When the Big Obligation Subsumes Smaller Obligations

The big obligation is The Widgets must comply with the Specifications.

That being the case, there wouldn’t seem to be much point in saying these smaller obligations:

  • Acme shall use only competent personnel in fabricating the Widgets.
  • Acme shall maintain all Widget-fabrication equipment in good condition.
  • Acme shall obtain and maintain insurance covering the Widget-fabrication facilities.

And so on. To comply with the big obligation, you have to have a handle on a lot of smaller stuff. It can seem annoying to fill a contract with obligations pertaining to the smaller stuff.

But the smaller obligations help you keep an eye on what’s going on. Instead of your waiting until defective Widgets roll off the production line, you can intervene earlier if any of the smaller stuff goes awry. The smaller obligations can be analogous to milestones.

But pick those smaller obligations that are strategic enough to serve as a canary in a coal mine. Don’t load up on them indiscriminately.

That’s my theory. I’d be happy to hear how it works out in practice.

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.

4 thoughts on “When the Big Obligation Subsumes Smaller Obligations”

  1. This can also weed out reliable counterparties from unreliable counterparties. An organization with a written data security policy will be more likely to avoid inadvertent disclosures than an organization without; even if the big obligation (to avoid unauthorized disclosures of confidential information) is the same.

  2. This holds true for complicated sales involving an ongoing business. These sales transactions often involve multiple asset categories (real property, intellectual property, personal property), employee obligations, government licenses, pending litigation, etc. Stating large obligations (i.e., buyer must acquire all government licenses before the closing) and then enumerating smaller obligations (i.e., including the following: a, b, c licenses) makes it easy to track closing progress with a checklist. The checklist helps focus the parties on the closing and serves as an early warning in the event that one party fails to complete smaller closing objectives.


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