Categories of Contract Language

Welcome back to the categories of contract language! Consider the following alternatives: Language of Discretion The Customer may purchase Widgets only by using Acme’s purchase-ordering system to submit a purchase order to Acme. Language of Obligation Used to Express a Condition To purchase Widgets, the Customer must submit purchase orders to Acme through Acme’s purchase-ordering system. Which do you prefer? … Read More

Today a reader posted the following comment (found here): Ken, I have been pushing your rules about shall and must since I started drafting contracts. Recently, a colleague said that we should use must exclusively. He pointed to the following link to bolster his case: https://www.faa.gov/about/i… I wanted to point it out for your opinion. Thanks If you want to … Read More

A benefit of this blog is that I get to try out new ideas. Often enough, I end up revisiting those ideas. That can make the original post out of date, but that’s a blogging fact of life. (I’m not disciplined enough to always put a link in the original post.) Here’s an example for you. In this post from … Read More

In this comment to a recent post, a reader outlined steps they’ve taken to make their contracts simpler and clearer. For purposes of this post, what’s of interest is that those steps include the following: … use “will” for our obligations and “shall” for the other party, … This is only the second time I’ve encountered the notion of using different verb … Read More

This is from an intercompany services agreement dated 3 July 2017 between General Electric Company and Baker Hughes that I happened upon in the SEC’s EDGAR system (PDF here): SECTION 10.16 Integrity. Each Party covenants that it is committed to unyielding integrity and will act in a manner consistent with the GE Integrity Guide for Suppliers, Contractors and Consultants, a … Read More

Recently I sent a consulting client a short explanation of how I handle statements of fact. Here it is, in case it’s of interest: I thought you might find it helpful if I summarized how I treat statements of fact. As a general matter, incorrect statements of fact give rise to a remedy. If the idea is that an incorrect … Read More

I’ve stated elsewhere (for example, in this 2014 article) the advantages of using shall to express an obligation imposed on the subject of a sentence, if the subject is a party to the contract. The primary advantage is that shall gives you an extra tool to work with. Instead of using will or must to express multiple meanings, you use … Read More

[Update: This 30 July 2017 post rendered this post redundant.] In this 2015 post I consider Nothing in this agreement gives X the right to [do something]. Now let’s consider Nothing in this agreement prevents X from [doing something]. We have to ask the age-old question: what category of contract language is this? Is it language of discretion? In other … Read More

Consider this sentence: After termination, Acme will have 60 days to return to Widgetco any Confidential Information in Acme’s possession. What category of contract language should that be? Presumably obligation: No later than 60 days after termination, Acme shall return to Widgetco any Confidential Information in Acme’s possession. How about this one: After termination, Acme will have 60 days to … Read More

I take issue with the wording of the standard clauses promulgated by the various arbitration institutions. I’ve written about shortcomings in the American Arbitration Association’s standard clause (see this 2010 article), but the same problems are on display in others. That’s not surprising—most drafting is poor, so why should arbitration clauses be any different? The standard clauses are all short, … Read More