4.1 Cross references

A provision often refers to a contract clause in the same contract or another contract. (Note that a provision can also refer to itself: this Section 9.2.) Such a cross reference indicates how the two provisions interact; whether the one is an elaboration on the other, subordinated or prevailing. For example:

Sections 6.4, 6.5(b), 7, 8.4, 12, 16, 17 and 18 shall survive the Term or an earlier termination of this Agreement.
Subject to Section 4.4, within 30 days of the date of delivery…
Technology Licence means the technology licence agreement attached as Schedule4.
The Deliverables corrected, completed or modified in accordance with Section 5.2(b)(ii) are subject to Acceptance in accordance with this Section 5.1; and

It is strongly recommended to keep the number of cross-references to a minimum. First, it improves the readability of the contract; the fewer the number of cross-references the better a reader should be able to understand a given provision on its own, without having to turn to other parts of the contract. The references subject to, notwithstanding and without prejudice to are normally the most disruptive ones. Secondly, a high number of cross-references, especially in a first draft of the contract, increases the chance of erroneous or dead references.

Suffixes. Some drafters add an indication below, above or hereof to the cross-reference. It indicates that the reference is an internal cross-reference rather than a reference to a section of some other contract. It is good practice to omit such a ‘suffix’. Omission implies the possibility that a reference made without the suffix can be interpreted as a reference to something arguably outside the contract. But, in virtually all cases, its omission does not entail any confusion (whilst in the opposite context, where reference is made to a source outside the contract, the drafter will likely be keen to ascertain that the reference is specific and correct). In case of references to a schedule or an annex, it may be useful to add the title of the schedule or annex immediately after the reference (and, obviously, make sure that the title does not change unless the reference is also changed).
If you are concerned about the specificity of a cross-reference without such a suffix, consider including a clause in the interpretation article, such as:

References to Articles, Sections, Annexes and Schedules are references to articles or sections of, or annexes or schedules to this Agreement.

If someone comments on the draft of someone else, it often happens that sections or articles are inserted or that sections are deleted. The result is that the cross-referred to section falls away (e.g. because a section is deleted) or that it is renumbered.

Automated cross-references. Common word processors provide a functionality to update references automatically, but in MS Word this is an additional source of problems because the technical point of reference easily falls away when editing the document. It is a good habit to use such functionality and, if you do so regularly, consider changing your personal preferences such that ‘field shading’ is always shown in grey on the screen (where the default setting would be that it turns grey only if the cursor is on the reference). Such automatically generated cross-references are reliable in the case of automated contract assembly applications (see paragraph 9.1), but also, in those cases, the subsequent drafting work may render references incorrect.

Marking references. Some drafters mark all cross-references by underlining or printing them in bold. This enables the reader to trace quickly where and how cross-referred to sections or annexes are referred to. Marking might also assist in checking internal cross-references. Otherwise, marking cross-references does not seem to serve any purpose. If cross-references are numerous, consider limiting the marked cross-references to those that refer to a schedule or annex only (which is what we prefer).