An Efficient Way to Link Statements of Fact to Termination Provisions

In recent consulting projects I’ve found myself revising client contracts that address issues as both statements of fact and grounds for termination, as in this made-up example:

Widgetco states that the Widgets are in good working condition.

Acme may terminate this agreement if the Widgets are not in good working condition.

My book The Structure of M&A Contracts (here) discusses how to make statements of fact and obligations in an M&A contract flow efficiently through the rest of the contract. Inspired by that, I’ve found myself experimenting with the following sort of provision as an alternative to saying the same things twice in commercial contracts:

If one or more of the following occurs, Alpha may by notice to Baker terminate this agreement, with termination occurring ten days after Baker receives that notice:

a statement of fact made by Baker in this agreement could not be made again on any date after the date of this agreement without being materially inaccurate[, except that if Baker is capable of remedying the circumstances causing a statement of fact to be materially inaccurate, then Alpha shall not terminate this agreement in accordance with this clause X unless Alpha notifies Baker of those circumstances and Baker fails to remedy those circumstances no later than 10 days after Apha so notifies Baker]; …

What do you think?

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.