“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.

9 thoughts on ““To the Extent Permitted by Law””

  1. Ken, another use of this phrase is in clauses that seek to limit or exclude liability. Judges are fond of striking down such clauses on the grounds that the clause goes further than is permitted by law. For example, under English law one cannot exclude liability for death or personal injury caused by negligence; under some Continental European countries’ laws, one cannot exclude liability for gross negligence or wilful misconduct.

    Sometimes, the draftsman will identify the types of liability that are not within the scope of the limitation of liability clause. On other occasions, a shortcut approach is taken, eg “To the extent permitted by law, the Supplier limits his liability to 50,000 Euros.” Whichever approach is taken, the draftsman is seeking to insert a “safety valve” into the clause and avoid a situation where the judge says, this clause is attempting to limit categories of liability that may not be limited, therefore the entire clause is ineffective.

    A similar issue can arise with entire agreement clauses. There is a famous English case from the 1990s where the judge held that such a clause did not work because it didn’t carve out fraudulent misrepresentation from its scope. Nowadays, English contracts usually include a sentence to state that nothing in the agreement purports to exclude liability for fraud.

    • Do you see any value in the phrase from an opinion practice standpoint? Apart from signaling to the parties what provisions might be of questionable enforceability, including the phrase “to the extent permitted by law” might assist the attorneys by cuting down on opinion research, negotiation or customization for unusual or controversial provisions.

  2. In executive employment agreements, the parties often provide that the employer shall indemnify the employee (or officer) to the extent permitted by law. Query, does it make a difference to say “to the fullest extent permitted by law”?

  3. On the basis that agreeing to do something illegal should be avoided, I think it is significantly better to include the phrase if there are questions about whether it will be legal to comply with the obligation. It seems to head off a later argument over who was intended to bear the risk of the obligation being/becoming illegal, which pointing at caselaw is less likely to achieve in practice.

    A sub-point is the phrase “to the extent”, which is meaningful in situations where partial performance/application is feasible. Otherwise, “where” is more appropriate. Leaving aside for a moment the issues Ken raised, it makes sense to say that a party may incinerate the Excess Materials to the extent permitted by law, as it may be legal to incinerate some materials but not others. However, I think one would waive a jury trial “where” permitted by law (if one were to do it at all). Sometimes “to the extent” is also used a pompous way of saying “if”, which should also be avoided.

    • W: But the phrase doesn’t say anything about who bears the risk.

      And I don’t think “where” works. For example, in California a waiver of jury trial is enforceable in federal court but not in state court. “If” might represent an improvement, but I’d have to consider whether you might have contexts where a waiver works for some claims but not for others.


  4. I think the phrase is useful for things like indemnification provisions. Typically, these provisions explicitly state when one party will be eligible for payments pursuant to an indemnity arrangement. If one of those instances were to be deemed contrary to law, it could have the effect of rendering the entire provision void. Inlcuding the qualifier, “to the maximum extent permitted by law” seems to avoid this result.

    • Gustav: I’d have thought a severability provision more useful. For one thing, one severability provision would apply to any provisions of uncertain enforceability; you wouldn’t have to repeat the concept in each provision. Furthermore, “to the extent permitted by law” doesn’t specify what happens when something isn’t permitted.

      In any event, I think “maximum” is redundant.


      • I agree Ken, just playing Devil’s advocate. In any event, I enjoy reading your blog as your posts are insightful and very relevant to my practice. I think many terms and phrases are used because of the “that’s the way we’ve always done thing” mentality. Thank you for trying to break that mold.


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