Issues in Drafting Commercial Agreements—The “Box”

My background is in drafting for deals rather drafting commercial agreements. (By “commercial agreement” I mean, vaguely enough, a form agreement relating to the supply of goods, services, or technology to customers.) But in my consulting activities, I’ve recently been dealing exclusively with commercial agreements.

Because any given commercial agreement will likely be entered into dozens if not hundreds of times, from the company’s perspective only select information is of interest in any given contract.

Consequently, it’s commonplace for commercial agreements to pull out of the body of the contract and place at the top of the contract those bits of information that are unique to that contract, such as the customer’s name and contact information, the signature blocks, the effective date of the contract, the termination date, and any identification numbers assigned to the customer or the contract. Often enough this information is presented within borders, with various bits of information assigned their own compartment. I refer to this sort of presentation as the “box.”

Presumably the idea is that if a company is entering into a particular contract many times, it simplifies matters for the company’s contract-management personnel to be able to find on the first page of each contract all information that is unique to that contract.

Here’s what I think of this practice:

Tradition and narrative logic (for instance, the idea that more important provisions should come before less important provisions) help determine the sequence of provisions in a contract. Departing from such standard arrangements can make it harder to read a contract. For instance, I find it a little awkward to have the termination date stated apart from the termination provisions, or the party contact information stated apart from the notices provisions. You should only take information out of its traditional context and put it on the first page if the administrative benefits clearly outweigh any adverse effects on readability.

I’m skeptical that the administrative benefits are significant. Presumably any company that has to handle commercial agreements with many different customers would maintain an electronic database containing relevant information from each contract. Only if company personnel were routinely required to consult copies of the contracts—surely not a desirable situation—would it matter where in a contract that information is placed.

And note that administrative convenience isn’t relevant to the customer, for whom the agreement is a one-off experience.

Another concern is that putting the signature blocks and other out-of-context information on the first page conveys the message that the company is intimately familiar with, and so doesn’t have much interest in, that which follows. I’m a little uneasy with anything that suggests to a customer that it is dealing with “boilerplate,” as that raises the possibility of the customer claiming that it didn’t know what it was getting into. This would seem to be particularly the case when you’re dealing with a contract that contains negotiated provisions. So in this context, too, you have to weight the pros and cons of putting information on the first page versus keeping it in its traditional place.

The net effect is that whenever I’ve redrafted a commercial agreement that contains a box or something comparable, I’ve dispensed with it—with the client’s assent—in favor of a more traditional arrangement.

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.