Almost invariably, contracts are subdivided into articles, sections, subsections and other enumerated clauses. In large agreements, the articles are sometimes grouped in chapters. But how do you call them, those articles, sections, clauses or provisions? This blog post addresses this question.
Subdividing provisions considerably improves the readability and legibility of a contract; it enables the drafter to make cross-references and, if the contract is well structured, readers can find their way around efficiently. A few words about commonly used subdivision, indentation and numbering principles will be discussed.
Naming. There are no firm rules on naming the articles and sections. It appears that in UK legal practice, all clauses tend to be referred to as Clause whilst in the US it is common (and I believe rightfully so) to refer to Articles as the main dividers and subdivided in Sections. If Clause is used for everything, the only danger is use of the phrase this Clause, because that can obviously be ambiguous. In several jurisdictions a terminology that translates easily into English is used (e.g. clauses, sections); whilst in other jurisdictions the terminology used for referring to statutory provisions and regulations is avoided. In this book, we will refer to the main dividing level (level 1) as articles; we will refer to level 2 as sections, we call (level 3) subdivisions of sections subsections, and further subdivisions (on level 4) as paragraphs, items or (also) subsections.
You should avoid creating sections at level 5 or 6. If you do need to enumerate at a fifth level, it is recommended that you do so ‘inline’, in running text (and number either with capital letters, (A), (B), (C), or (x), (y), (z)). It is a good idea to mark references to Articles and Sections by capitalising the first letter (as opposed to references to articles in statutes or other contracts).
Articles and sections. Articles are no more than the heading (or ‘caption’) of the sections immediately underneath. The sections contain the provisions relating to a particular topic. A section may consist of one or more phrases, just like a novelist text, gathered together subject by subject. In U.S. style contracts, both articles and sections tend to be lengthier than European style contracts.
Breaking a section. If any section or subsection is more than about six to ten lines long, consider dividing it into separate subsections. In U.S. style contracts, the dividing point would be much later (e.g. twenty lines), or not even a criterion at all. If the other sections of the same article address different subject matters, it is recommended to break the section and to remove the numbering of the second part.