OK, it’s categories-of-contract-language time again! More specifically, the topic is language of policy, which states rules for how the contract works. Language of policy relates to stuff that happens automatically, as in This agreement is governed by German law.
One shortcoming in language of policy is when you use structures analogous to the passive voice, as in Rent is payable on the first day of each month. See this 2016 post another example of that. But this post is about something different, namely the way language of policy can become even more opaque if you use jargon—shorthand that won’t be accessible to every reader and that requires the reader to fill gaps.
Consider this example, which seems to state a rule instead of requiring Acme to do anything:
Acme will have a lead-time of up to 45 days from accepting a Purchase Order for scheduling Services.
The following version expresses the same meaning much more clearly by articulating what having a lead time actually means and by otherwise being less clipped:
No later than 45 days after it receives a Purchase Order, Acme shall notify the Customer of the schedule for performing the Services requested in that Purchase Order.
It uses ten more words, but they’re well worth it.
Here’s another example:
Payment terms are net 30 from the date of the invoice.
It could be made slightly less opaque by saying 30 days, but the big fix would be to add an actor:
The Customer shall pay each invoice no later than 30 days from the date of the invoice.
In this case, the risk of confusion would seem negligible—this jargon is widely used. But it’s best to think not in terms of risk but in terms of clarity. If provisions involve parties doing stuff, they’re easier to read if you express them that way instead of using jargon or finding other ways to hide the actor. Apply that approach in all your drafting, instead of making occasional exceptions for usages that might not be bad enough to bother excluding them. It’s easier to be consistent, and it benefits readers.
(New to the categories of contract language? Go here for the “quick reference” chart from the fourth edition of A Manual of Style for Contract Drafting. And have a comment? I invite you to post it below; over the years I’ve found discussion on this blog to be more valuable than discussion on Twitter or LinkedIn. If you prefer, you’re welcome to email me at kadams@adamsdrafting.com.)
“Net X” jargon is widely used, but not widely understood in any rigorous detail. I have and will continue to see confusion and minor disputes about it. Does the clock start when goods are delivered (or services rendered)? On the date on the bill? When the bill is sent? When the bill is received? By the customer’s payments platform? By by the customer itself? Boring, pointless disputes.
I would not hesitate to push your shall-pay-when language. Hard. If the client wants to throw jargon around to feel cool, remind them they’re acting like a damnable lawyer.
“Date of the invoice” raises issues of its own. That’s something I mentioned in a post on the MSCD LinkedIn group, for a change of scene: https://www.linkedin.com/feed/update/urn:li:activity:6819437260279291904