Plain English in contracts: how to keep it simple and clear

Each contract drafter should write plain English in contracts and keep only a few main drafting principles in mind. A contract should be in plain English, meaning that the contract language used is simple and clear. A drafter must be accurate. The contract should be consistent as regards style, structure, terminology and level of detail. A drafter may use vague terms but should be conscious how and when to use them, and should avoid ambiguities (unless it serves an intended purpose).

Furthermore, a contract drafter who works in a multinational context should have a broad understanding of the characteristics of different national legal systems and be aware of significant differences between legal cultures.

Use plain English in contracts: a businessman should be able to understand what it says. The involvement of a legal counsel should be necessary only to give an impartial view, oversee the legal consequences, to clarify that certain phrases are normal or to confirm that indeed they reflect the parties’ intentions. The legal aspects of a contract should be limited to what is being expressed, not how it is expressed. (No tricks!) Old fashioned contractual language, which is not plain English (anymore) will make a contract harder to read. It will also not serve the interests of the parties.

Plain English. What is plain English in contracts language, especially plain legal language? It is ordinary ‘adult English’, used in day-to-day context. It is language stripped of archaic ‘legalese’ or the latest business jargon and vocabulary, supported by a proper layout and typography of the text. As regards spelling, a multinational company may prefer British English (or another) to U.S., Canadian or Australian English but in either case, language should be used consistently.

Don’t. Nevertheless, do not use:

  • …it’s…
  • …ain’t…
  • …won’t…
  • …can’t…
  • Purchaser should not
  • Licensee should
  • owe Seller…

…for obvious reasons (?)

No archaisms. There is no need to include archaisms such as WITNESSETH or oddities such as the use of both words and numerals to express numbers (words may be useful because a number is easy to misprint, but equally risky is updating figures whilst forgetting the corresponding words; words to ascertain that 30 days are “(thirty)” days and not “13” or “20” is ridiculous). The use of Latin terms is not archaic but you should avoid grotesque speech.

Important and necessary. A good drafter determines what is important. It is important to understand where in the business the real risks or avoidable exposures are, or where the desired performance by a party is not self-evident. Secondly, a drafter should consider whether providing for it is necessary; in other words, who carries the burden of any true uncertainty? Often, deleting words or clauses makes clear what really matters.

Do not emphasise the unnecessary (plain English in contracts is plain…) #

A contract drafter should resist attempting to insert more emphatic wording than is necessary to achieve the purpose of an obligation or a provision. If words are clear and precise, there is no need to underline that they mean what they say. A few words seem to be particularly common. For example:

No Party shall subject its interests in the Shares in any manner whatsoever to a right of pledge, a right of usufruct or other encumbrance of any kind.
Upon settlement of the IP Claim, Peterson shall have no right of action whatsoever against Johnson.
Purchaser may in its sole discretion waive any of the Conditions under paragraphs (a), (c) and (d) at any time.

Obviously, a compromise in discussions between the parties may well result in a contract provision emphasising that a certain behaviour is prohibited. Do not avoid such psychological strategies.

Delete unnecessary words #

. Finalising a contract by deleting the superfluous words makes it crisp. Deleting unnecessary words brings the truly important matters to the surface. This is even more important in contract drafting than in other writings. A woolly novelist may bore the reader; but a wordy contract drafter may even create ambiguity.

In der Beschränkung zeigt sich erst der Meister.[1] (Dare to delete.)

The following ‘drop dead provision’ can be much shorter:

This Agreement may be terminated at any time prior to the Completion by either Party, if the Completion shall not have been consummated on or before 31 March 2008, provided that the termination right shall not be available to any Party whose failure to perform any material obligation under this Agreement is the cause of such delay.

The provision states an exception that will likely apply in every mature jurisdiction: one cannot have cake and eat it. Therefore, more appropriate would be:

Each Party may terminate this Agreement at any time prior to the Completion, if the Completion shall not have taken place before 1 April 2008.

A good drafter determines what is important. It is important to understand where in the business the real risks or avoidable exposures are, or where the desired performance by a party is not self-evident. Secondly, a drafter should consider whether providing for it is necessary; in other words, who carries the burden of a true uncertainty. Often, deleting words or clauses makes clear what really matters.

Plain English in contracts require short sentences #

Short sentences are easier to read. Everyone knows that short sentences are much easier to read than longer ones. Contracts are amongst the least readable texts one can imagine. Apart from the abstract language, the typical reason for this is the use of lengthy sentences. Therefore, be concise and to the point and address only those matters that must be elaborated on to avoid surprises or confusion, or those matters which have relevance in litigated disputes.

Adopt a contract drafting convention. Some organisations have a rule that no sentence should exceed 17 words and that no word should exceed five syllables. This may be excessively prescriptive but it imposes an excellent discipline. It certainly requires the drafter to express ideas one at a time. A true dragon is the following sentence:

Exclusivity.  The Seller covenants and agrees that for a period of ninety (90) days after the date first written above (the “Effective Date”) or such shorter period as set forth below (as the case may be, the “Exclusivity Period”), none of the Seller, its affiliates or subsidiaries will, and they will cause their respective shareholders, directors, officers, managers, employees, agents, advisors or representatives not to, directly or indirectly, solicit offers for, encourage, negotiate, discuss, or enter into any agreement, understanding or commitment regarding, a possible direct or indirect sale, merger, combination, consolidation, joint venture, partnership, recapitalization, restructuring, refinancing or other disposition of all or any material part of the Company or its subsidiaries or any of the Company’s or its subsidiaries’ assets or issued or unissued capital stock (a “Company Sale”) with any party other than Purchaser or provide any information to any party other than Purchaser regarding the Company in that connection; provided that, (i) for the time period commencing on the Effective Date and ending at 11:59 p.m. Central European Time on 7 July 2007 (the “Bid Confirmation Date”), the Parties shall work together in good faith and use commercially reasonable efforts to facilitate due diligence by Purchaser and their advisors to confirm, based on the information made available to Purchaser or their advisors prior to the Bid Confirmation Date, the intent of Purchaser to implement the Transaction pursuant to the terms of this Heads of Agreement and if Purchaser does not deliver notice to Seller of such intent by 11:59 p.m. Central European Time on (or otherwise prior to) the Bid Confirmation Date (such notice, a “Bid Confirmation”), then Seller shall have the right to terminate the Exclusivity Period effective as of (but not prior to) the Bid Confirmation Date by providing written notice to Purchaser by no later than 5 p.m. Central European Time on (but not prior to) the day following the Bid Confirmation Date; and (ii) if Purchaser delivers the Bid Confirmation or if such termination notice set forth in the preceding clause (i) is not given, the Seller shall have the right to terminate the Exclusivity Period effective as of (but not prior to) 11:59 p.m. Central European Time on the sixtieth (60th) day following the Effective Date by delivering written notice of such termination to Purchaser by no later than 5 p.m. Central European Time on (but not prior to) the sixty-first (61st) day following the Effective Date.

Techniques to simplify such sentences are to think first and to conceptualise: does it really increase ‘certainty’ if you draft the long lists of persons, actions or matters?! A list also has drawbacks such as encouraging creativity towards the grey areas of the listed matters; concepts are more likely to capture any failing manifestations; a list of concepts lacks conceptuality.

The above contract clause can be shortened easily by a better use of definitions, by separating out the condition (i.e. the second half), by defining:

  • the exhaustive (?) list of related persons (e. “their respective shareholders, directors, officers, managers, employees, agents, advisors or representatives”);
  • several or all (?) of their prohibited actions (e. “not to, directly or indirectly, solicit offers for, encourage, negotiate, discuss, or enter into any agreement, understanding or commitment”); and
  • all (?) the possible transaction structures (e. “a possible direct or indirect sale, merger, combination, consolidation, joint venture, partnership, recapitalization, restructuring, refinancing or other disposition of all or any material part of the Company or its subsidiaries or any of the Company’s or its subsidiaries’ assets or issued or unissued capital stock”).

In other words, a quasi-exhaustive list could be reduced into concise wording addressing the relevant concept rather than its manifestations.

Uncertainty can be taken out if abstract references are made concrete. A reference to time (e.g. “5:00 p.m. Central European Time on (but not prior to) the sixty-first (61st) day following the Effective Date”) can replaced by the actual date and time.

Sentence and paragraph structure #

One of the most important features of simple and clear language are the sentence structure and your paragraph setup. In this paragraph (c), we will discuss several techniques to improve your style.

Keep subject, verb and object together (SVO)

Sentences in the English language fairly strictly follow an order of subject-verb-object (SVO). Texts are easier understood if the actor (the subject) and the determination of his action (the verb) are close together at the beginning of the sentence. A document becomes harder to read when you create unnecessary gaps between the subject and the verb. The Dutch and Germans have the patience for that. If the sentence also contains an object, this would be best positioned early on in the sentence but always after the subject and the verb. Sometimes, this should be achieved by turning the intervening words into a separate sentence or by moving them to the beginning or end of the sentence. An example:

The Seller hereby sells and transfers the boat.

Here the seller is the subject (S), sell is the verb (V) and boat is the object (O). This very simply example can be contrasted with the following:

The Seller hereby sells and transfers, subject to purchaser providing x, y and z indemnities, the boat.

In this example, readability improves if the boat is moved to the beginning or, probably even better, the indemnities can be moved to the next sentence or even a separate article headed Indemnities.

Order your contractual concepts

Sometimes, the object of an obligation consists of several concepts. If you prefer not to split the sentence, it is a good idea to structure the object of the obligation so that the reader will catch all the concepts at once and is able to remember each. In line with this, use a natural sequence in which the concepts are commonly experienced. An example of a messy sequence:

…to use, sell, have sold, manufacture, have manufactured, modify, have modified, distribute and have distributed the Licenced Product.

Obviously, a product is not first used, then sold, then manufactured etc. Few people can reproduce this. Conversely, many people are able to reproduce even a long sequence if it is logical. Furthermore, bring together the items that relate to each other:

Force Majeure means [acts of God such as earthquake, flood, storm or lightning, fire], [accident, explosion, sabotage, war, terrorism, riot, civil disturbance, epidemic]

Grouping subordinate clauses

An effective technique to increase legibility is to separate out the exceptions, qualifications or conditions. Often, the visual subdivision in separate (indented) subparagraphs increases readability. Sentences should be short-cut if they pile up clauses that could well stand on their own or if exceptions, qualifications or conditions can be separated and moved to a separate sentence. Alternatively, you could subdivide the exceptions, qualifications or conditions in separate (indented) subparagraphs:

Seller shall indemnify Purchaser against all costs and damages to the extent caused by the following facts or events preceding the Closing Date:
(a)        any contamination on the Manufacturing Site related to discontinued activities as of Signing Date, provided that (i) Purchaser gives Seller full control in handling such contamination and related damages, and (ii) promptly notifies Seller of all communications with Governmental Authorities and interested persons;
(b)        the environmental remediation of the Manufacturing Site related to current activities, provided that:

(i)         the remediation is initiated within 12 months from the Closing Date;
(ii)        Target and Purchaser have obtained written approval of Seller for remediation actions undertaken (which consent may not unreasonably be withheld or delayed) and have kept Seller fully informed of all communications with Governmental Authorities and other interested persons; and
(iii)       the remediation is for the contaminations identified on Schedule 3 only and is substantially in accordance with a remediation plan agreed between the Parties and approved by the Governmental Authorities,

up to a maximum of EUR 1 million.

Please note that by the level of indentation, the limitation to one million euro applies to section (b) only.

The left-right principle (or: pyramid principle) #

Left-right principle. You will make reading easier if you formulate the sentence such that it reads from a known or familiar context into the main message. In many languages, the unguided reader will read to the end of a sentence in an (unspoken) ascending or descending tone. At the end of the sentence, where the tone reaches the peak (or bottom), the reader unconsciously ‘seeks’ the most important information. This is called the left-right principle and may help the writer structure a text and each sentence. This is illustrated by the following graph:

Plain English in contracts and Left right principle
Plain English in contracts and the left-right principle

If you want to make it the reader easy, start with a subject that is known (because it was addressed in the preceding sentence) and end the sentence with what you want to achieve with that sentence. This left-right principle equally applies to structuring a paragraph or section and to structuring your entire contract and even the set of transaction documents. The principle implies that simple matters are addressed first and complications later on in the sentence, paragraph or contract[1].

If the most important information is halfway through the sentence (instead of at the end), the reader may miss the importance of it or even the entire point. Contract clauses should adopt the left-right principle by limiting and structuring the information in the sentences of a section. For example:

A is followed by B and C. B implies D. C causes E. D and E support the conclusion F.

The left-right principle somewhat discords with how people think: a normal person starts with the main point and then deals with the exceptions and limitations. You would make the reader comfortable by first driving your point home. The left-right principle on the other hand, suggests using familiar concepts and a known context first and then work towards the key point. A technique to redress this discordance is to limit the scope of a sentence to introducing only one or two ‘new things’ per sentence.

Signalling sentence. It also helps to start a paragraph with a signalling sentence addressing the main topic or conclusion and then ‘restart’ the paragraph. The topical paragraph structure of the previous example could therefore become:

A leads to F. A is followed by B and C. B implies D. C causes E. D and E support the conclusion F.

The signalling (or topical) sentence may well be used to convey a basic, but often forgotten, statement. For example, a research agreement or a joint development agreement normally supports a project plan or statement of work, where those latter documents are the essence of the relationship; in particular if one party is required to propose a project setup, it makes sense to start the article dealing with the contents of the project plan or ‘SoW’ with:

Service Provider shall work out all details of each Development Project in a Statement of Work. Each Statement of Work proposed by Service Provider to Customer must set forth…

The left right-right principle, as well as using a signalling sentence, also discords with how people perceive other people’s communications: an audience tends to visualise. This would mean that a message is better received if you start with an example and continue with the substance. If you want to prevent a reader visualising his or her own example, start with the right one yourself. Then elaborate on that example to make your point. For example:

The Parties shall use best efforts to have the Conditions satisfied as soon as practicable. In particular, Purchaser shall, in respect of the Condition in Article 2.1(c): (a) make appropriate filings…; and (b) propose all such remedies as…

In this example, the first sentence states the main principle. This makes reading the subsequent sentence easier. It would be understood as an elaboration on the principle of best efforts. Note, however, that if you replace in particular by the word furthermore (or in addition), the second sentence converts into a firm obligation standing on its own (!)

Plain English in contracts is supported by using signalling words #

Three techniques to link. Bryan Garner[2] divided such links or transitions into three categories:

  1. Pointing words: this, that, these, those and the.

These words – especially this and that – refer directly to an antecedent. If the preceding sentence or paragraph describes a principle or prohibition, and the next paragraph begins with “An exception to this…” the word this makes a clear connection.

  1. Echo links: words or phrases echo a preceding qualification, condition or concept.

An echo link between two provisions of a contract provides a strong connection and is therefore a useful technique to avoid ambiguity. At the same time, contract drafters tend to expand the echo links to avoid ambiguity. Therefore, always remember the general drafting principles of keeping a contract simple and clear (e.g. ‘write short sentences’ and ‘delete unnecessary words’). An ‘echo link’ often appears together with the pointing word such (e.g. “…such prohibitions do not…”). As a matter of style, consider limiting yourself to the more elegant pointing word the or this in connection with an ‘echo link’.

For example, it is unnecessary to repeat or summarise prohibitions if qualifying them as such (or identifying them by their number) is unequivocally clear. So after an enumeration of three prohibitions, avoid elaborate echo links such as:

The three prohibitions not to modify, manufacture or use the Prototype do not apply in the event that…

Given the strong interrelationship created by an echo link, it is recommended to minimise it to what is really necessary for making the transition (and avoiding ambiguity):

The three prohibitions do not apply if…

It would probably be appropriate, especially if the preceding enumeration consists of visually separated subitems, to continue with the mere caveat “…, except if…”.

Note that the echo link may well be used to express a qualification of what precedes (e.g. calling the three enumerations ‘prohibitions’ implies a qualification). However, be reluctant to introduce more than one qualification in such echo links. The qualifications themselves may be a source of ambiguity. Note that the use of defined terms is a species of echo links.

  1. Explicit connectives: words intrinsically making a transition (such as further, also, therefore).

These ‘explicit connectives’ greatly improve the readability of a text because the coherence of provisions increases. Garner categorised the explicit connectives:

  • Adding a point: also, and, in addition, besides, similarly, further;
  • Giving an example: for example, for instance, for one thing (and for another);
  • Restating or summarising: in other words, that is, in short, put differently, again;
  • Introducing a result: so, as a result, therefore, accordingly, then;
  • Contrasting: but, however, on the other hand, nevertheless, conversely;
  • Summing up: to summarise, to conclude, in conclusion, in short;
  • Sequencing qualifications, conditions or concepts: Firstly,… Secondly,… Thirdly,… Finally,…

Not all of these categories apply to contracts. Examples should be given only when the obligation or provision is not readily understandable or if the extent or priority of any exceptions, qualifications or limitations cannot easily be understood without an example. Furthermore, a contract should not contain a restatement or summary of any obligations other than in the recitals. Similarly, the background of obligations and other provisions should not be explained (except for key obligations and provisions that may be announced in the recitals); therefore, only exceptionally ‘introducing a result’ is appropriate.

Use the active tense and personalise sentences #

Active tense. A golden rule for writing texts, equally valuable in drafting contracts as for any text, is to use the active tense instead of the passive. Often, the active voice results in a sentence that is less wordy and more direct.

In passive tense there is the potential danger that it is unclear which party is obliged to perform. To solve this in the passive, the drafter should insert additional words like by Seller. Two additional words. A technique to prevent this is to realise that each obligation should mention the debtor. In most cases, this will almost automatically turn the sentence into the active tense in which the debtor of an obligation is also the (grammatical) subject of the sentence.

Personalise! A method to make contracts dry as dust is to ‘impersonalise’ the contract provisions. Impersonal sentences can be recognised by phrases such as It is agreed that. Often, this phrase is redundant because it would be followed by something like A shall do x and y, which is sufficient and clear. If it is not, the actor (i.e., the debtor of the obligation) is probably missing. Similar examples, in which the debtor potentially remains unclear, start with The Parties agree to.

Similarly, if possible, obligations and other provisions should be drafted in the singular number and the present tense. Instead of The Parties shall promptly notify each other of the occurrence of events of force majeure, it is better to write A Party shall promptly notify the other Party of the occurrence of an event of force majeure.

Nominalisation. Nouns are more tiresome to read than verbs. ‘Active sentences’ tend to build ‘verb-heavy’ structures that would in the passive be covered by nouns. A verb gives a sentence its action, whereas a noun places the reader outside the context. This means that a text also becomes more vivid in the active voice. Not only does the active voice keep a sentence simpler, it also tends to make the sentence clearer.

Lawyers are well able to nominalise verbs: in the lawyer’s eye, a shareholder does not resolve but adopts or makes a resolution; a buyer does not pay but makes a payment; a party does not notify in writing but gives a written notice; a service provider does not act appropriately but takes appropriate action. NOT! Try to avoid these nominalisations and build on verbs as much as possible.

Use the singular. If possible, obligations and other provisions should be drafted in the singular and using the present tense. The idea behind this is that the use of plural nouns and prepositions such as and, or, each, every or any may create ambiguity. With those prepositions, it may be questionable whether in a particular context a reference should be made to a single member of the group identified by the noun, or to the entire group. For example, instead of:

The Parties shall promptly notify each other of the occurrence of events of force majeure.

It is better to write:

A Party shall promptly notify the other Party of the occurrence of an event of force majeure.

 

[1]      Joseph M. Williams, Style – Lessons in clarity and grace, Pearson Longman 2007 (9th ed.), 92 ff. Barbara Minto, The pyramid principle – Logic in writing and thinking, Prentice Hall/FT, 2009 (3rd ed.).
[2]      Bryan A. Garner, Legal Writing in Plain English, University of Chicago Press, Chicago 2001, p. 67-71.
[1]       Goethe, Natur und Kunst, 1802.

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