“To the Extent Permitted by Law”

I’ve been wondering about to the extent permitted by law. Let’s consider the contexts in which it might be used in a contract between Acme and WidgetCo:

You can use it in language of discretion, as in To the extent permitted by law, Acme may terminate the Target Employees. If Acme terminates any Target Employees unlawfully, it will have to answer to the authorities. But if you were to omit to the extent permitted by law, presumably WidgetCo couldn’t bring a breach-of-contract claim against Acme based on that activity. Does that matter? I don’t know. If WidgetCo were somehow harmed, it might be able to bring some other kind of claim. And if the contract imposed on Acme an obligation to comply with law generally, that would render irrelevant relying on to the extent permitted by law in this provision.

Maybe a more basic function of to the extent permitted by law is simply to signal that the parties acknowledge that in this context, some legal restrictions might apply.

Consider language of obligation: To the extent permitted by law, Acme shall incinerate the Excess Materials. Omitting to the extent permitted by lawfrom this provision shouldn’t worry Acme, as WidgetCo couldn’t successfully sue it for being unwilling to behave unlawfully. But having the phrase in there at least alerts the parties to the fact that incinerating something might well be subject to legal restrictions.

How about language of policy? Here’s the example that got me thinking about this topic: “Each party, to the extent permitted by law, … waives its right to a trial by jury.” It’s from a treatise that recommends that you use to the extent permitted by law in this context because “there are instances when jury trial waivers are not enforceable as a matter of law. This clause would preserve the effectiveness of the jury trial waiver as between the parties in instances where the law does not prohibit waiver.”

But that doesn’t make sense: if the law doesn’t prohibit waiver, you’d have no need for to the extent permitted by law. And if it does prohibit waiver, the phrase would be equally irrelevant.

So the only conceivable value of to the extent permitted by law in this context would be to—you guessed it—signal to the parties that the waiver might be unenforceable. (Courts in California and Georgie have held that pre-litigation waivers of jury trial are unenforceable for purposes of trials in state court.)

So although to the extent permitted by lawhas little o r no substantive effect, it serves a modest purpose in the context of a provision that is subject to legal restrictions. But if you use the phrase in a contract, it would make sense to explain to your client, and to the other side, what those restrictions are rather than expecting to the extent permitted by law to do that work for you.

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.