Author Archives: Matt Johnston

Clear English Contract Revision

Earlier this week, I posted a discussion on the waste of resources that comes with poorly written contracts. I had an exercise in that post that discussed how long it took to review a short 170 word passage of a contract. I promised to detailed break down of that contract provision. Fair warning, this is going to be a long post, so grab a drink.

The provision below comes from a standard vendor contract issued by a major national trade association (who remains anonymous). The association was seeking to retain my client to provide website design, programming, and integration services.

Approval.  The completion of each Phase, and the Deliverables associated with each such Phase, shall be subject to the prior written approval of Association in each instance.  Prior to moving from one Phase to the next, Vendor shall be required to obtain Association’s written approval for all Deliverables described for such Phase, as well as written approval to proceed to the next Phase. In the event that Association does not approve a Deliverable for a reasonable non-conformity, the Parties shall work together in good faith to resolve the identified problems with the Deliverable, after which Vendor, at its sole cost, shall modify the Deliverable and re-submit the revised Deliverable for Association’s review and approval.  In the event that Association rejects a Deliverable after three (3) revision cycles and Association determines, in its reasonable business judgment, that such Deliverable is critical to the value of the Services, Association shall have the right to terminate the Agreement upon written notice to Vendor, which notice shall reference the terms of this Section 4.

So let’s break this provision down into its sentence components. Below each provision, I will describe the purpose of the provision. Then I will analyze the problems with the language and why it can be written better, followed by an actual rewrite.

Sentence 1

The completion of each Phase, and the Deliverables associated with each such Phase, shall be subject to the prior written approval of Association in each instance.

Purpose: The purpose of this sentence is to state that the Associaiton must approve in writing when a phase or deliverable is complete. However, that is not what is written. The Association wants to make sure it has reviewed each phase of the project and the deliverables before moving on to the next phase, which is entirely reasonable.

Analysis: Although the purpose of this sentence is easy to understand and entirely appropriate, the contract drafter fairly well murdered this sentence.  First, there is the passive voice which hides the actor of this sentence, the Association. If you take out the clause in the middle, the passive voice becomes clearer. I think the clause regarding the Deliverables was dropped in after the original sentence was written to address the that this contract was going to include deliveries of product or reports. The result is that the reader gets confused by all the words used to express the idea of Association approval of work.

Second, the use of the word “shall” is inappropriate here. “Shall” may well be the most abused and over-used word in contract drafting. Using the “Shall Substitution,” that is substituting the phrase “has a duty to” in place of “shall,” we find a very bizarre reading. The phrase becomes “Has a duty to be subject to….” which sounds silly. The inanimate, intangible notion of “approval” can have no duty to do anything.

Third, it seems as though the concept of prior written approval is also unfahtomable. Does the prior written approval come before the Phase is complete? That is what prior written approval means, before something is complete. In fact, however, the purpose is to say that any Phase cannot be considered complete until the Association has given its written approval of the Phase work and Deliverable.

Rewrite: I would delete this entire sentence. See the discussion below for Sentence 2.

Sentence 2

Prior to moving from one Phase to the next, Vendor shall be required to obtain Association’s written approval for all Deliverables described for such Phase, as well as written approval to proceed to the next Phase.

Purpose: This provision states that the Vendor must obtain written approval from the Association before moving on to the next phase. Or in other words, This provision states that the Association must declare in writing that eaxch phase and each deliverable of the project is complete before the Vendor can move to the next phase. This is essentially a repeat of the previous sentence but couched as an obligation on the Vendor to get approval.

Analysis. This sentence is full of unnecessary rhetorical flourishes. “Prior to moving from one phase to the next,” is a lot of words to express the notion that something must be done before going to a new phase. “Shall be required” is likewise clunky. Using the Shall Substitution, we find a clunky phrase that reads “has a duty to be required.”. The last clause, “as well as written approval to proceed to the next Phase” is several words to express the idea of authority to continue work.

The next major problem is that too much burden is placed on the Vendor with this provision. If you consider that the Vendor has to provide the project deliverable and wait for the Association to approve it, why does the Vendor now have to ask permission to move on to the next phase? It places the Vendor in the role of a servant rather than in the role of a necessary partner. Of course, the Association should be happy with the Deliverable, but it doesn’t need to take such a domineering position. In this relationship, the Association needs to carry some burden of action.

Rewrite: Association must approve in writing all current Phase work and Deliverables before Vendor begins work on the next Phase.

Sentence 3

In the event that Association does not approve a Deliverable for a reasonable non-conformity, the Parties shall work together in good faith to resolve the identified problems with the Deliverable, after which Vendor, at its sole cost, shall modify the Deliverable and re-submit the revised Deliverable for Association’s review and approval.

Purpose: The biggest problem with this sentence is it attempts to state three purposes, when it actually needs to state four and it does a poor job stating its three purposes. The first purpose is to state that if the Association doesn’t like something with a deliverable, then the parties will work to resolve the problem. The missing element here is that the Association must identify the problems with the Deliverable before the parties can work on resolving the problem. The second purpose is to state that the Vendor must fix the problems on its own time and own dime. The third purpose is to say the Vendor has to resubmit the deliverable again for review and approval. If a contract is going to describe a process that must be followed, each step should have its own sentence.

Analysis: As noted above, there are way too many ideas being jammed into this sentence. The drafter needs to break things down more. The first purpose is actually incompletely stated. This is a simple if-then statement that uses my favorite five syllable, four-word rhetorical flouris (“In the event of”) instead of the simple and direct “if.” The drafter then forgot to state the “then” part. The problem with the “if” part as stated is that it tries to be too broad with its language, as if it was contemplating something broader than a deliverable to doesn’t meet its needs or specifications. The unstated “then” part of this purpose is that the Association needs to identify the problems or non-conformities, so that the Vendor can begin to address the issues. This is an example of what I call “Unstated Assumptions.” The sentence assumes problems will be identified, but fails to state who will carry the identification burden. The contract drafter then changes terminology (a dangerous habit). Note that at the start of the sentence, the Association’s disapproval is based on a “reasonable non-conformity” but then talks about “identified problems.” I understand that a person might consider them the same idea expressed differently. But a contract must be specific. A “non-conformity” would mean a failure to meet specifications, for example, the deliverable fails to integrate with a necessary component. A “problem” might be a series of typos in a text passage. The former is of concern and should prohibit approval. The second is a minor issue that should not bar progress.

The expression of the idea that the parties will work together to resolve the non-conformities or problems sounds nice, except that the whole “good faith” is another rhetorical flourish. The law of contracts implies a duty of good faith on the parties. If one side does not act in good faith, they are denying the other party the benefit of the bargain, which is actionable as a breach of contract. Another rhetorical flourish is the use of the phrase “at its sole cost.” The second purpose can be fulfilled by simply stating Vendor will correct the non-conformities at its cost.

Finally, the last little couplet “review and approval” is unecessary. Association needs to approve the Deliverable.

Rewrite: If Association discovers one or more reasonable non-conformities in a Deliverable, then Association shall identify the non-conformities in writing to the Vendor. The parties shall confer within a reasonable time to determine a resolution to the non-conformities. Vendor shall correct the non-conformities at Vendor’s cost. Vendor shall submit the revised Deliverable for Association’s approval.

Sentence 4

In the event that Association rejects a Deliverable after three (3) revision cycles and Association determines, in its reasonable business judgment, that such Deliverable is critical to the value of the Services, Association shall have the right to terminate the Agreement upon written notice to Vendor, which notice shall reference the terms of this Section 4.

Purpose: This sentence has a simple if-then conditional statement, it just takes 56 words to say it. The purpose is, if Vendor can’t correct the problem after three revision cycles, and the Deliverable is vital to the Services in teh contract, the Association can end the contract. As a consequence of Vendor’s inability to correct the problem (or potentially the Associations in ability to explain its expectations) it is probably a good idea to simply end the relationship.

Analysis: The sentence starts with my favorite rhetorical flourish to begin an if-then conditional. Next we have a number mine, the written number followed by a parenthetical. Honestly, I hate this stylistic murder of English. Pick a style. A third grader can understand what the written word “three” means. If you want to have a style that says all numbers should be in numerical form, then do so and stop putting the numbers in words. If there needs to be an edit to this part from three to four cycles, but only the number gets updated, what does “three (4)” mean? Then we get the clause “in its reasonable business judgment” which looks reasonable, but is unnecessarily long. Those five words can be replace with the simple “reasonably” to modify “determines.”

Then we have my second favorite rhetorical flourish, “shall have the right to.” Do your “shall” substitution and we would read “has a duty to have the right to….” A pretty silly reading results. What the drafter means is that the Association has discretion to terminate the contract. In other words, it can choose to to end the contract or it can choose to continue the contract. Put more succinctly, the Association may terminate the agreement. “May” is a term of discretion in contracts.

The last part of the sentence is a hidden “if-then” conditional. The only time this is needed is if the Association chooses to terminate the contract. The “if” part is hidden while the “then” part is hanging out there is space. This “then” statement is not related to the opening “if” part. The first “if” is related to the “then” of the Association being able to terminate the contract. The last “then” part needs something related to the discretion, in this case, if the Association terminates the agreement then the Association must give written notice referencing Section 4.

Rewrite: If Association reasonably rejects a Deliverable after three revisions and if Association reasonable determines the Deliverable to be vital to the Services, Association may terminate this agreement. If Association terminates this agreement, then Association shall provide to Vendor written notice citing this Section 4.

Here would be my entire rewritten Section 4.

Approval. Association must approve in writing all current Phase work and Deliverables before Vendor begins work on the next Phase. If Association discovers one or more reasonable non-conformities in a Deliverable, then Association shall identify the non-conformities in writing to the Vendor. The parties shall confer within a reasonable time to find a resolution to the non-conformities. Vendor shall correct the non-conformities at Vendor’s cost. Vendor shall submit the revised Deliverable for Association’s approval. If Association reasonably rejects a Deliverable after three revisions and if Association reasonably determines the Deliverable is vital to the Services, Association may terminate this agreement. If Association terminates this agreement, then Association shall provide to Vendor written notice citing this Section 4.

Analytics: This paragraph contains 116 words in six sentences. The average sentence length is 19.3 words, the shortest is eight words, and the longest is 35 words. The original post had just four sentences with 26, 36, 52, and 56 words respectively in each sentence for a total of 170 words. That is an average of 42.5 words per sentence.

The re-written version is 32 percent shorter in total word count and the average sentence length reduced by more than 54 percent. The ideas are presented clearly and the conditional statements clearly stated.

 

 

 

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