Contract Language and Layout—Ten Dos and Don’ts

Given that I’ve been blogging for a year, I thought I’d take the opportunity to pull together in this post, in the form of “dos” and “don’ts,” some components of my online presence. The coverage is necessarily patchy, but it’s safe to say that in the past year I’ve been able to write about the issues that I feel most strongly about.

DON’T include in your contracts stuff that’s meaningless. One good example of aggressively meaningless contract language is the traditional recital of consideration—the bit before the body of the contract that goes something like “NOW, THEREFORE, in consideration of the premises and mutual promises herein contained …,” and so on. Instead, just say “The parties therefore agree as follows.” See this article; Canadian readers, see this blog post.

DON’T use the phrase representations and warranties (or the phrase represents and warrants). Admit it: you never saw the point of referring to both concepts rather than just one or the other, but nevertheless you follow the herd. Instead, use just representations. See this article, this blog post, and this blog post. And see this blog post about using just warranty on its own.

DON’T believe the urban legends of drafting. For example, don’t think that an obligation to use “best efforts” requires a party to do more than would an obligation to use “reasonable efforts”—a court would likely interpret both terms as meaning the same thing. See this article and this blog post.

DON’T use more words than are necessary to accomplish a given goal, as excess words can cause problems. For example, many agreements require one party to “indemnify and hold harmless” another against losses. When drafting such provisions, most drafters presumably give no thought to whether hold harmless means something different from indemnify. Most authorities think that they mean the same thing, but don’t be surprised if a litigant, or even a court, strains to distinguish hold harmless from indemnify in ways the drafter hadn’t intended, on the grounds that otherwise the drafter wouldn’t have used the extra words. A carefully crafted provision using just indemnify can say all that you need to say. For more on hold harmless and indemnify, see this blog post, this blog post, and this blog post.

DON’T assume that jargon is an inevitable part of contract language. If you have no clue what something means, or if it sounds a little pompous or turgid, the odds are good that you could throw it overboard. In the past year I’ve had occasion to blog about a number of problematic usages, including the following:

• from the beginning of time
• certify
• for the avoidance of doubt
• without limiting the generality of the foregoing
• form and substance
• including without limitation

DO be disciplined in your use of shall. Many drafters use shall as if a provision won’t be enforceable if it doesn’t use shall. Instead, it’s best to use shall only when you wish to create an obligation—in other words, if you wish to convey the meaning “has a duty to.” Overuse of shall muddies the distinction between categories of contract language. Not only does that make a contract more difficult to read, it can also result in a dispute. Regarding use of shall, see this blog post. Regarding how overzealous use of shall can result in disputes over whether a given provision constitutes an obligation or a condition, see this blog post and this blog post.

DO become familiar with how ambiguity can arise in contract language. Ambiguity is a relatively common source of disputes, and the only way to avoid ambiguity is by studying it—unless you know what to look for, you’ll miss it. A high-profile instance of ambiguity is that which gave rise to the dispute between Rogers and Aliant, two Canadian telecommunications companies; for more about that, see this blog post, this blog post, and this blog post. (I’ve acted as expert witness for Rogers in this dispute.) For a recent U.S. case involving an example of syntactic ambiguity, see this blog post. Gluttons for punishment might want to check out this law review article on the ambiguity associated with and and or.

DO reconsider what material means. It’s a tricky word, as it’s both vague and ambiguous. It took me an embarrassingly long time to realize the full implications of this; see this blog post.

DO adopt an efficient enumeration scheme and stick with it. In my book I recommend an “articles” and “no-articles” version of what I refer to as the MSCD enumeration scheme. I think it’s the most efficient enumeration scheme going, and software makes it a simple matter to adopt both versions.

DO realize that mainstream contract drafting leaves a lot to be desired: the traditional way of drafting contracts is flawed, in terms of both quality and process. For more about this, see this article. Implementing change is challenging, particularly for junior lawyers, but it’s doable; see this blog post. But true change won’t come one lawyer at a time—we need a bigger fix. I’ve pinned my hopes on document assembly: see this blog post and this blog post, among others.

BONUS: DON’T keep using the traditional format for written consents. Using a more modern format would, at no risk, allow you to dispense with WHEREAS, RESOLVED, be and hereby is, and the other lame trappings of the traditional format. See this article and this blog post.