Wearing my LegalSifter hat, today I researched how contracts refer to inspection of goods. In doing so, I encountered the following in this Yara purchase order (selected at random):
All Goods may be inspected by the Purchaser within a reasonable time after delivery to the location required by the Purchaser. If on inspection, any Goods are found to be unsatisfactory, defective, or inferior quality or workmanship or fail to meet any specifications or other requirements of this Purchase Order, the Purchaser may return the Goods to the Supplier at the Supplier’s sole risk and expense.
The first sentence doesn’t make sense. For one thing, no one needs to be granted discretion to inspect goods—you’re free to inspect goods whenever you wish. Furthermore, the first sentence suggests that if you inspect outside of a reasonable time after delivery, you’d be in breach. That doesn’t make sense—the seller wouldn’t be harmed.
Instead, the timing of inspection makes sense if you’re expressing a condition: if you don’t inspect within a designated period, you’re deemed to have accepted the goods. The second sentence is the place to express that, as it begins with a conditional clause (If on inspection).
So here’s how I’d revise the second sentence (although life’s too short for me to address other drafting issues):
All Goods may be inspected by the Purchaser within a reasonable time after delivery to the location required by the Purchaser.If on inspection by the Purchaser within a reasonable time after delivery any Goods are found to be unsatisfactory, defective, or inferior quality or workmanship or fail to meet any specifications or other requirements of this Purchase Order, the Purchaser may return the Goods to the Supplier at the Supplier’s sole risk and expense.
I omitted to the location required by the Purchaser, as that should be addressed only in an obligation of the buyer.
This just serves as yet another reminder that understanding the categories of contract language is invaluable for telling the story in a contract in a way that makes sense. If you’re new to the categories of contract language, start here.
(Oh, and the next series of my online course Drafting Clearer Contracts: Masterclass starts at 11 am Eastern Time on Thursday, 5 August. For more information, go here.)
1 thought on “Managing the Categories of Contract Language So You Tell the Story Concisely: An Example”
These may be other issues life is too short to address:
1/ Get rid of the conditional form and express the provision as a straight supplier’s obligation along these lines:
‘The Supplier shall bear the sole risk and expense of the Purchaser’s return to the Supplier of any Goods that the Purchaser reasonably finds, on inspection within a reasonable time after delivery, to be unsatisfactory, defective, of inferior quality or workmanship, or noncompliant with any requirement of this Purchase Order’.
2/ That revision makes one substantive change: it eliminates the passive construction by which the Goods ‘are found’ to be bad and identifies the by-agent as the Purchaser and makes explicit (needlessly?) that the Purchaser’s ‘finding’ of badness must be reasonable for the Supplier’s duty to arise.
3/ The provision under review is silent as to credit for the returned goods and deals with only the cost and risk of return. I assume other relief for bad goods is elsewhere in the contract.
4/ The original form of the provision exhibits a common fault that I think falls under ‘redundancy’ in the broad sense of ‘unnecessary fullness of expression’ (the sense that goes beyond mere repetition).
5/ In this faulty approach, a standard is set (‘Acme shall ship red widgets’) and a second provision provides what happens if the standard is not met (‘If Acme ships non-red widgets, Acme shall promptly replace them with red-widgets’).
6/ A conciser approach would be to skip words of conditionality and get right to the fact pattern that would make the remedial duty arise (‘Acme shall ship all red widgets. Acme shall promptly replace with red widgets any non-red widgets it ships’).
7/ That conciser approach may be ‘burying the conditions’, but doing so is still better than leading the reader through an ‘if/then’ syllogism without sufficient reason. –Wright