Legal Usage in Drafting Corporate Agreements

leondumoulin.nl: Legal Usage in Drafting Corporate Agreements: Kenneth A. Adams .
Table of contents

This is my list. Not all of these sins are really deadly. Some are merely embarrassing. Some I commit myself, sometimes deliberately. Others, however, carry real risks for clients and lawyers. I've rated each sin for risk, prevalence, embarrassment and annoyance.

The numbers reflect nothing except my own experience - or if you prefer, innocence. In general, a term should only be given a special definition in a contract if it is used more than once. The most common version of this sin sees the single use of a definition for no more reason than the lawyer forgot to decommission the definition after deleting the additional instances of its use.

Legal Usage in Drafting Corporate Agreements

Sometimes, I use a one-shot definition to abstract complexity from an over-complex clause, but that's just lazy drafting, and not much of an excuse. Why avoid one-shot definitions? NB It's also common to find unused definitions in contracts. For some reason I don't find this so annoying, perhaps because there's no argument about whether this is a mistake How many contracts have I read that boldly announce that all statutes referenced in the contract should be read to include amendments, re-enactments and replacement legislation — but then fail to reference any statutes at all?

How many solemnly promise that, contrary to appearances, the hes and hises of patriarchal legal drafting actually include shes and herses - but then stick strictly to gender-neutral language? All or almost all contractual documents have to define periods of time: It's easy to mess these up. A well-defined time period will have a start date and often a start time, as well as an end date and often an end time. The times and dates should be determinable without any doubt, vagueness or ambiguity.

Another drafting point about times: In UK domestic contracts at least, there is usually no need to specify the time zone. The court found that, where multiple limitations of liability are written into a single contract clause, a determination that one of those limitations is unreasonable under the Unfair Contract Terms Act will lead to the entire clause being struck from the contract. I'm not at present aware of any higher court judgment rejecting this very silly approach to construing limitations of liability.

Yet most of the limitations and exclusions of liability that I see still conjoin disparate types of liability in a single exclusion clause. It's a simple thing to limit or exclude the liability of a party under a contract without realising it. Take, for example, the humble entire agreement clause. But look at Section 3 of the Misrepresentation Act If a contract contains a term which would exclude or restrict — a any liability to which a party to a contract may be subject by reason of any misrepresentation made by him before the contract was made; or b any remedy available to another party to the contract by reason of such a misrepresentation, that term shall be of no effect except in so far as it satisfies the requirement of reasonableness as stated in section 11 1 of the Unfair Contract Terms Act ; and it is for those claiming that the term satisfies that requirement to show that it does.

A blanket exclusion of liability in relation to misrepresentation will usually be unreasonable. So, at a minimum, entire agreement clauses and other forms of disguised liability limitation should be made subject to a general carve-out for liabilities that fall within the UCTA blacklist or would be otherwise unlawful or unenforceable.

That is, losses falling outside the first category, but which were specifically been known to the parties or at least to the party in breach as being liable to result from the breach at the time the contract was entered into. In the US courts, the words have a much broader and more sensible meaning. It's fairly common to include in B2B contracts provisions that may be unenforceable, for example under the Unfair Contract Terms Act The intentional inclusion of unenforceable provisions doesn't usually harm the party they purport to protect, and because there will often be a degree of uncertainty about whether a particular provision is enforceable or not, their inclusion can at least help in negotiations to settle a dispute.

Many contracts take a similar approach to B2C contracts, maximising the supplier's apparent protections and minimising the supplier's apparent liabilities. This, however, can be dangerous.

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The abridgement of consumer rights could, in some circumstances, amount to a criminal offence under The Consumer Protection from Unfair Trading Regulations Perhaps in a legal memo, a brief, or a law-review article he would be right. But the question raised here is about using "may" in legal drafting, in what I assume is some kind of transactional document. The use of "may" to mean "possibly will" in a transactional document is rare but does occur: One slight complication inherent in using "may" to connote permission is that it can also be read as indicating that something might come to pass.


  1. Banged by the Flash.
  2. Read e-book online Legal Usage in Drafting Corporate Agreements PDF;
  3. Astronaut Skill Packet 15 (Preschool Digital Workbooks);

Take the following provision: You can usually discern from context which meaning is intended. But you can avoid even the need to rely on context by using one of these options: In the document, define "may" to mean "is authorized to" and use it carefully only for that meaning. Scrupulously avoid using "may" to mean "possibly will" in any legal-drafting project.

Do both 1 and 2.

leondumoulin.nl: "may" vs. "reserves the right to"

Powerful and certain As for the suggestion that "reserves the right" is more powerful than "may," I don't know. We could test the two usages on lawyers or nonlawyers and gauge their effect. My instinct is that shorter is more powerful, and that what is really being suggested is that "reserves the right" sounds more legal.

But generally, I don't care of something sounds legal as long as it IS legal, and I am not going for emotional impact in legal drafting. I want clarity and precision, and 'may' gives me that. Anyone who is serious about developing their skills as a contract drafter needs to read this book. That is not to say that you have to agree with every word of it, but you should at least consider the arguments that Ken makes. You will probably end up agreeing with most of them. It is said that the best way of persuading someone is to make them think they had the idea themselves.

7 deadly sins of contract drafting

The perspective that Ken takes is one of making contracts clearer and more accurate in their language; one of the benefits of doing this is to reduce the opportunities for disputes over interpretation. It is not part of his brief to pander to the quirkiness of courts, or the encrustation of national or State case law. He is particularly critical of how some courts go about the business of interpreting contracts. MSCD discusses, and make recommendations on, all aspects of the appearance and drafting style of a contract. This breadth of coverage is very helpful, but does mean that some of its recommendations are on subjects that might be thought a matter of personal preference, eg whether to type the document in a Times New Roman or Calibri font.

Put another way, some of the recommendations are core to the Adams drafting approach and are radical in some of their ideas eg those in chapter 3 — Categories of Contract Lanugage , while some others reflect conventional practice among lawyers and writers eg many of those in chapter 4 — Layout. A short review can only scratch the surface of the hundreds, or perhaps thousands, of detailed recommendations that are made in MSCD.

It seems to IP Draughts that there is a danger of overwhelming the casual reader with detailed information that cannot all be remembered. Once an author has published his work, he loses control over it, except at the margins in areas such as copyright infringement and defamation. People can read it, and use it, in whatever way they choose. Ken has spent many thousands of hours in debating, thinking and writing about the points discussed in MSCD.

The book reflects his well-considered conclusions on drafting best practice. Therefore it is natural for him to take the view that the recommendations of MSCD should be adopted wholesale by contract drafters internationally. While some drafters will take this approach, IP Draughts thinks it likely that a larger number of readers will make a gradual shift towards the principles of MSCD over time, with people moving at different speeds and adopting more or less of those principles as they consider appropriate.

A project of this kind benefits all who are involved in contracts, whether as drafters, negotiators, implementers of contractual obligations, or judges of disputes over those obligations. In this sense, Ken has chosen to perform a national, or international, service. IP Draughts hopes that the service gets the financial and other recognition that it deserves. In an earlier age, innovators who performed valuable national service were rewarded with Government prizes and royal pensions.