Issues in Drafting Commercial Agreements—Using the First and Second Person

I had always assumed that only consumer contracts use the first and second person, as in Each of us is free to enter into similar agreements with others and You are responsible for any personal property taxes.

But recently someone sent me a major company’s form of customer agreement. In that agreement, the company—let’s call it Acme Global Corporation—was called Acme. The customer—presumably also a company, given the nature of what was being purchased—was referred to by means of the pronouns you and your. Acme and the customer were referred to collectively by means of the pronouns we, us, and our.

The agreement featured other elements consistent with that approach, such as an informal introductory clause.

I have three observations:

First, I’m wondering whether the cozy feeling that this approach is meant to induce in the customer might fray a little over the course of ten pages of 9-point Helvetica.

Second, isn’t that coziness misplaced when you’re dealing with a legal entity rather than an individual?

And third, using the first and second person is incompatible with shall, so the drafter of this agreement sensibly enough didn’t use shall to express duties. (Historically, shall has been used with the third person, but not the first and second person, to express obligations. See MSCD 3.19. It would be a little rash to hazard an expanded role for shall at this stage in the game.) Instead, this contract uses Acme will and you agree to. To my mind, shall, when used in a disciplined manner, is more efficient than those alternatives as a vehicle for conveying duties, and that perhaps militates in favor of sticking with the third person. (Before throwing brickbats my way for being a shall booster, please read chapter 3 of MSCD, in which I explain my reasoning.)

That’s the extent of my observations. It’s an interesting approach, and I retain an open mind on it, but I can’t say that I was won over. I’d be interested to hear your opinions on the subject.

I’ll note in passing that the Acme contract was in other respects not a thing of beauty. Perhaps the drafter would have been better off focusing on its various shortcomings—clumsy layout, buried verbs, unhelpful passive voice, awkward boilerplate, and so forth—rather than just going for the touchy-feely approach.

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.