In this post I promised that I would write about voluntarily. Rejoice, friends—that time has come. As a bonus, I give you also freely.
The problem with both words is that the whole idea of a contract is that you enter into it because you want to and you agree to everything that it contains, so voluntarily and freely go without saying. Also, without getting into any deep analysis of free will, if you do something because business considerations leave you no other choice, are you doing that voluntarily?
I conclude that you can do without involuntarily, although you need voluntary when referring to bankruptcy, and can do without freely, unless you’re referring to securities.
But let’s look at each word.
“Voluntarily”
I fished from the Gowanus Canal EDGAR some specimens featuring voluntarily, to which I added comments:
- Confidential Information does not include information once it is voluntarily disclosed to the public by the Company, … [This suggests that confidential information remains confidential if the company is forced to disclose it. That doesn’t seem helpful.]
- … and shall not be voluntarily disclosed to any other person, except as may be required by law. [Presumably the idea of involuntary disclosure is covered by the exception.]
- … until that employee’s employment with the Company has been voluntarily or involuntarily terminated for at least six (6) months … [If this applies whether the employee quits or was fired, say that instead. Or “ceases to be an employee for any reason.” Anything but “voluntarily or involuntarily.” @danielschwartz confirms here that that’s an oddity. As @bradleybclark notes here, the idea of being terminated voluntarily is awkward.]
- … Restricted Shares may not be … encumbered, either voluntarily or involuntarily, until the restrictions have lapsed and the rights to the Shares have vested. [It doesn’t make sense to prohibit someone from involuntarily encumbering shares, because that person wouldn’t be the one doing the encumbering.]
- LICENSEE, AFFILIATED COMPANY or SUBLICENSEE … shall make all payments to JHU as due and when due, unless LICENSEE or SUBLICENSEE has prior to the payment becoming due, voluntarily and completely terminated this Agreement. [How does someone involuntarily terminate a contract?]
- … and hereby knowingly and voluntarily releases and forever discharges Lender … [As opposed to releasing the Lender because of the Lender’s terrible threats of bodily harm?]
- The Borrower may, upon notice from the Borrower to the Administrative Agent, at any time or from time to time voluntarily prepay Revolving Loans in whole or in part without premium or penalty … [Who heard of involuntarily prepaying a debt?]
- … voluntarily or involuntarily enters bankruptcy or receivership proceedings. [Well, here one context where involuntarily makes sense, but it would be clearer to say “anyone commences an involuntary case against” the party in question. So sez my article on termination-on-bankruptcy provisions, here.]
“Freely”
More from EDGAR (make sure you check out the last example, featuring freely tradable):
- The Membership Interest constitutes movable (personal) property and, subject to Section 6.06, shall be freely transferable and assignable in whole but not in part … [Why not just say “transferable”? If you want to make it clear that no consent is required, say that.]
- During the Research Term, Blueprint will maintain and share freely with Alexion a list of all Compounds, and all associated data for such Compounds. [Why not just say “share”?]
- Each Party acknowledges … having negotiated and freely entered into this agreement. [You don’t need to tell us that no one had a gun to their head.]
- This Agreement shall be freely assignable by the Company without restriction … [This is a complete mess, but considering just the “freely” part, “may assign” would do the trick.]
- Landlord may thereafter freely lease all or a portion of the Expansion Space to any other party, at any time, on any terms, in Landlord’s sole discretion. [What’s wrong with “may lease”?]
- The Rights Agent may … otherwise act as fully and freely as though it were not Rights Agent under this Agreement. [What’s wrong with “may act as though”?]
- Executive is entering into this Agreement, including the provisions set forth in Section 4 hereof, knowingly, freely and voluntarily in exchange for good and valuable consideration. [Gawd help us.]
- “Freely Tradable” means, with respect to any Notes, that such Notes are eligible to be sold by a Person who is not an Affiliate of the Company or the Guarantor (within the meaning of Rule 144) and has not been an Affiliate of the Company or the Guarantor (within the meaning of Rule 144) during the immediately preceding 90 days without any volume or manner of sale restrictions under the Securities Act. [You can find lots of contracts on EDGAR that use the phrase “freely tradable,” but as noted in this post on the North Texas SEC Lawyer blog, “the term “freely tradable” is not used anywhere in state or federal securities laws for a simple reason—that concept does not exist under the law!” It follows that generally it shouldn’t be used in contracts either, but using it as a defined term seems unobjectionable.]
“Restricted Shares may not be … encumbered, either voluntarily or involuntarily” — your comment is correct, of course, but this language slips in because the sentence is all wrong in the first place. The surplusage is there because the passive voice only gives the writer one subject to work with.
Kids, this is why your English teacher tells you not to use passive voice: because then you have a chance to figure out what you’re trying to say. Saying a party shall not encumber the Restricted Shares is one thing, but what do you mean by saying they “may not be” involuntarily encumbered?
Do you mean that the certificate of incorporation somehow disallows it? Do you mean the holder is liable to remove the encumbrance? Do you mean the Company won’t honor it? WHAT DO YOU MEAN? Language of prohibition? Policy? Obligation?
I am at the point where it pains me to read this stuff. I am in the middle of a 111-page loan agreement, and every paragraph is like this. It’s three times as long to read it because each sentence I have to unpack and repack. In the old days, I’d just blithely skim over, as if it all made perfect sense (and most of our colleagues still do — obviously the bank does).
Lawyers might be our own worst enemies.
Thank you for this. I feel your pain!
By the way, check out the last freely example, featuring freely tradable. I just revised it.
Not one passive in that lovely rant! Drafting contracts *entirely* without passives is great discipline, because when you can’t simply change the passive to active without an awkward result, you usually find that recasting the sentence altogether is better than changing back to the passive.
On ‘voluntary’, we should note that it has at least two senses: literally compelled, as in ‘He didn’t jump from the window, someone pushed him’, and ‘under obligation’, which is only figurative compulsion, as in ‘Do people pay money to Inland Revenue voluntarily?’ ‘No, it’s a legal duty — they must’. Do draftees serve ‘voluntarily’ or not? In one sense yes, in another no. The conscientious contract drafter must, as usual, find a way to clarity.
Ken, are there really defenders of what you call ‘dysfunctional traditional usages’ or are such usages the stock in trade of lawyers who disdain close attention to contract language as beneath them, the province of ‘wordsmiths’ whose proper place is over in the corner with the pissboys while the *real* lawyers sit with the dealmakers?
In your second paragraph you make the point I was groping at. I think that point by itself is reason enough to scupper voluntarily.
Regarding defenders of dysfunction, you’d be surprised at how many people out there are quick to invoke “tested” contract language. And even the likes of the traditional recital of consideration has ardent fans among those who teach Contracts at law school.
While I wouldn’t use these expressions, I can sort-of see some situations in which I can sort-of see what the drafter is driving at.
– termination of employment contracts by consent is sometimes negotiated to avoid the stigma of dismissal (and perhaps to try to avoid laws protecting the unfairly dismissed employee), though the termination is not really voluntary
– contracts made between parties of equal bargaining power are less likely to be struck down for having unreasonable terms (eg under the UK Unfair Contract Terms Act 1977)
These examples may not mean much in the “free world”.
Asserting in the contract that a termination is voluntary, or that the contract has been entered into freely, is unlikely to cut much ice with the English courts, but in the “contractarian” world of Delaware law under Chancellor Strine, perhaps this nonsense means something.
Whatever one might think of how Delaware courts see their role, their opinions are remarkably free of contract-language idiocy.
Like Mark, I sorta kinda get the idea of what drafters are aiming for, and like Rick I am pained by the syntactically tortured gibberish they use to express these ideas. While there must be a better way, here is where I think they’re coming from:
An involuntary encumbrance is one imposed by law, for example having a constructive trust imposed on property, or a lien obtained by a litigation adversary, and an involuntary transfer similarly, like when a bankruptcy *estate* acquires assets from a bankrupt entity. While it would be easy enough to say what happens under those circumstances, lawyers are congenitally incapable of resting with the examples we can think of, and so wrestle with how to generalize the concept so that “anything like that” will be treated in a similar manner. The result is the gauzy conceptualism of “involuntary” sales, terminations, encumbrances, and so forth. And while it is easy to say, well, just say what the consequences are of a certain thing’s happening, it would require keeping a catalogue of these events and piling them up in a remedies section. Doable, but when you’re trying to get an 111 page loan agreement churned out overnight, many will take the path of less resistance by dealing with these things as they come up. Not an excuse, mind you, just an explanation.
As to “freely tradable,” it’s been a while since my sec reg days, but the fact that the term does not appear in regulatory laws is no hindrance to using a convenient handle–after all, “insider trading” doesn’t appear in the (US federal) securities laws, either. Creating a definition strikes me as a reasonable way of dealing with the concept, which is only the concept of not being under a statutory or contractual disability (including restrictive stock legends and charter provisions) on selling the securities. “Freely tradable” is not a concept under the regulatory laws as such, but, then, they’re regulatory laws, not non-regulatory laws, so the term is just used for the white space. I’d avoid using it without a definition, but as a defined term? Why not?
Yes, you’re right. I was paying attention to the context. I’ve revised the post accordingly.
Ken:
A couple of thoughts.
First, in situations where you are getting a release, adding in “voluntarily” is not all bad. It’s there not because of its effect (none), but because you want to be able to ask questions like these on cross-examination of the departed employee who signed a severance agreement, then later wants to sue anyway: “You signed this agreement, right?” “It says that you are voluntarily releasing your claims in exchange for the severance payment, right?” “So, were you lying when you signed to indicate that you were releasing your claims voluntarily?” The language sets up these kinds of questions, which has the effect of making the release more enforceable in fact.
Second, on “freely,” I suspect that at least some of the uses noted originated with “freely” meaning “without charge.” Because of the ambiguity, “without charge” would be better language if that was meant. But in many of these provisions, I doubt that the most recent authors know what they meant.
Chris
If I were the judge hearing that line of cross-examination, I would be rather impatient. Either the agreement was signed willingly or its wasn’t. If one is forced to sign something, it makes no difference whether the something states that it was signed voluntarily. Perhaps the calculation is different if you have a jury trial. If so, that is another good reason for not having juries in commercial cases.
Mark:
I was thinking of a jury trial. Whethebr the agreement was voluntary will probably be a jury question, though it is possible that putting “voluntarily” into the document will get you summajry judgement from some judges.
Chris
Chris, indeed. Pity about the judges though. I suppose that’s why we need an appeals system. Unless we can devise some system of inserting text so that the victim can demonstrate he didn’t really mean it, like a hostage using strange words in the video to tell his family that he doesn’t mean what he is saying.