Unless you’re unlucky enough to be riding the copy-and-paste train, contract drafting involves making choices. Lots of them. When I redo a company’s template, it can feel like I’m in a slow-motion version of a first-shooter video game, facing in not-so-quick succession an endless barrage of decisions.
I addressed just one such decision in a recent tweet:
Anyone want to give me one good reason why I should say "promises to pay" in a promissory note instead of "shall pay"?
— Ken Adams (@AdamsDrafting) April 13, 2019
The thinking behind it is straightforward: I want to use the same verb structures to express the same meanings, instead of randomly opting for a different verb structure in a given context. (For my “quick reference” chart of the categories of contract language, go here.)
My tweet prompted this exchange:
UCC 3-104(a)
— Josh Reif ن (@joshreif) April 13, 2019
But if you use the word “promise,” there’s no question. Why risk it?
— Josh Reif ن (@joshreif) April 13, 2019
Tell that to my clients, their investors, and the ratings agencies. It’ll be music to their ears.
— Josh Reif ن (@joshreif) April 14, 2019
It also prompted this exchange, featuring longtime reader @rickcolosimo in a supporting role:
UCC 3-106 “promise or order”
— Jim Erlinger (@JimErlinger) April 13, 2019
Agree, but if you use the word, eliminate any doubt
— Jim Erlinger (@JimErlinger) April 17, 2019
But using shall pay instead of promises to pay poses no risk (subject to my note in the final paragraph of this post). I can’t explain that any better than Rick did in his tweet. Instead, sticking with traditional usages is generally a function of lawyers looking for protective cover. That’s an ingrained reflex among traditionalists: Parrot the language of the statute. Parrot “tested” contract language. Parrot whatever usages are favored by the herd.
If use of promises to pay in promissory notes were the only issue, we’d all shrug our shoulders and move on. But it’s never just one usage. Instead, it’s invariably the case that if you accept one suboptimal usage because it’s somehow an accepted choice, you will be similarly forgiving of other dysfunction. Surrender in one battle and you’ve likely already lost the war.
That’s a heavy price to pay, because there’s no shortage of dysfunction. As a result of generations of copy-and-pasting, there’s a disconnect between what’s in contracts and what people think is in contracts. Traditional contract drafting is chock full of archaisms, redundancies, bollixed verb structures, misconceptions, and other shortcomings. So people waste vast amounts of time and money wading through bloated and confusing contracts, and they suffer the consequences of disputes that flare up when they realize that because of the confusion they don’t have what they thought they had under a contract.
Because I’ve spent more than 20 years doggedly researching and writing about contract usages, I know that by rejecting dysfunction wherever you see it you create contracts that are way clearer and significantly shorter, so you save time and money and reduce the risk of dispute.
Note that I don’t pretend that following my recommendations will eliminate risk. Contract interpretation is a human activity, and as such contract parties and judges are prone to spasms of unreason. But if you draft for unreason, you have chaos. If we can’t draft for a reasonable reader and assume that that will result in a favorable outcome far more often than it results in an unfavorable outcome, we might as well give up on rational contracting. But that’s not happening: if anything, I’m optimistic about where things are headed.
