The Limits of Language of Belief

In this post last month I proposed yet another category of contract language—language of belief. Here’s a cleaned-up version of my example of language of belief:

The parties believe that this agreement complies with the requirements of section 409A of the IRS Code.

But consider the follow observation by Glenn West, which comes from our recent exchange (see this post):

In modern times, however, many warranties and representations are not in fact factual assertions by the party making them; rather they are factual predicates that the party receiving them has required be asserted by the other party as a risk allocation device (which include “facts” about which the party making such assertions may not even know are facts—e.g., legal enforceability of the agreement).

In other words, many standard statements of fact should, strictly speaking, be statements of belief, with risk allocation being addressed separately, by means of indemnification, termination fees, or otherwise.

Glenn mentions statements regarding enforceability, but presumably he could have also mentioned other topics covered by a standard closing opinion: formation, existence, good standing, no violations of law, etc.

I’m not inclined to insist that all such matters be handled by means of language of belief coupled with a risk-allocation provision. For one thing, the current practice has economy going for it. But if it’s unobjectionable to have parties make statements of fact regarding what are in fact legal opinions, is there any place for language of belief? Or is it only of theoretical interest?

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.