The Time for Taking Action “Upon” Something Happening

In addition to analyzing topics that are entirely new to me, part of what I do is fill small gaps in MSCD‘s coverage. So in that spirit, here’s a neat little gap-filler, fed to me by a law student.

The case is IPE Asset Management, LLC v. Fairview Block & Supply Corp., 123 A.D.3d 883, 999 N.Y.S.2d 465 (2014) (PDF here), a New York appellate opinion. The plaintiff, as purchaser, and one of the defendants, Fairview, as seller, entered into a contract for sale of an undeveloped parcel of real property. Here’s how the court describes the dispute:

Section 8 (a) of a rider to the contract provided that, if Fairview failed to obtain rezoning and subdivision approvals for the property for a certain number of “units” within 15 months of closing, the plaintiff, upon the expiration of the 15-month period, with 10 business days’ written notice to Fairview, “may” sell the property back to Fairview for the $600,000 contract price. … A closing took place on June 30, 2005, and it is undisputed that no zoning or subdivision approvals were obtained thereafter. In November 2010, and again in December 2010, the plaintiff notified Fairview that it wished to sell the property back to Fairview for the contract price. Fairview’s attorney responded that the plaintiff’s time to exercise that right had expired.

The plaintiff argued that the contract gave it an open-ended option, and the lower court agreed. But the defendants argued on appeal that the plaintiffs could exercise the option only during “a reasonable time” after the 15-month period had expired. The appeals court held that the language was ambiguous and that the lower court had erred in granting the plaintiff summary judgment.

It might be that this dispute involves not ambiguity but instead undue generality. This sense of upon means “on the occasion of” or “when (something) occurs,” and if the action ostensibly prompted by the event occurs too long after the event, that sense of simultaneity is lost. So the question really is, how long after the event can an action still be described as taking place upon that event?

But however you analyze it, there’s potential for dispute. So here’s my two-part recommendation:

First, if something is triggered by the event, upon is fine: This agreement will terminate upon Acme’s sale of the Shares. But upon is usually followed by an abstract noun, as in the previous example. (It could be followed by a gerund, as in upon Acme’s selling the Shares, but you see that less often.) In any kind of writing, it’s better to use verbs instead of abstract nouns (see MSCD 17.7, or @mrsalzwedel‘s account here), so I’d say instead when Acme sells the Shares.

Second, and more pertinently, if the idea is that a party may take an action or is under an obligation to take an action upon something happening, then state a period for taking that action. And to do that, you would use something other than upon: If during the 30 days after that 15-month period the Buyer notifies the Seller that it wishes to sell the Property back to the Seller …

By the way, why upon rather than on? I agree with Garner’s Modern American Usage that upon is appropriate to express the meaning “on the occasion of” or “when (something) occurs,” but that otherwise you’re better off with on. The result is that you use two different words to convey two different meanings, and that’s a good thing.

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.

5 thoughts on “The Time for Taking Action “Upon” Something Happening”

  1. A few comments:

    1/ ‘Within 15 months of closing’ is theoretically a 30-month period with the closing at its center. Context shows the period to be ‘within 15 months *after* closing’.

    2/ ‘Closing’ itself is doubly uncertain, in that

    (a) it isn’t clear whether it’s a *point* in time or a multi-minute *period* of time (sometimes closings take hours), and

    (b) it isn’t clear whether the 15-month period began (1) “at” closing-however-defined, (2) at midnight at the start of the closing date, (3) at midnight at the end of the closing date, or (4) at some other point.

    3/ There was no dispute, however, about whether the 15-month period was over; all agreed that it was. Therefore the foregoing, however fascinating, is moot.

    4/ I would phrase the dispute in the case this way: was the option period open-ended or closed-ended, and if closed-ended, what was the endpoint of the option period?

    5/ There’s nothing inherently wrong or unreasonable about an open-ended period, that is, a period with a startpoint but no endpoint. A typical example is a release of claims whereby C ‘forever’ releases D from specified claims.

    6/ If a releasor (a) released a releasee from all claims the releasor had against the releasee up to the point of signing the release, but (b) did not say ‘forever’, I think the releasor would have a difficult time arguing that the release was for only a ‘reasonable’ time, after which the releasor could once gain assert her claims against the releasee.

    7/ In the case at hand, it seems incredibly incautious of the seller to undertake to repurchase the property in a period with a stated startpoint but no stated endpoint. To rely on the rule of reasonableness in such a context is punishable by litigation.

    8/ In conclusion, the case seems less about the word ‘upon’ or its synonym ‘on’ and more about creating a period with a stated startpoint but no stated endpoint when the drafter means there to be an endpoint. The angel of prudence whispers from every drafter’s shoulder, ‘Never do that’.

    • Fortunately, if the Nigel of prudence (damn that spellchecker) loses his voice through talking too much, the archangel of interpretation, in the form of the court, can imply terms.

      This is as much a defect of substance as it is of drafting style. The drafter needs to think through the “what ifs”. I use a similar example when teaching the drafting of options.

      Not sure I can hear a difference between on and upon. But then I prefer obliged to obligated so what do I know?

      • Considered generally, there is no difference between on and upon, apart from upon being a poncified version of on. But for one’s own drafting discipline, one can create the distinction.

      • Agree with preference for ‘obliged’. But where do you stand on the shorter ‘duty’ in place of the longer ‘obligation’? Ken sees a difference and prefers the latter, as I recall.–Wright


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