I regret to report the sudden and unexpected demise of one of the categories of contract language, namely language of belief.
Well, I don’t really regret it. In fact, I’m relieved. Language of belief was a scrawny, frail creature who stood around not doing much of anything other than picking its nose, gazing into space, and getting in the way of the other categories. And the name was unfortunate—it suggested some sort of faith-based drafting initiative.
It happened in Vancouver on 27 April, during my “advanced” seminar for Osgoode Professional Development on the categories of contract language. I think of it as a mercy killing. The person responsible was Gillian Muirhead, of the law firm Lawson Lundell. It was quick and clinical.
By way of background, MSCD devotes a grand total of three paragraphs to language of belief. Here they are:
It doesn’t make sense to state categorically in a contract the legal implications of facts as they exist on the date of the agreement. Instead, it would be up to a court to decide what those implications are—the best a party could do is give its opinion. In such contexts, it’s preferable to use language of belief, as in [14-1], rather than language of policy, as in [14-1a].
But it’s routine for drafters to present legal opinions as statements of fact. Examples include statements regarding topics also covered by standard legal opinions delivered at closing—formation, existence, enforceability of obligations, no violations of law, and other matters.
Instead of asserting facts within the knowledge of the party making the statement, such statements serve to allocate risk. Although in many cases it would go against long-established convention, it would be clearer, but not necessarily more convenient, to use instead language of belief, supplemented by provisions addressing indemnification, termination fees, or some other risk-allocation mechanism.
Here’s example [14-1]: The parties believe that this agreement complies with the requirements of section 409A of the IRS Code.
And here’s example [14-1a]: This agreement complies with the requirements of section 409A of the IRS Code.
What Gillian said fatally undermined this puny edifice. It was along the following lines: “Language of belief doesn’t accomplish much. If whatever language of belief addresses doesn’t comply with law, using instead a statement of fact (saying that whatever it is complies with law) would offer a remedy and would allow the other party to elect not to close the deal. By contrast, language of belief gives the other side nothing, unless you can establish that the party in question didn’t in fact believe that whatever it is complied with law—an unlikely notion. So in the absence of a statement of fact, you should make compliance a condition to closing. And you can make noncompliance a basis for indemnification. Who cares about language of belief.”
With language of belief cut down to size in that manner, the other shoe dropped: I realized that language of belief is really just another statement of fact, except that example [14-1] doesn’t make sense, in that parties to a contract wouldn’t make joint statements of fact—it should simply read Acme believes that. (Presumably you could say The parties believe in a set of recitals, if you have the urge.) You would preface it in some manner with Acme states, the MSCD verb for introducing statements of fact.
After all, Acme believes that is analogous to using a knowledge qualifier in a statement of fact, and I’m not inclined to add “language of knowledge” to the categories of contract language.
Does it make sense to say Acme believes? Well, conceivably it would allow Acme to limit its exposure while giving the other side some comfort. But I couldn’t say how often it’s used, and I’m not inclined to start looking into it.
My creating language of belief was a mistake without consequence. Yes, it exists, but it’s not a separate category. Instead, it’s a way to phrase statements of fact, one of uncertain relevance. That makes it a feature of language of declaration, which is the category into which statements of fact fall.
So good-bye and good riddance to language of belief. I’m not fond of getting stuff wrong. And I’m not fond of looking a bit dopey in front of seminar participants. But a lot of my ideas are novel. With the help of my readers and seminar participants, I test my ideas, making such adjustments as are necessary. Every so often, I throw something on the scrapheap. Language of belief is just the most recent example. It lasted as long as it did because it’s a backwater of my own making.
My thanks to Gillian. Getting the chance to bat ideas around with smart seminar participants like her helps me do better work.