Yesterday I encountered an article that discusses why Sarbanes-Oxley should be of concern to anyone who’s responsible for a public company’s contracts. There are doubtless other works on this subject, but I’m cheerfully unaware of them. Here’s the citation: Colin P.A. Jones, Sarbanes-Oxley and the Inch-Thick Contract, 5 Richmond Journal of Law and Business 1 (2005). Click here for a … Read More
Here’s another weapon in the never-ending war on verbiage in contracts—be careful how you use the word basis. As Bryan Garner says in Garner’s Modern American Usage, “The word basis often signals verbosity in adverbial constructions.” So instead of on a daily basis, try daily, as in “Interest will accrue on a daily basis [read daily].” (In other words, use … Read More
When I’m stymied by a particular English-usage question and I can’t find an answer in my usual sources, I’ll consult the Chicago Style Q&A, an online resource of The Chicago Manual of Style. I was browsing the Q&A the other day—I’m waiting breathlessly for them to post an answer to a question I submitted—when I saw the following: Q. Contracts … Read More
The opinion in Johnson & Johnson v. Guidant Corp. (the case I discuss in my post “‘Willful’—It’s Ambiguous”) contains the following statement: The relevant language in the no-solicitation clause defines the term “Representatives,” with some circularity, as “any investment banker, financial advisor, attorney, accountant or other advisor, agent or representative.” This reflects a common misconception. In fact, there’s nothing circular … Read More
You should avoid using in your contracts the word willful (alternative spelling wilful), as it’s ambiguous. This lesson comes courtesy of Judge Gerard E. Lynch of the Southern District of New York, in his opinion in Johnson & Johnson v. Guidant Corp., 2007 U.S. Dist. LEXIS 64114 (S.D.N.Y. Aug. 29, 2007). (Click here for a copy of this case.) This … Read More
Here’s a point that I don’t make in MSCD but will be sure to make in MSCD2: Don’t use in the recitals defined terms that are defined later in the contract. The job of the recitals is to introduce the transaction. If you put in the recitals a defined term that’s defined later, you force the reader to go in … Read More
Dick Wydick’s materials for our panel discussion at the ABA annual meeting included the following provision from the merger agreement for a transaction valued at more than $2 billion. (Like Dick, I’ve eliminated any identifying information.) As you read through it—I recommend a side order of Valium—ask yourself why Dick found it of interest. In the event that (y) Parent … Read More
A reader in Italy asked me about a short article that he had seen on www.breakingviews.com. I wasn’t familiar with this site, but it describes itself as “the leading international source of online financial commentary.” (Click here to go to the article; you’ll need to subscribe, or at least register for a free trial.) The article in question is about … Read More
My email in-box is overflowing with emails from Lexis notifying me of cases ostensibly relating to ambiguity. I fished from the torrent the following straightforward example of syntactic ambiguity. (Syntactic ambiguity arises out of the order in which words appear and how they relate to each other.) It’s from Active Zones of America, LLC v. SDV (USA) Inc., 2007 U.S. … Read More
I’ve intermittently pondered what to call the contracts one copies, in whole or in part, when drafting a new contract. Contracts Prepared for Use in Future Transactions First, consider those contracts that are prepared for use in future transactions and so contain blanks, placeholders, and perhaps suitable annotations. What should they be called? Did you say “forms”? I’m not keen … Read More
