Revisiting Alternatives to Imposing Obligations on Nonparties

[Updated 5:30 p.m. EDT, May 15, 2012, to revise what is now the next-to-last bullet point and add a new final bullet point, as well as supplement the closing sentence.]

I find myself revisiting a favorite topic: stating in a contract how a nonparty is to act. (That something I explored most recently in this post about shall require.) Consider the following examples and the accompanying annotations:

  • Each Acme employee shall enter into a confidentiality agreement with Acme in the form of exhibit 2. [No: It doesn’t make sense to impose a duty on a nonparty.]
  • Each Acme employee will enter into … . [No: Using “will” suggests that this is language of policy, that each employee will automatically enter into a confidentiality agreement.]
  • Each Acme employee must enter into … . [An improvement, in that it states an obligation without imposing a duty. But implicitly the obligation is actually imposed on Acme—why not make it explicit? Oh wait—maybe this states a condition that Acme must satisfy. So there’s plenty of room for improvement.]
  • Acme shall cause each Acme employee to enter into … . [Unlike, say, wholly owned subsidiaries, individuals are possessed of free will and so can’t be instrumentalities of others, so this doesn’t make sense. Acme can’t make employees enter into a confidentiality agreement. Instead, all it can do is ask them to and fire them if they refuse to.]
  • Acme shall require each Acme employee to enter into … . [Aside from exhibiting the same shortcoming as “shall cause,” this is unclear, as it could be read as suggesting that Acme has a duty to impose on each Acme employee a duty to enter into a confidentiality agreement.]
  • Acme shall ensure that each Acme employee enters into … . [Aside from exhibiting the same shortcoming as “shall cause,” this is too genteel, and not specific enough.]
  • Acme shall enter into a confidentiality agreement in the form of exhibit 2 with each of its current employees, unless any one or more current employees refuses, in which case Acme shall terminate those one or more current employees. Acme shall not hire as an employee any person who does not enter a confidentiality agreement with Acme in the form of exhibit 2 as a condition to becoming an Acme employee. [My initial version of this didn’t include the “unless” clause, but westmorlandia’s comment showed me the error of my ways: without the “unless” clause, imposing on Acme an obligation to enter into a confidentiality agreement with each employee is functionally identical to imposing on Acme an obligation to “shall cause” each employee to enter into an employment agreement. But this version is way too cumbersome.]
  • Acme represents that it has entered into a confidentiality agreement in the form of exhibit 2 with each of its current employees. Acme shall not hire as an employee any person who does not enter a confidentiality agreement with Acme in the form of exhibit 2 as a condition to becoming an Acme employee. [I think this is the most realistic option.]
I had intended with this post to show why it’s problematic to impose obligations on nonparties who are individuals, and I was more successful than I had planned, in that I ended up confusing myself!
.

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.