Choose Your Words Carefully
As the court in Neon Enterprise Software, LLC v. International Business Machines, 2011 WL 830737, * at 6 (W.D. Tex. Feb. 17, 2011), so clearly stated:
A party who fails to properly protect itself in a contract must suffer
the consequences of poor drafting, ideally, the plain meaning of a
contract will reflect the circumstances surrounding the contract’s
creation and embody the parties’ reasonable expectations.
Thus, the parties should choose their words carefully to avoid open-ended interpretations and to ensure that every statement is unambiguous. Open-ended, ambiguous wording benefits neither party, as each party seeks certainty and to avoid the cost and distraction of entering into the dispute resolution process. See, e.g., Primary Investments, LLC v. Wee Tender Care III, Inc., 746 S.E.2d 823 (Ga. App. 2013) (Failure to carefully define the “seller” of day care business limited purchaser’s ability to enforce accompanying covenant of non-competition.).
Prudent vendors should avoid superlatives, such as “best,” “most,” “proven,” “greatest,” “largest,” “world class,” “success,” “best of breed” and “leading edge,” which may give rise to claims of an implied warranty by the customer in the event of a dispute. At the same time, vendors should emphasize the pro-competitive aspects of their products, such as reducing of costs, while avoiding anti-competitive terms, such as “dominant” or “pricing or margin leverage.”
Too often the parties draft important provisions, such as the license grant, in broad flowing terms without considering the implications of doing so. From the licensor’s perspective, the licensor should seek to succinctly and clearly define not only the licensee’s rights but also the limitations of its rights. Utilizing broad language will likely give rise to future problems if a dispute arises over the licensee’s rights. See, e.g., Edgenet, Inc. v. Home Depot U.S.A., Inc., 658 F.3d 662 (7th Cir. 2011). (Broad unrestrictive license grant permitted licensee to copy copyrighted materials and create derivative works.).
To avoid ambiguity, the parties should use an active voice when drafting the parties’ obligations. Further, drafting should be in the present tense.
In particular, the following words and phrases should be avoided:
All: The use of the word “all” in some contexts is imprecise. As the context dictates, best practices are to establish a definitive list or otherwise limit the meaning to a finite set. Every effort should be made to avoid the use of “all” in a contractual context that allows the parties to adopt different connotations of its meaning.
As necessary: Who decides what is necessary and on what basis?
Authorized: Who decides if an action is “authorized”? On what criteria is an action “authorized”?
End to end solution: Use this phrase only if it is factually accurate.
Ensure: “Ensure” can be construed to equate to a guarantee. Depending on the context, “validate,” “verify,” “confirm,” or “test” are preferable and will hopefully limit any connotation that a party is guaranteeing a result. In the few instances where it is difficult to eliminate the word “ensure,” the parties may want to consider utilizing the phrase “in an effort to ensure.”
Equal to or Higher than the Industry Standard: This phrase in relation to performance or service levels is open to interpretation, leading to potential friction between the parties. For example, often an industry standard will not exist, i.e., there is no “industry standard” for data protection. Thus, the parties should avoid any similar language as well, including “a reasonable standard,” “highest industry standard,” “the same security as the recipient but no less than a reasonable standard of care,” etc.
Includes/Including: References to the words “include” or “including” will likely be construed as meaning “without limitation.” With the exception of the phrase “only includes” or the use of similar restrictive or limiting language, the use of “includes/including” suggests that a list is not definitive, and that there are additional responsibilities or obligations other than those listed. Prudent parties should use the following alternative language:
includes only; and
is as follows.
Relevant: “Relevant” is subjective by nature, leaving it open for interpretation by the parties, increasing the potential for dispute. Who is to say what is relevant? When used to reference compliance with a law, “applicable” is a preferred substitute, as the law dictates when it applies and when it does not.
Other words and phrases that should be avoided include:
best practices/best efforts/best
fully responsible/personally responsible
highest quality/highest standard
meet/fully meet/exceed requirements or expectations
success/successful (e.g., “We are committed to your success.”)
will/will result in