“Procurement” is a standard business term. I refers to a company’s acquisition of goods or services, and the department that handles such matters is commonly referred to simply as “Procurement.”
But the verb procure is a slightly different matter. It’s a formal word for get. As noted in Garner’s Dictionary of Legal Usage, it’s even more formal than obtain. I suspect that guys in Procurement rarely use procure.
Of course, your average drafter isn’t put off by formality, so you see procure quite a lot in contracts. It occurs in 1,853 contracts filed on the SEC’s Edgar system in the past six months.
But in addition to use of procure to mean “get,” those contracts reflect another use of the word, and it’s that usage that I’m interested in. It’s procure followed by a that-clause or by an abstract noun, with procure meaning “cause.”
Drafters from Commonwealth countries are fond of this use of procure. (My brief search on Edgar found it only in contracts relating to operations outside the U.S.)
In particular, this use of procure occurs frequently in the publicly available Australian contracts that I’ve been reviewing in advance of my upcoming seminars in Australia. Here are examples of procure plus that-clause drawn from one of those Australian contracts (emphasis added):
The parties agree to use all reasonable endeavours to procure that New Lion will perform its obligations under the Lion Scheme and the AuSelect Scheme upon and subject to the terms of this document.
The parties will procure that … New Lion will provide the AuSelect Scheme Consideration to each AuSelect Scheme Participant on the Implementation Date in accordance with the requirements of this agreement, the AuSelect Scheme and the New Lion Deed Poll.
The parties must procure that New Lion appoints Ernst & Young as its company auditor on or before Implementation.
And here are some examples of procure plus abstract noun from another Australian contract (emphasis added):
CPPIB will pay (or procure the payment of) 70% of the Investor Monitoring Costs …
… CPPIB will use its best endeavours to procure the provision to the relevant proposed transferees of additional information specific to … .
The Company will … procure the preparation by the Service Provider … of a valuation in accordance with this clause 12.5 … .
I find nothing to recommend either variant of this usage, as it appears archaic and bears no resemblance to use of procure in standard English, even a stuffy version of standard English. I suggest that using instead cause would represent a big improvement.
And don’t use cause with an abstract noun, unless you have an urge to sound bureaucratic. Use it instead with a verb, so as to convey the same meaning more clearly and succinctly.
“Ensure” is a more modern word that does the job and is familiar in US contracts.
Mark: I’m not comfortable with ensure.
Saying ensure is the same as saying assure, which suggests suretyship, which suggests that ensure is equivalent to guarantee.
By contrast, I’d only ever use cause if the action in question is to be taken by an instrumentality (most obviously, a subsidiary) of the party in question. That’s a narrower concept.
Ken
I have to say I agree with Mark about ‘ensure’ as a better alternative.
If ‘procure’ is taken to mean ‘will cause something to be done’ (rather than ‘will use best efforts’ as mentioned in a comment above), then ensure fits that purpose exactly and is more easily understood. I don’t know that it goes further than ‘procure’ to suggest guarantee.
As an Australian drafter with a habitual fondness for “shall procure”, I take your point. “Shall cause” is less archaic and is, on that basis, a preferable alternative.
Without meaning to go over old ground, I’m more comfortable than you are with applying this wording to circumstances in which the person assuming the obligation does not control the person required to take the action or achieve the result (“impossible obligations” as you call them in this blog post:http://www.koncision.com/a-taxonomy-of-impossible-obligations/). To my mind, “shall cause” is an acceptable short-hand way of addressing risk allocation that avoids the arguments that would flow from addressing that allocation through an indemnity or guarantee. Nevertheless, having taken your views on board, I’m trying to favour wording that involves X assuming the risk of something not occuring rather than X assuming an impossible obligation to cause that thing to occur.
Adrian: Thank you for reminding me about that blog post! I knew I’d written something about shall cause but couldn’t remember where. #lame. Ken
On an unrelated note, and leaving the fustiness issues aside, I see that two of the examples you quote above state “The parties [will/must] procure that…”. This seems problematic – if the relevant thing is not procured, who is liable to whom?
It makes some sense to have all parties subject to the same reasonable endeavours provision, but surely not to an absolute obligation?
I also recently read some Australia prepared contracts and was perplexed by the use of “procure”. I have been reading Canadian contracts for 25 years and do not remember ever seeing this used in Canada – so Canada is one Commonwealth country that you can scratch off the list as a user of this term.
When reading these contracts I was particularly concerned that the Australian legal definition of the term might provide some wiggle room such that someone tasked with “procuring” and who did their best (but ultimately did not achieve what was required to be procured) might not trigger a breach. I believe I recall one contract drafted by a large respected firm that included a defined term for “Procure” that effectively turned the meaning into a “shall make best efforts to” which given its prevalent use in the contract really hollowed out a bunch of the covenants that used “Procure”.
As an Australian drafter I can see a distinction between “procure” and “cause”, and wouldn’t necessarily see “cause” as an acceptable alternative. “Cause” suggests that the party undertaking the obligation can directly create the outcome. “Procure” is more often used when the party undertaking the obligation can’t directly create the outcome but can use its influence or control to bring about the outcome. So a party can “cause” its own asset to be sold, but will use its voting power and influence to “procure” that its subsidiary sells assets which the subsidiary owns. I realise that’s a subtle distinction, but hopefully it expains how “procure” is commonly used in Australia. The extent to which a party must procure something (ie. by using best endeavours, etc), is a seperate question and is usually heavily negotiated – to the considerable frustration of the non-lawyers in the deal.
Robert: So procure is an efforts standard? But it’s not clear exactly what that standard is? That sounds like a mess; how can you expect readers to make sense of it?
Note that commenter Adrian is comfortable with cause as an alternative to procure. That suggests that the word indeed has no clear meaning.
Ken
I have been a bit disturbed by the occasional “procure that A does X” wording myself. I have had an English client insist on it once though, FWIW. I also vote for “cause” myself.
The only instance I can imagine in which procure might look sensible is one where there is something that actually needs to be procured (from a subsidiary, etc., as you say), such as a consent letter or affidavit. This can also be reworded with “cause” (or “obtain”, for that matter), but “procure” in this case seems perfectly clear on where the obligation lies: anything short of getting the consent letter is a breach.
I’ve also seen it used in the sense of a contract party having to “procure” a particular promise from a third party, but as you say the obligations here are usually very vague. One might reasonably assume that the obligation is met once the 3rd party promise is procured (whether kept or not), but to whom does the promise need to be made? Who is liable to whom if broken?
Thanks, makes sense.
I’m reading a contract that repeatedly uses the term “will procure that” e.g. “A will procure that transactions are processed within 10 days”; B will procure that enquiries are actioned within 3 business days”. The use of “proure that” makes no sense in this context. “Ensure” is so much simpler and direct. If something really has to be procured then the contract should state “A will procure an undertaking/assurance that transactions are processed…”.
Read about “ensure” in MSCD or on this blog. It’s not a good option. As is often the case, the key is determining the appropriate category of contract language.