Ken Adams has written a recent post describing the use of “agrees that” in a contract.
One steady comment I make to agreements is getting rid of “agrees that” because it’s worse than ambiguous: it’s entirely unclear and likely to be used in distinctly different (and inconsistent) ways in the same contract. “Agrees that” becomes ambiguous when you let words mean things they don’t mean. I remove that phrase from drafts because it’s often a signal that someone is trying to say something different than what’s there. The true intent is always better expressed with “X shall” or “Y acknowledges” or even “Z represents.”
To me, the analysis is simply: What if this provision is breached? What does that look like? Who should be liable, and for what? Once you answer those questions, you know how to revise the sentence and eliminate the potential for inadvertent, or deliberate, confusion.
Man, Ken Adam’s isn’t kidding when he talks about not being impressed by collections of contracts, mostly scraped from EDGAR. I saw a reference to TechAgreements, which I hadn’t heard of before, and now I know why: Here’s a selling point on their page with “Recommended Convertible Notes” (which are all clearly just scraped): “Prepared by top US Lawyers” OMG. It’s basically a roadmap for lawyers who don’t know what they’re doing at all to practice “magic spell” law, where as long as you have the right kind of agreement, it will do the trick for your particular deal. I get that it’s not always true – I have a colleague who lost years’ worth of deal docs that she’d used previously – for her, starting with EDGAR isn’t crazy if she just wants to save time from scratch.
I’m going to have to start coming up with a series of industry specific analogies to help clients understand why the “I just need a ____ contract” doesn’t work:
“I just need a two-story house.”
“I just need a song.”
“I just need a website.”
“I just need some financial statements.”
“I just need an SUV.”
“I just need an algorithm.”
“I just need a ruby gem.”
One size fits all doesn’t. One size fits most is possible, of course, and well-drafted generic forms can you most people most of the way there. But in the same way that you can’t just take a house design out of a book or a design pattern from a website site, you can’t just use a similar contract or, worse, one with the right-sounding name, and get what you need in your deal. Applying law to facts – to your specific facts and circumstances, including your particular sensitivities to different kinds of risks – that’s the practice of law. That’s what we do, and you can’t get that out of a pile of someone else’s contracts, no matter how big it is.