C O N T E N T S

List of Tables

xvii

List of Samples
Preface

xix

xxi

Introduction

CHAPTER 1

xxv

The Front of the Contract

The Title
1
The Introductory Clause

Format
3
Reference to the Type of Agreement
Verb
4
Date
4
Between Versus Among
7
Identifying the Parties
8
Parties with a Limited Role
8
Referring to Lists of Parties
9
Describing the Parties
9
Defined Terms for Party Names
12
The Defined Term This Agreement

Recitals

17

18

Function
18
Giving the Recitals a Heading
20
Enumeration
20
Use Simple Narrative Prose
20
Using In Accordance with this Agreement in Purpose Recitals
Incorporation by Reference
21
True and Correct
22
Defined Terms in the Recitals
22

The Lead-In

21

22

Wording
22
Consideration
23
Giving a Heading to the Body of the Contract

26

Cover Sheet, Table of Contents, and Index of Defined Terms

26

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CHAPTER

2 Categories of Contract Language

Preliminary NoteUsing the Third Person

Language of Agreement 28
Language of Performance 29

27

28

Use of Hereby in Language of Performance

29
Dont Use the Passive Voice in Language of Performance
Other Problematic Usages
31
Indicating Absence of Performance
31

Language of Obligation

30

31

Language of Obligation Imposed on the Subject of a Sentence

32
Language of Obligation Imposed on Someone Other Than the Subject
of a Sentence
40

Language of Discretion

45

Using May to Convey Discretion

45
Whether Discretion Is Limited
47
The Ambiguity Inherent in May . . . Only
48
Using May to Convey Possibility
49
May Require
50
Using At its Discretion with May
51
May and the Timing and Frequency of Permitted Actions
55
Hereby Grants . . . the Right To
56
Using Is Entitled To in Language of Discretion
57
Using Is Not Required To in Language of Discretion
58
Discretion by Way of an Exception to Language of Obligation
60

Language of Prohibition

60

Using Shall Not in Language of Prohibition

60
Using May Not in Language of Prohibition
60
Using Is Not Entitled To in Language of Prohibition
61
Prohibition by Way of an Exception to Language of Discretion
Choosing Between Discretion and Prohibition for an Action
Subject to Consent
62

Language of Policy

61

62

Tenses to Use in Policies

62
Passive-Type Policies
64
Dont Use Shall in Policies
65
Expressing Conditions
65
Conditional Clauses
65
Language of Policy Used to Express Conditions
68
Language of Obligation Used to Express Conditions

Language of Declaration

70

71

Representations
72
Acknowledgments
72

Shall and May in Restrictive Relative Clauses

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CHAPTER

3 Layout

vii

75

The Components of the Body of the Contract

75

Articles
75
Sections
75
Subsections
80
Enumerated Clauses
80
The MSCD Enumeration Scheme
85
Using a Two-Column Format
85

Arranging Provisions in the Body of the Contract

87

Division
87
Classification
87
Sequence
87

Frontloading 89
Cross-References 90
Function
Wording
Updating

CHAPTER

90
91
92

4 The Back of the Contract

The Concluding Clause

95

95

The Two Kinds of Concluding Clause

95
Using Signing Rather Than Executing and Delivering
Which Tense to Use
97
Using an As Of Date in the Concluding Clause
98
Traditional Concluding Clauses
98
Avoiding Signature-Page Mix-Ups
99

The Signature Blocks

99

Format
99
Parties with Limited Role
101
Seals
101
Witnessing Signatures
102
Notarizing Signatures
103
Signing a Contract Electronically

103

Blank Space After the Body of the Contract 104

Giving the Signature Page an Identifying Notation
Attachments 105
Kinds of Attachments
105
References to Attachments
105
Exhibits
105
Schedules
106
Attachments as Part of a Contract
Virtual Attachments
109

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104

108

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A MANUAL OF STYLE FOR CONTRACT DRAFTING

CHAPTER

5 Defined Terms

111

Purpose 111
The Nature of Defined Terms 111
Selecting Defined Terms 112
Types of Definitions 113
Autonomous Definitions
113
Integrated Definitions
116

Which Type of Definition to Use

The Definition Section 121

120

Versus Defining Terms On Site

121
Where to Place the Definition Section

Cross-References to Definitions

122

123

The Index of Defined Terms

123
Referring to the Definition Section
124
When a Defined Term Is Used Before It Is Defined

Use Defined Terms Efficiently

CHAPTER

124

125

6 Sources of Uncertainty in Contract Language

127

Ambiguity 127
Undue Generality 128
Inconsistency 129
Redundancy 129
Conflict 130
Vagueness 130

CHAPTER

7 Reasonable Eorts and Its Variants

The Function of Efforts Provisions 133

The Spectrum of Efforts Standards 133
What the Different Efforts Standards Mean

133

134

The Semantics of Best Efforts and Reasonable Efforts

The Semantics of Other Efforts Standards
136
The Semantics of All Reasonable Efforts
136
U.S. Caselaw
136
Other Caselaw
138
The UCC
139

134

Enforceability of Efforts Provisions 140

Determining Whether a Party Has Made Reasonable Efforts

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Establishing a Benchmark
141
Balancing Without a Benchmark
Narrowly Directed Efforts
142

143

144

The Wording of Reasonable Efforts Provisions

CHAPTER

146

8 Material and Material Adverse Change

Material

ix

142

Use Only Reasonable Efforts 143

Defining What Reasonable Efforts Means
The Core Definition
Carve-Outs
144

149

149

A Source of Ambiguity
149
How Material Is Used
150
Defining Material
152
Defining Significant
153
Limiting Use of Qualifications
Basic Protection
155

Material Adverse Change

154

156

Using MAC
156
Defining MAC
164

CHAPTER

9 References to Time

Points in Time

181

181

The Prepositions
182
When in a Given Day a Point in Time Occurs
Alternatives to Ambiguity
183
Specifying the Time of Day
184
Time Zones
185

Periods of Time

183

186

Forward-Running Periods of Time

186
Backward-Running Periods of Time
187
Avoid Using Within
188
Which Unit of Time to Use
188
Using On to Denote a Day-Long Period of Time

Apportioning Quantities Per Unit of Time

The Possible Meaning of Certain Units of Time

Handling Short Periods
191

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190

190
190

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A MANUAL OF STYLE FOR CONTRACT DRAFTING

CHAPTER

10 Ambiguity of the Part Versus the Whole

Plural Nouns

193

Subject Ambiguity
193
Direct-Object Ambiguity
194
Subject-and-Direct-Object Ambiguity

And

195

195

Subject Ambiguity
196
Direct-Object Ambiguity
196
Subject-and-Direct-Object Ambiguity
198
Multiple Verb Phrases
198
Ambiguity of Direct Object Plus Objects of Preposition
The Effect of Adjectives
200
The Ambiguity of Every X and Y
202

Or

193

199

202

Background
202
As Applied to Contracts
Plural Nouns
205
The Effect of Adjectives

204
207

And/Or 209
And . . . Or 210
Every, Each, and Any 210
Practical Considerations 212
Minding Your Ands and Ors, and Supplementing Them
On Seeking to Eliminate Every Ambiguity
213

CHAPTER

11 Syntac c Ambiguity

Modifiers

212

215

215

Modifiers Preceding or Trailing Two or More Nouns

Modifiers Occurring Between Two or More Nouns
Squinting Modifiers
219
Modifiers of Uncertain Length
219
Poorly Placed Modifiers
220
Opening and Closing Modifiers
221

That and Which

215
218

223

Background
223
Current Usage
223
Recommendation
225

Commas

225

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CHAPTER

12 Select Usages

Action or Proceeding
Applicable 227

xi

227

227

Applicable Plus Noun

227
The Verb To Be Plus Applicable
As Applicable
229

228

Arising Out Of and Relating To 229

As Amended 229
As the Case May Be 231
Automatically 231
Basis (Including Timely) 232
Bylaws 233
Certain 234
Certify 234
Change in Control or Change of Control?
Competitive 235
Complete and Accurate 235
Costs and Expenses 237
Coupled with an Interest 237
Deem 239
During the Term of This Agreement 240
Execute and Deliver 240
Form and Substance 242
For the Avoidance of Doubt 243
From the Beginning of Time 245
Guaranty and Guarantee 245
Half and 50% 246
Here- and There- Words 246
Including Without Limitation 246

234

Illustrative Versus Restrictive

247
Few Cases Holding That Including Is Restrictive
248
Weak Caselaw Holding That But Not Limited To Makes
Including Illustrative
248
Cases Disregarding But Not Limited To in Holding
That Including Is Restrictive
249
Conclusion
250
How to Avoid Any Uncertainty
251

Incorporated by Reference 251

IndemnifyWhether to Say Hereby Indemnifies or Shall
Indemnify
253

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Indemnify and Hold Harmless

253

Meaning
253
Risks of Using Indemnify and Hold Harmless
Defend
255

Indenture 255
It Being Understood 256
Joint and Several 258
Knowledge 258
MoneyStating Amounts Of

260

Words and Numerals

259
Decimal Fractions
259
Very Large Amounts
260
Currencies
260
Provision Specifying Drafting Conventions

Moral Turpitude

254

261

261

Background
261
What Crime?
262
Involving?
263
Exclusion?
263
What Procedural Posture?
264
Which Jurisdiction?
264
Doubling Up?
264
Recommendation
265

Mutatis Mutandis 265

Mutual and Mutually 266
NoticeThe Apostrophe in Five Days Notice 267
Notice and Prior Notice 267
Notwithstanding, Subject To, and Except as Otherwise
Provided In 269
Notwithstanding
269
Subject To
270
Except as Otherwise Provided In
271
Eliminating Nullified Provisions
271

ObligationsSome Terminology

272

Obligation Versus Covenant

272
Obligation and Prohibition
273
Obligation Versus Duty
273
Perform and Comply With
273
Breach and Its Alternatives
273

Only 274
On the One Hand . . . On the Other Hand

274

To Indicate Which Conjunction Has Scope Over the Other

To Divide a List into Two Categories
276
Used Unnecesarily
276

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Parentheses 278
Party as an Adjective 278
Promptly and Immediately

xiii

278

Promptly
279
Immediately
280
The Semantics
281
Recommendation
282

Provided, However, That 282

Representations and Warranties

284

Distinguishing Between Representations and Warranties

Significance of Use in Contracts
286
Which Term to Use
288
Jurisdictions Outside the U.S.
289

RepresentationsCertain Related Terminology

Respective and Respectively 291
Respective
Respectively

284

290

291
292

Said Used as a Pointing Word 293

Same Used as a Pronoun 294
Satisfactory 294
Stockholder or Shareholder 295
Such As 295
Such Used as a Pointing Word 297
Survival
298
Survival of Claims
298
Survival of Provisions
299
Survival of Representations
300

Termination and Expiration

Termination for Convenience

300
302

The Implications of Termination for Convenience

Alternative Language
303

302

That Certain 304

The Earlier [or Later, Greater, or Lesser] of X and Y
Third Party 305
Throughout the Universe 306
Time Is of the Essence 307
TrademarksReferences To 308
All Caps or Initial Caps?
309
Registration Symbol or No Registration Symbol?
Relationship to Trademark Guidelines
311

305

310

Unless the Context Otherwise Requires 312

Unless the Parties Agree Otherwise 312

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A MANUAL OF STYLE FOR CONTRACT DRAFTING

The Virgule, Also Known as the Forward Slash 312

Warrant, Warrant Certificate, and Warrant Agreement
Warranty 313

313

Background
313
Definition of Warranty and To Warrant
313
Using the Verb To Warrant to Introduce a Statement of Fact
314
Using the Verb To Warrant to Introduce an Obligation
315
Using the Word Warranty
316

Willful 316
Without Limiting the Generality of the Foregoing 317
Words that Dont Belong in the Body of the Contract 319

CHAPTER

13 Numbers and Formulas

Words or Numerals
Formulas 322

321

321

Using Prose
322
Using Mathematical Equations

Consecutive Ranges of Numbers

329

330

Distinguishing Between Stepped Rates and Shifting Flat

Rates
330
Gaps and Overlaps
332

CHAPTER

14

Provisions Specifying Dra ing Conven ons

Provisions that Might Be Moderately Useful

Provisions that Should Be Redundant 336
Provisions to Avoid 338

CHAPTER

335

15 Typography

Typefaces

335

341

341

ClearType
343
Aesthetic Considerations
344
Compatibility
345
Serif Versus Sans Serif
346
Weighing Change
346

Justification 347
Emphasis 348
Emphasizing Names and Article Headings
348
Emphasizing Section Headings and Defined Terms

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What Not to Emphasize

Emphasizing Provisions

350
350

Font Size 352

Characters Per Line 353
Line Spacing 355
Space After Punctuation 355
Curly and Straight Quotation Marks and Apostrophes

CHAPTER

xv

357

16 Dra ing as Wri ng

359

Dont Make Sentences Too Long 359

Keep Subject, Verb, and Object Close Together 360
Dont Bury Verbs 361
Avoid Redundant Synonyms 363
Avoid Needless Elaboration 365
Be Restrained in Using Rhetorical Emphasis 366
Avoid Gender-Specific Language 367
Avoid Lawyerisms 368
Avoid Other Wordy Phrases 369
To the Extent That
369
The Fact That
369
There Is, There Are
370

Use Possessives 371

Dont Overuse Initial Capitals
The Extraneous The 372
Dont Use (s) 373
Contractions 373

CHAPTER

371

17 Amendments

375

Amending, or Amending and Restating 375

Title 376
Introductory Clause and Recitals 376
The Lead-In 376
Language of Performance 377
Distinguishing Between Amending and Supplementing
Adding, Deleting, and Replacing Language 377
Change Affecting Part of a Provision
Change Affecting an Entire Provision

Layout

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377
378

380

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A MANUAL OF STYLE FOR CONTRACT DRAFTING

CHAPTER

18 Le er Agreements

381

Function 381
Components 381
Senders Address
381
Date
381
Recipients Address
382
Salutation
382
Introductory Sentence
382
Substantive Terms
382
Closing Sentence
382
Senders Signature
383
Recipients Signature 384

CHAPTER

19 Dra ing Corporate Resolu ons

385

The Title 386

The Lead-In 386
Recitals 388
Resolutions 388
Where to Place the Verb Resolve
Factual Resolutions
389
Suasive Resolutions
391
Dont Use Language of Obligation

The Concluding Clause

388

392

393

Wording
393
What Date to Use
394
Counterparts
395

The Signature Blocks 395

Attachments 396
A Sample Written Consent, Before and After
Appendix

401

Appendix Part A: Before

402

Appendix Part B: Before, Annotated

Appendix Part C: After
Certain Works Cited
Cases Cited
Index

396

410

425
433

439

443

About the Author

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L I S T

O F

T A B L E S

Table 1

Language of Performance

29

Table 2

Language of Obligation Imposed on Subject

of Sentence

32

Language of Obligation Imposed on Someone

Other than Subject of Sentence

41

Table 4

Language of Discretion: May

46

Table 5

Language of Discretion: Is Entitled To

58

Table 6

Language of Discretion: Is Not Required To

58

Table 7

Language of Policy

63

Table 8

Conditional Clauses

66

Table 9

Conditional ClausesThe Matrix Clause

67

Table 10

Language of Policy Used to Express Conditions

69

Table 11

Language of Obligation Used to Express

Conditions

70

Table 12

Language of Declaration

71

Table 13

Misuse of Shall and May in Restrictive

Relative Clauses

74

Table 3

xvii

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L I S T

O F

S A M P L E S

Sample 1

Title and Introductory Clause

Sample 2

Recitals

19

Sample 3

MSCD Enumeration Scheme, Articles Version

76

Sample 4

Staggered First-Line-Indent Format

78

Sample 5

Staggered Hanging-Indent Format

79

Sample 6

Integrated and Tabulated Enumerated Clauses

82

Sample 7

Tabulated Enumerated Clauses Followed

by Dangling Test

83

MSCD Sections Enumeration Scheme

in Two-Column Format

86

The Concluding Clause and Signature

BlocksDate Stated in Introductory Clause

96

Sample 8
Sample 9

Sample 10 The Concluding Clause and Signature

BlocksSignatures Dated

100

Sample 11 Typefaces

341

Sample 12 Justification

347

Sample 13 Emphasis

348

Sample 14 Font Size

353

Sample 15 Line Spacing

356

Sample 16 Use of Italics in Amendments

380

Sample 17 Letter Agreement

383

Sample 18 Before Version of Written Consent

397

Sample 19 After Version of Written Consent

399

xix

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