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.
If you’ll forgive the reference from children’s literature, I think a quote from C.S. Lewis in The Chronicles of Narnia is especially instructive in the whole discussion of why the MSCD is not followed more regularly: “One of the most cowardly things ordinary people do is to shut their eyes to facts.”
I am not saying that the difference between “promises to pay” and “shall pay” is life-shattering. I don’t think Ken is either. There are definitely bigger battles to fight and we’re often just ordinary cogs in a rather unforgiving machine. But small cowardices, taken in the aggregate, often limit us much more than the battles we are eager to fight.
I know I’m an idealist. I know I’m taking a black and white position in a world of gray. But as far as I can see, any lawyer who offers “Why risk it?” as justification for not trying to improve something is simply shutting their eyes to the facts.
Eloquent! Thank you.
I look at the decision from a view point of expectation. If I say “promise to pay” then there is a hope or a plan that the debtor will pay. If I say “shall pay”, the the debtor has a duty to pay.
Viewed from the debtor’s point of view, I think for the most part the debtor has every intention to make good on the promise. But viewed from the creditor’s standpoint, is there the same expectation based on the words? I would think that from a creditor standpoint, having a duty to pay is far more comforting than a promise.
Given that at the heart of every contract dispute is a failure of expectations, why not manage everyone’s expectations?
That’s some misbegotten hair-splitting …
I have found that the most basic legal concepts are at “jurisdiction, jurisdiction” which is like “location, location” in the real estate industry and “concise” never fails.