“Shall Require”

Consider the following:

Company shall require each of its subcontractors to provide insurance coverage … .

Do you think a reasonable reader, or a judge, would conclude that shall require means the same thing as shall cause?

[Updated February 29, 2012: Since one example does not a sample make, here are some other instances of shall require that I found on EDGAR:

The Company shall require any successor to all or substantially all of its business or assets … , and any parent company thereof, to expressly assume and agree to perform the Company’s obligations under this Agreement.

AIRLINE shall comply with, and shall require its officers, agents, employees, contractors, subcontractors, sublessees, vendors, suppliers, other representatives, and any other persons over whom it has control to comply with … .

In the event Roberts makes Sales of Product(s) to persons other than End Users, Roberts shall require such persons to provide Roberts with such information as Lilly may reasonably request to permit Lilly to calculate and verify Net Sales and Royalties due.

But most instances of shall require can be attributed to pathological use of shall instead of the simple present, as in the phrase as the context shall require.]

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.

14 thoughts on ““Shall Require””

  1. I don’t think it means the same thing, but I think it respects the independence of subcontractors that I assume are not affiliated with the Company.  Since the Company has no corporate power to cause the subcontractor to do anything, isn’t the Company’s undertaking to require the coverage the best one can hope for?

  2. It kinds of begs the question as to what happen when the subcontractor fails to have insurance. Surely it would be better to have something specific like, “Before awarding any work to any subcontractor, the Company shall obtain from the subcontractor a  certificate of insurance indicating the following: …”

      • It seems to me that “shall cuase” would be closer to “demand and obtain”, whereas “shall require” is merely “demand”. Under “shall require”, the company could require it, but that’s all it is required to do, no? If the subcontractor does not obtain the requisite insurance, is it a breach by the company? However, it seems to me that “shall cause” is would result in a breach if the sub failed to obtain the requisite insurance. I do prefer the formulation requiring the certificate of insurance and I see this frequently.

  3. In this situation, I prefer “Company shall ensure that each of its subcontractors provides insurance coverage,” because it makes it clear when there’s been a breach (if a subcontractor doesn’t have insurance coverage), makes it clear whose job it is (the Company’s), but is completely silent about how the Company should go about doing this.

  4. Ken, 

    I’m not sure it makes a difference from a litigation standpoint but I’d like to hear other opinions. For example, if the Sub was negligent causing damage to Owner, Owner will sue Sub (expecting insurance coverage) only to find out that Sub does not have insurance. 

    Owner will then look to Company and if the contract says “shall require” then Company is in breach because it did not require Sub to provide insurance. Similarly, if the contract says “shall cause” then Company is also in breach because it did not cause Sub to provide insurance. 

    Either way, it seems to me the result is the same. If the result is the same then from a risk-management/lawsuit avoidance standpoint, it seems prudent to draft the agreement like Mr. Lemens suggests (i.e., actually obtaining a certificate of insurance from Sub before execution of the contract or commencement of work). 


    • Bradley: I think the concern is whether shall require simply means that the Company has to tell its subcontractors to get insurance, rather than make sure that they actually do. Ken

        • There was some discussion of shall ensure on this blog recently; see http://www.koncision.com/procure/#comment-421309106. I don’t think my response to Mark Anderson’s comment actually makes much sense. But more to the point, I don’t think shall cause is prone to confusion.


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