“This Is a Plain English Warrant Agreement”?!?

Behold what I just found washed up on the shores of the SEC’s EDGAR system:

PLAIN ENGLISH WARRANT AGREEMENT

This is a PLAIN ENGLISH WARRANT AGREEMENT dated May 22, 2008 by and between RELYPSA, INC., a Delaware corporation, and TRIPLEPOINT CAPITAL LLC, a Delaware limited liability company.

What the … !

First off, if you want your contract to be in plain English, then make it in plain English. Having the contract prominently refer to itself as a plain-English contract doesn’t somehow magically make it more comprehensible.

You can find on EDGAR a handful of other contracts that brazenly flaunt their plain-Englishness in this manner.

It so happens that this contract utterly flunks at plain English, as it contains stuff like the following:

  • This Plain English Warrant Agreement may be referred to as the “Warrant Agreement”.
  • In consideration of such Loan Agreement, the Parties agree to the following mutual agreements and conditions set forth below:
  • This Warrant Agreement shall be binding upon any of the successors or assigns of the Parties.

And how about the following 162-word sentence:

Notwithstanding the foregoing, Our right to purchase the Warrant Stock shall automatically be deemed to be exercised in full via the net issuance method in the manner set forth in Section 3, without any further action on behalf of Us upon the occurrence of a Merger Event, with a Person who is not one of Your affiliates in which Your common stock is exchanged for cash and/or stock that is traded on a recognized public exchange or on the NASDAQ Global or Global Select Market, provided that, upon consummation of the Merger Event, the consideration payable to Us pursuant to such exercise and on account of the Warrant Stock consists of (i) cash or (ii) stock that is traded on a recognized public exchange or on the NASDAQ National Market and the total per share consideration is equal to or greater than two (2) times the aggregate Exercise Price (as adjusted).

This contract’s use of the term “plain English” stands as a good example of why I don’t use that term. The drafters of this contract evidently thought that putting their contract in plain English meant making it read something like a consumer document. Because the plain-English movement was initially associated with making consumer documents more comprehensible, the term has continued to have that connotation, although it can also be understood to refer to making any document more comprehensible for anyone, even a specialized readership.

To avoid anyone thinking that MSCD is geared to documents intended for Joe Public as opposed to business contracts, I refer not to “plain English” but to “standard English.”

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.