Defined terms and definitions are a powerful tool to improve the readability of a contract. At the same time, it is a contract drafting discipline in which almost invariably mistakes or drafting flaws are found. Thanks to M&A-practice, several ‘best practice principles’ can be identified for drafting and using definitions and defined terms. Those principles are what this blog and the following two blogs are about.
Terminology. In the best practice principles below, I adopted a fairly strict terminology: definition refers to the description, or object, of what is defined; defined term refers to the word or words chosen to refer to the definition. In common parlance, both are somewhat interchangeably referred to as definitions. The body text refers to the preamble, warranties, conditions, covenants, and contract clauses other than the definitions article.
A. BEST PRACTICE PRINCIPLES RELATING TO THE USE OF DEFINED TERMS
This blogpost was removed, since the best practice rules have been included in the book Drafting contracts, which you can read on this website (click here).