August 2004

Commonest Errors in Contract Drafting

by Robert C. Cumbow

These columns have tended to focus on general grammar and usage issues, with only occasional sorties into questions specific to legal writing. This time I'd like to focus on a kind of writing unique to lawyers: the drafting of contracts.

This is not intended to be a primer on how to structure and draft a contract. It's nothing more than a collection of the errors and usage problems I've most commonly seen in contracts.

Let's begin with the identification of the parties. A standard identification clause will read something like: "This Agreement is made and entered into by and between Joan and Francine." That structure works fine for the two-party contract, which is the most common kind. Multi-party contracts are rare. Less rare, however, are two-party contracts in which one of the two parties is a partnership or some other group of persons or entities. In this situation, it's no longer a simple matter of writing, "This Agreement is made and entered into by and between Joan and Francine and Loretta." Stated that way, it looks like a three-party contract, or a two-party contract in which it's not clear which of the two parties includes Francine. Is the contract between (1) Joan and (2) Francine and Loretta, or between (1) Joan and Francine and (2) Loretta? A good solution to this difficulty — and one that sure beats the archaic "party of the first part" and "party of the second part" — is the "two-handed" approach: "This Agreement is made and entered into by and between Joan, on the one hand, and Francine and Loretta, on the other."

This may seem like a no-brainer, but you might be surprised how common it is for a contract to list three names without clarifying which side each of the named parties is on. A not-uncommon example is "This Agreement is made and entered into by and between Joan's Publishing Company ("Publisher") and Francine ("Author") and Loretta ("Illustrator")." Each party may know which side she's on, but it will not be clear at all to an objective, uninvolved reader of the contract—such as a court.

The Recitals

What about those pesky "whereas" clauses? Actually, they're often not necessary at all. But if your agreement needs recitals, simply follow the identification of the parties with a section called "Recitals." To avoid confusion, identify the recitals with letters rather than numbers. Once you have all your recitals in, start a new section called Agreement, and number the paragraphs from there on.

However, if for some perverse reason you really need the traditional "whereas" structure, at least do it right. Remember that "whereas" is a conjunction meaning "It being the fact that" or "inasmuch as." ("Whereas" can also mean "and" or "but," as in "Morty went to the movies whereas Ferdy went to the mall," or "I think Paul Verhoeven is a great satirist, whereas most critics take him seriously.") Because "whereas" is a conjunction, the phrase it introduces is not a complete sentence, and thus should not be followed by a period. A comma is acceptable, but for ease of reading, our old friend the semicolon works best.

It is a very common and erroneous belief that the word "whereas" should be followed by a comma. This is nonsense. You should not put a comma after the introductory word "whereas" in a recital, any more than you would put a comma after the word "because" in a structure such as "Because I do not hope to turn again."

Remember, too, that the word "and" should introduce the last item in the "whereas" series, just as the word "and" precedes the last term in any series. In traditional contract drafting, the recitals are followed by the phrase, "Now, therefore, the parties agree as follows:" — which is actually the main sentence, to which the various "whereas" recitals are qualifying dependent clauses. A properly rendered recital section in traditional "whereas" form, then, ought to look something like this:

Whereas Francine has written a children's book on the subject of bees;
Whereas Francine has a contract for the publication of said book;
Whereas Loretta is an illustrator noted for her work in drawing bees; and
Whereas Francine wishes to engage Loretta to illustrate said book;
Now, therefore, Francine and Loretta agree as follows:

The capitalization of each clause is, of course, not strictly correct, since the entire recital section as presented here is a single sentence. But in this instance, capitalizing each new clause is a harmless nod to traditional formal drafting from the quill-and-ink days. For modern audiences, however, doesn't the following look a lot friendlier?

RECITALS
A. Francine has written a children's book on the subject of bees.
B. Francine has a contract for the publication of said book.
C. Loretta is an illustrator noted for her work in drawing bees.
D. Francine wishes to engage Loretta to illustrate said book.

AGREEMENT
1. Francine and Loretta will share equally all proceeds received from the published book. (etc.)

The Party of the Redundancy Part

I can't tell you how often I see the phrase "mutual agreement" in contracts. In fact, I'm writing this entire column just to provide myself with an opportunity to protest the use of this absurd redundancy. "The deliverables will be due according to a schedule on which the parties will mutually agree." "This agreement may be revised or modified from time to time by mutual agreement of the parties." Think, friends, for just a moment: Is there such a thing as an agreement that isn't mutual? Is it an agreement at all if only one party agrees? After you've drafted a contract, do a global search for the word "mutual." Chances are you'll be able to delete every occurrence of that word, since the concept of mutuality is necessarily contained in the concept of "agreement."

Avoiding Pitfalls

Some additional elementary grammatical or usage mistakes that I've seen in a lot of contracts are ones that I've already discussed in previous columns, so I'll just summarize them here:

• "Which" or "that"? In deciding whether to use "which" or "that," ask yourself whether the clause to be introduced by the disputed word is essential to what you have to say, or is an incidental bit of information that could just as easily be left out without harming your message. Or, if you prefer, ask yourself if you could insert the phrase "by the way" into the clause and not lose your meaning. A good test is to say the sentence to yourself both ways, using "which" and then using "that," and choose the way that sounds right. This works most of the time, because people tend to use "that" correctly when speaking. It's only when writing that many of us get overcome with attacks of stuffiness and convince ourselves that "which" is the better word because it somehow sounds more important.

• Where to put the "only": Search for every occurrence of the word "only" in your contract, and make sure that (1) it serves a useful purpose in the sentence, and (2) it is in the best possible place to make the meaning clear. To show you what a difference the placement of an "only" makes, I present three variations on a contractual sentence:

1. Only Francine will receive royalties if Loretta agrees.
2. Francine will receive only royalties if Loretta agrees.
3. Francine will receive royalties only if Loretta agrees.

If you think these three sentences all mean the same thing, you have no business drafting contracts.

• Apostrophe-s: Form the possessive of a singular noun by adding apostrophe-s. Form the possessive of a plural noun ending in "s" by adding an apostrophe only. Form the possessive of a plural noun not ending in "s" by adding an apostrophe-s. And most importantly, do not use "it's" when you mean "its." "Its" is the possessive form of "it" (as in "Dog must have its day"). "It's" is a contraction for "it is."

Taking the Wind Out

I don't pretend that any of what follows is original, but it bears repeating. The wind can be taken out of most legal contracts by writing in plain, even conversational, English, and using as few words as possible.

"Shall" is a word almost never spoken. But somehow when lawyers sit down to write a contract, "shall" takes over the field, sweeping every cowering "will" before it. Traditionally, "shall" was an imperative, signifying that a thing was required; while "will" was a simple signifier that an event would take place in the future. That distinction has been lost — thanks largely to overzealous legal writers who use "shall" for everything. Example: "As used in this contract, the word 'Author' shall be understood to refer to Francine." Better: "In this contract, the word 'Author' means Francine." Better still: "Francine ('Author')."

For today's audiences, use "will" if you mean that the thing is in the future; use the present tense as much as you can; and try not to use "shall" at all.

The passive voice is wordier, windier, and usually less clear than the active voice. Use the passive only if your point can't be made as clearly or smoothly in the active voice. On this issue, your word-processing software's spell-checking feature might actually help rather than hinder (as it usually does). Most spell-checkers are now flagging the passive voice and "suggesting" recasting the sentence in the active voice. Consider following the advice whenever you can.

Another example of wind in a contract is the use of the phrase "to include." Put that way, it suggests that the inclusion has not yet occurred, but will in the future. If that's true, then go ahead and use it: "The illustrations, to include all drawings, maps, and charts, are due 60 days after the parties sign this contract." However, if the inclusion has already occurred, it makes no sense to use "to include." "Francine has written three books, to include one successful children's book." In that sentence, "including" makes more sense.

While we're on the subject of inclusion, let's quickly acknowledge the contract drafter's friend "including without limitation." The word "include" does not mean "limited to," or "having only these things." It means, in fact, exactly the opposite: "having these things and some others as well." Using the construction "including without limitation" or "including but not limited to" is an unnecessary device that serves no purpose. The word "including" does not mean, and never has meant, "limited to." No one ever uses it or understands it to mean that, and no court would ever interpret it to mean that; so there is no reason to add "but not limited to" when using the word "including." This is one of those belt-and-suspenders redundancies that tend to make contracts unreadable, unmeaningful — and sometimes, as a result, unenforceable.

All lawyers have an interest in making contracts — and all legal documents — clear, understandable, even engaging. Send me your suggestions on improving the drafting of legal documents, and I'll incorporate them into a future column.

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Robert C. Cumbow is a shareholder with Graham & Dunn, Seattle, where he counsels clients in beverage, food, communications, entertainment, and other businesses on trademark, copyright, advertising, and media law. He teaches at Seattle University Law School; has written widely on law, film, food, and language; and contributes this column quarterly to Bar News. Contact him at rcumbow@grahamdunn.com.

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