Revisiting the Layout of Australian Contracts

In this December 2011 post I considered document-design “bling” in Australian contracts. I’d now like to consider another issue relating to the look of Australian contracts: use of tabulated enumerated clauses.

Consider the screenshot to the right (click on it to see it full-size). I think it’s a compact but otherwise representative example of how Australian drafters like to break up contract text.

In MSCD chapter 3 I suggest that determining whether to tabulate a given set of enumerated clauses is a function of how many clauses are in the set and how long they are. If they’re relatively dense, breaking them out can make them easier to read.

But the sample contracts I’ve looked at suggest that Australian drafters routinely tabulate enumerated clauses regardless of how many clauses are in a set and how short they are. I find that tabulating even short enumerated clauses can make them harder to read, as it chops prose into unhelpfully short chunks. It also wastes space.

I also recommend in MSCD that in the interest of readability you use a full independent clause to introduce a set of enumerated clauses, a task often facilitated by working in the words the following. But in the sample Australian contracts I looked at, the drafters didn’t concern themselves about that, cutting off the introductory text any old where. That has two consequences. First, it breaks up the reading flow. And second, it encourages overuse of tabulated enumerated clauses. Rather than saying Acme shall: … (1) … ; … and (5) … , you’d likely be better off with a different structure, perhaps separate sentences without enumeration.

The extract included in this post exhibits these two characteristics. I don’t know that I’d bother tabulating the first set of enumerated clauses. And I find very awkward use of Interest as the only introductory text for the second set of tabulated enumerated clauses.

Overuse of tabulated enumerated clauses and use of unduly truncated introductory text can turn contract prose into something like the instructions that accompany an Ikea bookcase. That approach works when your information is best digested in bite-size morsels. I think that contracts are sufficiently complex that breaking them down into shopping-list-size components is counterproductive.

My approach is on display in this sample extract of a contract generated using Koncision’s confidentiality-agreement template. Would readability be enhanced by breaking up one or two of the blocks of text in that extract? Perhaps. But regardless, that extract represents a very different approach from that on display in the Australian contracts I’ve reviewed.

But I’m acutely aware that when it comes to document design, your habits can interfere with the perspective required to make general recommendations. I welcome your input.

By the way, the inefficient use of space in the Australian contracts I’ve looked at is aggravated by use of only hanging indents rather than a mix of first-line indents (for sections and subsections) and hanging indents (for tabulated enumerated clauses), as in the MSCD enumeration scheme.

[Update: Overzealous use of subsections is another way to break up contract text more than is helpful. The subsections in the extract in this post are slight, and you’ll see from my exchange with Mark Anderson in the comments that at least one of them could be whittled down further. I suspect that if I were to redraft this contract, I’d consolidate many of the subsections.]

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.

11 thoughts on “Revisiting the Layout of Australian Contracts”

  1. This style is very familiar to an English lawyer.  In general, my preference is to do more tabulating than occurs in many US contracts.which I find are often large blocks of indigestible text.  However, I agree that it can be taken too far, and I share your dislike for paragraphs hanging off a single word, so I probably wouldn’t have drafted paragraph (c)(i) like that, but instead would have put the text of (i) into (c) and converted (c)(ii) [assuming there is one] into (d).

    I am uneasy about (a)(i) and (ii) but for a different reason to you.  I find the cross-referral between (a)(i) and (b) rather clumsy (but familiar as a technique that can sometimes aid clarity).  Given that the drafter is using lots of defined terms in this wording, so that it is necessary to cross-refer to other clauses, my preference would be to keep (a) fairly simple and fold the nuances of the obligations into the defined terms, eg:

    (a) …the Borrower must pay Interest to the Lender on each Advance on or before each Interest Payment Date.

    • Mark: I agree that the cross-reference is clumsy; I think that clause (i) is unnecessary. I saw a lot of this sort of inefficiency in the Australian contracts I reviewed.

      I’d be wary of shunting complexity to the definitions. I saw a lot of that in the Australian contracts too. It can result in provisions with a deceiving straightforwardness that is belied by thickets of defined terms and bloated definitions.


  2. Ken:

    We disagree over numbering schemes, but I agree with your critique of the Australian version.

    To my mind, the standard MSCD numbering scheme hides the numbers too much. In your example PDF, I run my eyes down the left margin and I see section 1, then I see subsection (b). Now I’m confused. Where did subsection (a) go? Oh, there it is stuck in section 1. And if you are using white space to separate sections, there’s really no need to first-line indent the sections. It communicates no more information than leaving it unindented.

    My standard is section numbers like 4, then subsection numbers like 4.1, both left-aligned and ideally both as nothing more than a title with text to follow. For enumerated clauses, I also use hanging indents, but I generally limit myself to two levels of enumeration: (a) and (1). If I find the need to have more levels that this, it is usually because I’m doing a bad job of writing it and I need to flatten my organizational structure.

    (Often the cause is that I have a mental model of levels of detail. This thing is like that thing in its level of generality or detail. It’s OK not to be consistent on that. For example, one could say that, in a normal commercial deal, “confidentiality” and “boilerplate” are at the same level of generality. But there’s really no need to have a section heading gathering all the boilerplate together. Separate sections will do nicely.)

    I challenge you to a duel of numbering schemes. If you send me your same NDA in Word format, I will reformat it using my numbering scheme and indenting and we can put it to a vote of your learned readers. I won’t reorder anything or change any words, so that this just about numbering structures. I will, though, take the liberty of inserting titles and automated cross references where my standard approach would require it. The loser buys the winner a beer.


    • Chris: You know that I’m always game for a marketplace-of-ideas smackdown; let me turn to this after my travels. But any such referendum wouldn’t be binding! If I had to select usages based on their popularity, MSCD would look very different. Ken

  3. Two things – definitions shouldn’t be used to give words meanings contrary to their common usage; definitions = common usage then deal with exceptions in the text. And the over-riding consideration for subsection etc. division and blocking should be, what’s easier for the reader to understand? In general readers deal better with short sentences, and I think the trend is happily in that direction. Even consistency in the numbering scheme is more a hang-up for the lawyers than for the users.

    • Bob: I’m not sure I get your first point. Sure, you don’t want a defined term to be misleading, but most defined terms don’t have some commonly accepted meaning: definitions of defined terms aren’t dictionary definitions. Instead, defined terms are labels given to contract concepts in the interest of concision and consistency.

      Sure, the whole aim of contract layout should be to make the contract easier to understand. But I suggest that at some point fragmentation becomes an annoyance rather than a benefit.

      And why not use an efficient and logical enumeration scheme? It’s easily done. Furthermore, the rewards aren’t dramatic, but they’re not negligible either.


  4. The Australian contract in question is too broken up, and a good illustration of how one can go too far in that direction. Still, at least it is better than the two page paragraphs (of a single sentence in egregious cases) that occasionally appear in contracts drafted by the New York firms.

    I would also strongly agree with Chris Lemens’s preference for hanging indents, and for avoiding first-line indents. First-line indenting and white spaces between paragraphs serve the same function, and first-line indenting is a nightmare with ennumerated clauses – it leaves the eye constantly wondering where it is in the clause hierarchy. In the Koncision sample, the “(1)” in the definition of Confidential Information is hard against the left edge, whereas the “1” at the start of the section – two levels up in the hierarchy – is indented. And the “(b)” that falls between them is double-indented! I found it very confusing, and I think it all stems from using first-line indenting and not using hanging-indents.

    • W: First-line indenting a nightmare? Steady on! And I don’t think it’s too much to expect the reader to distinguish the “1.” hierarchy from the “(1)” hierarchy.

      More generally, people like what they’re used to when it comes to document design. I think the MSCD scheme is more logical than an all-hanging-indents scheme and makes better use of space. But a fuller explication can await my smackdown with Chris, although I state my case in MSCD chapter 3.



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