If one or more provisions of this agreement are unenforceable as written, then any tribunal interpreting this agreement should interpret each such provision as if it contained the smallest reasonable changes that would make it enforceable. If no reasonable change would make it enforceable, then the tribunal should interpret the agreement as if it did not contain the provision, unless it would be unreasonable to do so.”
8/ This version tries to downplay judicial rewriting, but what if there are two different ways to make the provision enforceable, both reasonable? How is the court to chose between them?
9/ My version also smuggles in something absent from the original, namely, that if changing or ignoring the unenforceable provision defeats the essence of the contract, the court should give up and declare the whole contract unenforceable. I think that’s preferable to insisting that the contract be enforced without the unenforceable provision, no matter what, for the reason stated in the next paragraph.
10/ What if the contract says that the payment for goods and services is ten pounds of gold, and the court finds gold payment clauses unenforceable and the policy of the jurisdiction is not to rewrite parties’ contracts, so the court will enforce the contract without the payment clause, as directed by the severability clause? The buyer gets free goods and services. Better to require the court to find that ignoring the unenforceable provision defeats the essence of the contract and voids it.
AWB: My thoughts on your numbered comments:
1. I used the passive voice to avoid having to address that it might be a court or an arbitrator who decides that a provision is unenforceable.
2. My language takes into account that some jurisdictions won’t rewrite unenforceable provisions.
3. Dunno.
4. I don’t think so. The parties propose but the court disposes.
5. See point 2.
6. N/A
7. I’m not crazy about “should,” as I’m not sure it’s helpful to have the parties handing out instructions to a court.
8. The court will do what it wants.
9. This concept is included as an option in my original severability language: http://www.koncision.com/feast-your-eyes-on-koncisions-new-severability-provision/.
10. See point 9. I’d be surprised if a court were to interpret the contract in the manner you suggest. Do you know of any relevant caselaw?
Ken