Contracts are formal documents, generally constructed from three basic forms of sentences, each following the form of subject…verb…object.
- Obligations = Noun Entity (party)…modal verb…verb…object.
- Statements = Noun Generic…modal verb…verb…object.
- Definitions = Term…(“means” / “includes”)…definition
Conditions, qualifiers, and exceptions may appear in any order either preceding or following the obligation or statement:
[condition / predicate]…[obligation / statement]…object…[qualifier / exception].
Obligations
Obligations are sentences where the subject of a modal verb is one of the parties to the agreement. A modal verb is a type of auxiliary verb used to indicate modality—namely, permission, obligation, or ability.
- General form: Noun Entity (party)…modal verb…verb…object.
- Conditional obligations: [condition], Noun Entity (party)…modal verb…verb…object.
- Qualified obligations: Noun Entity (party)…modal verb…verb…object…[exception / qualifier].
Note: conditions and qualifications may appear anywhere in the sentence and a sentence may contain both.
Representations & Acknowledgements
Representations and acknowledgments are sentences where the subject of the sentence is a party and the verb is one (or more) of the following: “represents”, “warrants”, “acknowledges”, or “agrees”.
- Complete clause: Noun Entity (party)…modal verb…verb…object.
- Statement following an introductory clause: Noun …verb…object.
Statements
Statements are sentences where the object of the verb is the agreement or a generic noun.
- Statements relating to the agreement: This [A / a]greement…[modal verb]…verb…object.
- Other statements: Noun …[modal verb]…verb…object.
Note: statements may or may not contain a modal verb.
Defintions
Definitions or defined terms may be drafted in-line or in a separate paragraph, often grouped together in a dedicated “Definitions” section.
- Restrictive definition: “[Defined Term]”…means…definition.
- Illustrative definition: “[Defined Term]”…includes…definition.
- Embedded definition: “[Defined Term]” has the meaning listed in….
General Guidelines
- All defined terms used in the agreement should be included in the Definitions section, even if the definition is inline. For example, ‘“Term” has the meaning set out in section 8.1 (Term).’
- If a given phrase is used repeatedly, consider creating a definition to shorten
- If a definition is only used a few times, consider eliminating
Lists
Lists describe a concept or the elements of a contract term.
- Word lists: lists used to define a concept
- Restrictive list is a complete description of a concept
- Illustrative list is a non-exhaustive itemization of examples
- Clause Elements: lists used to identify separate clause elements
- Inline
- Separated
- Captioned