Recently I saw this tweet by @strowhiro:
Contracts with a defined terms section AND other terms defined throughout: fine or sloppy?
— Michelle Strowhiro (@strowhiro) October 19, 2022
It’s a great question, but I thought that the odds of getting clear answer on Twitter were slim, even with 164 people taking a shot at it.
To my knowledge, only two people have written about this in any detail. One is Howard Darmstadter, in his book Hereof, Thereof, and Everywhereof: A Contrarian Guide to Legal Drafting. The other is me. (I cheerfully admit that I owe a debt to Howard for getting me to think about this.) Howard is spending his time on other stuff these days, so I wouldn’t have expected him to offer an answer. And I wasn’t inclined to distill into a few tweets what occupies a couple of pages of A Manual of Style for Contract Drafting.
I said as much in a reply to Michelle’s tweet, but I decided that seemed a little churlish. Generally, anything I address in MSCD makes some sort of an appearance on my blog, but that’s not the case with this issue. So in a tweet, I told Michelle that I’d post on this blog the relevant pages of MSCD. Hence this post: you can find those pages here.
Mind you, I was wrong about Twitter not offering a clear answer. For example, the following tweet from @amess captures my position quite nicely. I was just being lazy!
The punchline is in MSCD 6.94 — general terms and defined terms where the meaning is generally known (but may vary from deal to deal) in the definition section. Unique terms in the text.
The MSCD is well-worth the cost, FWIW.
— Aaron Messing 🇺🇦 (@amess) October 20, 2022
(Given that Elon Musk just acquired Twitter, let’s see whether tweet-heavy posts become a thing of the past.)
6 thoughts on “Putting Definitions in a Definition Section Versus Putting Them “On Site””
Yes, that tweet is exactly what I would say. My take would be 1) avoid defining a term if you can manage; and otherwise 2) put the term in the local section if it’s only used in that section; or 3) put it in the definitions section. I’ve gone back and forth on whether to include a “directory” of defined terms in the definitions section (e.g., “MacGuffin” is defined in section 2.3), but ultimately decided that it’s a bit much, and isn’t necessary if you’re following rules 2 and 3.
I’m also a fan of putting the definitions section in an appendix at the *back* of the agreement. This makes it easier to separate the definitions for reference when you’re reviewing the document. And I dislike having to flip through several pages of definitions at the start of the agreement before I even know what the agreement is about.
Similar to my practice. I define terms that are only used in one section within that section itself. If used more broadly, they go in the definitions section. If the definition is complex and relates to the provisions of one section, I may include a cross-reference definition in the definitions section.
My personal preference is NOT to put definitions in an appendix. I have seen too many contracts where common words are used as defined terms with very uncommon meanings. I like to scan the definitions up front to know whether I can read the rest of the text with a general level of confidence in my understanding.
Wholeheartedly agree. Early experience reviewing (literally) hundreds, if not thousands of recording and music publishing agreements in connection with corporate acquisitions taught me much about the importance of layout from the point of view of the reviewer, and drafted my own agreements with that in mind. One result is that the first numbered section is simply a statement that the definitions of capitalized terms used in the agreement are to be found in the first Schedule, incorporated by reference. I remain astonished that the convenience of the reader clearly carries so little weight in the minds of many off those drafting agreements.
Hi Chris. I confess I don’t use that sort of first section: I want to have at the top of the body of the contract that which is most compelling. In business contracts, I think it’s fair to assume that the reader can figure out for themselves whether there’s a definition section towards the back. (In a longer contract, you can make that clear with an index of definitions.) Ken
Hi Ken. Anomalous that you should think of definitions as not compelling. I think of a contract as a narrative, and introducing them as a prelude akin to informing the reader as to the language of your narrative. However, inasmuch as I do not want to burden the reader with memorization of the definitions, or compel her to keep going back and forth, I like to contemplate the possibility of being able to rip out that first Schedule and keeping it with one while reading the body of the text. (I suppose “ripping out” dates me, but “extract pages” in Adobespeak is also a concept.
By the way, referring to the definitions as those used throughout the agreement retains the possibility of definitions unique to a section being included in that section.
I have a different take. I’ve kicked it around for 18 years, and I’m comfortable with it. But it’s a matter of notions of efficiency rather than right or wrong.