When a Party's Exercise of Discretion Is Possible Only If the Other Party Cooperates

My thanks go to a Penn Law student who reminded me of the following categories-of-contract-language nuance:

Consider this provision:

During the Due Diligence Period, Acme may on one or more occasions cause its representatives to inspect and copy any Widget Documents located at Widgetco’s offices, on condition that they do so during Widgetco’s business hours and give Widgetco at least two business days’ prior notice.

I think it’s OK, although I’m sure the parties could go back and forth on such a provision.

But from a categories-of-contract-language perspective, it could be improved in one respect. It doesn’t simply grant Acme discretion; it also imposes an unstated obligation on Widgetco to cooperate.

Whenever an obligation is lurking, I prefer to bring it to the fore. So I’d redraft this provision to read as follows:

During the Due Diligence Period, Widgetco shall permit Acme’s representatives to inspect and copy, on one or more occasions, any Widget Documents located at Widgetco’s offices, on condition that they do so during Widgetco’s business hours and give Widgetco at least two business days’ prior notice.

In this version, Acme’s discretion isn’t addressed directly, but it’s the flip side of the coin to Widgetco’s obligation to permit the specified conduct. By contrast, reading an obligation into the first version requires, as a matter of logic, a bigger step.

Here’s my general statement of this principle: If Party A would be able to take a given action only if Party B cooperates, address that action by imposing an obligation on Party B to permit that action rather than by means of granting Party A discretion to take that action.

Any thoughts?

MSCD doesn’t address this nuance. I expect that the third edition will.

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.