New NYLJ Article on Materiality

Today’s issue of the New York Law Journal contains my article Revisiting Materiality. Click here for a pdf reprint; it’s also available on the GC New York website (free registration required).

This article discusses how the word material—that favorite of deal lawyers—is ambiguous, and it suggests ways of addressing this problem. This is a topic that I’ve previously danced around, but to my knowledge no one else is aware that it’s an issue.

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.

4 thoughts on “New NYLJ Article on Materiality”

  1. Ken: I have long struggled with the phrases material and material adverse change in contracts and I applaud your efforts on this subject as published in the NYLJ.

    However, the double-negative in your proposed representation “Acme’s books and records contain no-non-trivial inaccuracies” is distracting and difficult to unwind.

    Per your blog post of February 26, 2007 in which you state that “I know no way around the double negative” and in which you inivite “improvements on my language” I propose a change in your analysis.

    Rather than indicating the lower level of significance by the term “Non-Trivial” and thereby backing into double-negatives, I suggest using the term “Significant.” You can simply define it as a level of significance that is not trivial but is a lesser level of significance than Material.


  2. Steve: I think you’re right; let me chew on it a while. This is the sort of input I was hoping for before I put these ideas in book form. Ken

  3. The SEC and PCAOB recently defined the term “significant deficiency” in relation to internal controls. “The term significant deficiency means a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the registrant’s financial reporting.”

  4. HD: Thank you. That makes it even easier for me to go with “Significant” and “Insignificant” rather than “Non-trivial” and “Trivial.” Ken


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