If you are confused by legal mumbo jumbo, you certainly aren’t alone. Sometimes, the way attorneys write is confusing even to other lawyers. Even though there is a shift in the law toward writing contracts in more “human-friendly” ways, capitalized common words that aren’t usually capitalized, WORDS IN ALL CAPS, and specific words and phrases (known as terms of art) are there because of their legal significance. Some things cannot be de-legalesed. I hope after you read this, you will understand contracts a little bit better.
So, what is with the seemingly random capitalized words? This drives people like me—grammar freaks—crazy! But, they are capitalized for a reason. If you see a capitalized word in a contract and it isn’t usually capitalized in real life, look for a definitions section in the contract or look for another place where the word is set off in quotation marks. A capitalized word in a contract means the word, for purposes of the agreement, may have a different from meaning from the one you would find in Webster’s dictionary or from the way in which most people use it. I could define “cat” to mean dog in a contract and that would be perfectly fine. I know, weird.
Then there are sections that are in all CAPITAL letters. Strangely enough, the capital letters are there because there are some warranty disclaimers or limits of liability that the court may not enforce if they aren’t in all caps. The capital letters are there to make the section so obvious the reader cannot miss them. They are the opposite of fine print. In legal terms, the sections in all caps are there to make the text “conspicuous” in the same way the warnings on a box might be in big red letters or contain a skull and crossbones. I understand that all capital letters make the section must harder to read and it seems like the writer is yelling at you…but they are very important from a legal enforceablility standpoint.
Lastly, I’m going to talk about a few common legal provisions that attorneys tend to call “boilerplate” provisions. They are called boilerplate because almost all contracts have them in some form or another. These provisions may be worded slightly differently but they all contain the same significant words that make them important.
1. “Incorporated by reference.” Incorporated by reference is really a phrase, not a provision, but it is so common that you should understand what it means. This phrase means that there is another document that is contained in a separate file but that forms an integral part of the main contract.
2. Integration clause. An integration clause is usually entitled “Entire Agreement” or something to that effect and it states that the text of the contract you are signing is what you are agreeing to. It doesn’t matter if you had other conversations where you and the other party agreed to some terms that aren’t in the agreement or if the sales guy “promised” you things that aren’t in the contract. If these terms and promises are not contained within the agreement, even if you have them in writing (for example, in an email), they do not count.
3. “Force majeure.” Force majeure is a term that you may have heard of. It is a provision that states that if some extreme situation occurs (most typically, an “act of God” like a hurricane or fire) that makes it impossible to fulfill your promises (or “perform”) under the contract, your failure to fulfill the promises will not constitute a breach of the contract.
4. Waiver clause. A waiver clause means if there is a provision of the contract that requires the other party to do something or prohibits the other party from doing something and you do not enforce that provision, you still have the right to enforce it at some other time. In other words, just because you let him get away with something once doesn’t mean he gets a hall pass to do it again.
5. Severability clause. A severability clause means that if there is a part of the contract that turns out to be unenforceable, it doesn’t mean that the whole contract is null and void. The severability clause usually states that the bad part of the contract will be excluded and the rest of the contract will continue as if it didn’t exist.
This is just the tip of the mumbo jumbo iceberg but I hope it helped you understand contracts a little bit better. At least, you now you that you shouldn’t go in and “pretty up” what your lawyer has drafted for you or correct her grammar. It took me three years of law school and years of legal experience to comprehend so don’t feel overwhelmed if you still have no idea what you are looking at. That’s why lawyers are here to help. Contact me and I’ll be glad to draft a contract for you or help you understand the mumbo jumbo you already have.