Thursday, June 23, 2011

Drafting tip: Keep the word "especially" out of your contracts

The word "especially" can be ambiguous when used in a contract because it may indicate that whatever it modifies is "particularly important" or it may instead be interpreted to mean "specifically" or "principally."  The problem is, as Ken Adams from Koncise Drafter points out, the former may lead to the conclusion that one scenario in a series is more important than the others when that isn't what the parties intended. By way of example:

Usually, especially is used to mean “particularly,” as in the following examples:

If the scope of work of a Work Order changes, especially the estimated timelines, then the applicable Work Order may be amended as provided in this Section 5.3(a).

Distributor shall not, for any reason whatsoever, disclose any of Taomee Network’s business secrets to any third party, especially Taomee Network’s competitors, failing which it will be subject to severe penalty and, if the circumstance is serious, legal liability.

If any party breaches the contract, especially under material breach, the breaching party shall compensate the other party 20% of the total contracted amount of the last one year.

The Sellers acknowledge that such information is of material to the Business, and will continue to be so after the consummation of the transactions contemplated herein, and that disclosure of such confidential information to others, especially the Company’s existing and/or potential competitors, or the unauthorized use of such information by others would cause substantial loss and harm to the Company.

To the extent to which the contributing Party is entitled to assert claims towards third parties under the contract on the contributed activities, especially claims under guarantees and warranties, it assigns such claims to STOXX as far as they relate to the contributed activities, or asserts such claims in the interest of, at the expense of and in favour of STOXX.

Executive’s obligations under Article III and Article IV of this Agreement (especially those relating to confidentiality, non-competition and non-solicitation) shall continue after his employment with the Company is ended, regardless of the nature or reason for such termination.

The problem with especially is that it’s used to indicate that with respect to a given provision, some subset of the universe to which that provision applies is particularly important. Necessarily, that denigrates the importance of the rest of that universe; that could could hamper attempts to enforce that provision with respect to the rest of that universe.

If you want to make sure that something falls within the scope of a given provision, you can do that in ways that are more neutral than by using especially. For example, through disciplined use of including (see MSCD 12.100).

Drafters also use especially to mean “specifically,” as in the examples below. Using specifically instead would represent a better choice.

This Plan shall be administered initially by the Board of Directors of the Corporation (the “Board”), except that the Board may, in its discretion, establish a committee composed of two (2) or more members of the Board or two (2) or more other persons to administer the Plan, which committee (the “Committee”) may be an executive, compensation or other committee, including a separate committee especially created [read created specifically] for this purpose.

The Construction Manager shall obtain bids from Subcontractors and from suppliers of materials or equipment fabricated especially [read specifically] for the Work and shall deliver such bids, and a recap and summary of such bids, to the Architect and the Owner.

(jbl).

http://lawprofessors.typepad.com/legal_skills/2011/06/drafting-tip-keep-the-word-especially-out-of-your-contracts.html

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