This post on ContractsProf Blog by Myanna Dellinger begins as follows:
If a recording artist enters into a personal services agreement with a record company that, among other things, contains a promise that the artist will “look solely to [a corporate version of the music band] for the payment of my fees and/or royalties … and will not assert any claim in this regard against [the record company],” has the artist then waived his/her right to sue under the contract if the band’s corporated [sic] version does not do so?
If you’re interested in the answer to that question, I leave you to read Myanna’s post. After some prodding by reader Vance Koven, I have a more general question: What’s up with look to?
I found the following examples on EDGAR:
After that time, the Noteholder of this Note can only look to the Issuer for payment on this Note.
… and such Subsidiary Guarantor has not been induced to enter into this Agreement on the basis of a contemplation, belief, understanding or agreement that any party other than the Borrower will be liable to perform the Guaranteed Obligations, or that the Finance Parties will look to any such other party to perform the Guaranteed Obligations; …
Tenant agrees to look to the provider of Tenant’s insurance for coverage for the loss of Tenant’s use of the Premises and any other related losses or damages incurred by Tenant during any reconstruction period.
… and such Holders shall thereafter be entitled to look to the Issuer only as general creditors for payment thereof (unless otherwise provided by law); …
The first thing thing to note about look to is that it’s oddly colloquial. I’m not a fan of terms of art when there’s a simpler alternative, but look to seems a bit too casual.
But you get to the bigger question when you look at look to from the perspective of the categories of contract language.
Consider Acme shall look to only Baker for payment on this note. It’s phrased as language of obligation, but obligation to do what? It couldn’t be considered an obligation to actually go after Baker; instead, what it really seeks to express is that Acme won’t go after Able, the party (or nonparty beneficiary) that benefits from this provision.
And besides, it’s not as if Able would care if Acme goes after Charlie or Delta for payment of the note, so in that respect the only Baker part doesn’t make sense.
So I would say instead, Able will not be liable for payment on this note. That approach can be applied to all instances of look to: instead of saying X will go after Y, say X won’t go after Z.
You could say Acme shall not look to Able for payment on this note, but again, look to is too colloquial.
What do you think?
‘Look to’ means ‘make a claim against’.
It would be unusual to have a contractual duty to make claim against someone: ‘Acme shall make a claim against only Baker on the note’. That version doesn’t say what it wants to say. (Thanks to Vance Koven for that felicitous anthropomorphism.)
More common would be a prohibition against making a claim (‘Acme shall make no claim against Abel on the note’) or, what amounts to the same thing, a provision that no duty exists (‘Abel has no liability to Acme on the note’).
A drafter can reach the goal with an active or passive approach.
Active: ‘Acme shall not make a claim against [=look to] Abel for payment of the note’.
Passive: ‘Abel shall not be liable [=answerable, bound] to Acme for payment of the note’.
I think it’s a toss-up between the active and passive versions. Maybe the tie-breaker is ‘When in doubt, use the active voice’?
I confess that within the active version, ‘look to’ has more appeal to me than ‘make a claim against’, but the preference is mild.
This isn’t language of obligation, right, so: “Abel will not be liable to Acme for payment of the note.”
I definitely prefer the active version and I think “shall not make a claim” is clearer in meaning for anyone not used to seeing “look to.”
I don’t like Acme shall not make a claim against Able, as it leaves open the possibility that a basis for a claim might exist. As such, it’s comparable to no-dispute provisions: https://www.adamsdrafting.com/the-pros-and-cons-of-no-dispute-provisions/.
Good catch on ‘shall’; I fixed it. Ken says ‘shall not make a claim’ implies that a basis for a claim might exist, so maybe ‘has no claim’ is better than ‘shall not make a claim’. But Ken’s ‘Able will not be liable for payment on this note’ keeps looking better the more I think about it. Category? Perhaps language of discretion, like ‘is not required to’ pay anything on this note.
This has nothing to do with the active and passive voice.
You are of course right that ‘active’ and ‘passive’ don’t apply literally, but by loose analogy the drafter must choose between expressing the ‘shall not look to Able’ idea either as Acme’s (‘active’) duty not to seek payment from Able, or Able’s (‘passive’) lack of duty to pay.
I fixed the ‘shall’ goof. *Cringing with embarrassment*
Ken:
I dislike the idea of naming the possible target of a claim, as in your version, “Acme will not be liable …” What about Acme’s officers, directors, employees, shareholders, joint venturers, brokers, sales agents, blah, blah, blah? The benefit of the grammatical structure of “look to” is that is says who the only liable party is.
I’m not sure how to turn this into language that passes the various MSCD tests. Maybe “No one but Able will be liable to Baker under (or in relation to) this agreement”? And then you could make that mutual somehow, maybe “Each party will be the only person liable to the other party under (or in relation to) this agreement”? That’s not quite as strong as the unilateral version.
And I’d still like something that uses the word “waives,” like “Each party waives any right to assert any claim under (or in relation to) this agreement against anyone but the other party.” I’m not sure that does the trick, though. Because what I really want is a waiver of the claim itself, not the right to assert it. So maybe “Each party waives all claims under (or in relation to) this agreement except claims against the other party.”
Chris
I have no problem adding something about affiliates, employees, etc. That’s standard in different contexts. The result would be something that’s precisely tailored.
Again, we don’t care who Acme goes after, as long as it isn’t Able.
As regards waiving any claims, I think it’s more economical to eliminate the possibility of any claims.