Same Basic Meaning; Subtle Differences

An appendix (plural=appendices) is a collection of supplementary material, usually at the end of a contract (or, in the literary world, books).

An exhibit is a supplement to either a contract or, more often, a brief or other submission to a court.

Note that supplementary materials to contracts are more commonly referred to as “appendices” in England, whereas “exhibits” is the preferred term in the US. In both jurisdictions, “exhibits” are far more common in court pleadings, given that such supplements are often used as exhibits at trial.

An annex is another term used to refer to something that is attached, appended or added to a record or other document. In practice, the term can be used interchangeably with the terms “appendix” and “exhibit”. However, the term “annex” is used less frequently than either “appendix” or “exhibit” in most legal agreements with the exception of International Treaties (or similar documents with an international effect) in which the word “annex” is commonly used to refer to materials which supplement the Treaty.

An attachment also refers to items or documents that are appended to a main document. However, the term has recently become more commonly used to refer to files that are “attached” to an e-mail and may be opened separately by the recipient.

Specific Meanings
A schedule generally refers to materials that could be in the main contract but are instead moved to the end (usually due to their length) in an effort to achieve clarity and brevity in the main contract. For this reason, schedules are often considered to be part of the main contract and are sometimes required to be separately signed by both parties.,

An enclosure refers to documents which are actually inserted (often with other documents) in the same envelope, package, etc. For this reason, it is only appropriate to use the term “Enclosure” when the document is physically contained within an envelope or other packaging (and is mailed to the recipient, rather than e-mailed).

The term supplement is not often used to refer to materials which are appended to a main contract, but instead generally refers to an entirely separate document which adds to, or amends, the original contract (example: a “Supplement to the Lease Agreement” would normally consist of a new document which refers to the original Lease Agreement, rather than being an addendum to the Lease Agreement upon execution).

Drafter’s Tip

When drafting a contract use the terms commonly used in your jurisdiction, e.g. “exhibit” in the US and “appendix” in the UK. Regardless of the term you employ, use it consistently throughout the documents and any correspondence surrounding them.

Coode suggested a logical order for clause construction.

Drafter’s Tip
Refer to any exceptions first: e.g.“Subject to…” Next, set out the circumstances or conditions upon which the legal right or obligation depends, using the present tense: e.g.“If A does… and B does …”

Third, set out the right or obligation using the active voice and avoiding the passive (opposite of active; in grammar, the form of verb used to indicate that the subject is the recipient of the action. Passive: “The law was passed.” Active: “Parliament passed the law.”): e.g.“A shall do 1,2,3, and 4.”

Finally, put the provision into paragraphs and give it a heading (a title for a page, chapter or, here, a clause in a contract).

For example, in the context of a loan document, a provision allowing a borrower to draw money if the conditions precedent (a condition which must be performed before the other party is obligated to perform) have been satisfied, that is, notice has been granted in the required form, and no event of default has occurred, might be drafted as:

Heading: 7. Availability of the loan

Subject to no event of default having occurred under clause 5, if:

(a) Borrower has satisfied all the conditions precedent listed in clause 4; and

(b) Borrower has delivered to the agent a notice of drawdown in accordance with clause 11;

Lender will make available to the Borrower a term loan facility up to a maximum amount of $10,000,000

Drafter’s Tip

Use plain English whenever possible in order to insure that the letter is understood by the recipient, balance succinct style with sufficient detail, and adapt the format and content, including the depth of legal analysis, to the recipient. Use the introductory paragraph to identify your representative capacity and clearly state the purpose of the letter. In the body of the letter state the legal and factual bases for your demands and then state your demands followed by an implicit or explicit threat to take legal action if the demands are not met. Overall, demand letters should be a firm statement of your client’s position and intentions, and while demand letters are often written to intimidate, they should not bully the recipient.

Get good examples from your colleagues or contacts and avoid common errors such as using inflammatory language, and misstating the facts and/or the law.

For example, a demand letter in the context of a dispute regarding intellectual property rights might be drafted as (using a U.S. business letter format):

Dear Mr. Adversary:

We represent Instinctive Sports (“IS”), a leading manufacturer of professional athletic shoes. IS owns all trademark rights in the well-known symbol that adorns our products and sales and marketing materials. The mark is widely known and famous throughout this jurisdiction.

It has come to our attention that you have registered the domain name “is.nu.” This domain name inherently refers to Instinctive Sports. There appears to be no good faith reason for you to have registered this domain name, since you have no connection to IS.

If you have registered the domain name in bad faith, your actions may subject you to the loss of your domain name as well as to civil penalties of up to $100,000 under the Anticybersquatting Consumer Protection Act. As your website currently offers athletic goods, your actions also constitute trademark infringement and/or dilution under the Trademark Act.

Accordingly, we seek your prompt written assurance that (1) you have ceased publication, distribution, transmission, or dissemination of any information, goods, or services under the name “is.nu,” or any other name confusingly similar thereto; and (2) you will either delete the domain name “is.nu” from the domain name registry or immediately transfer the name to IS.

If we can have your agreement on these points, IS will be willing to consider this matter closed. Alternatively, we will commence an action at the World Intellectual Property Organization pursuant to the Uniform Domain Name Dispute Resolution Policy, and a civil action, seeking injunctive relief, damages, and attorneys’ fees.

Please respond by no later than 17 November 2006. If we do not have your written agreement by that date, IS will commence legal proceedings without further notice.

Yours truly,

Perry Mason

Ultimately, whether your forum selection clause is included in the contract is a matter for negotiation. If you prevail, draft the clause with care. It is essential to be clear whether the designation of jurisdiction is exclusive or non-exclusive because some courts may be reluctant to find exclusivity where the clause is ambiguous.

Drafter’s Tip

Use the following language to designate exclusivity:

“Each party hereby irrevocably agrees that the courts of (Country X) shall have exclusive jurisdiction to resolve any controversy or claim of whatever nature arising out of or relating to this contract or breach thereof.”

Thus, for example, in Entwistle v. Dent (1848), a letter from a London merchant to his agent in China stated that “If tea is not obtainable at our limits you may invest one half of the whole proceeds in silk.” The court held that the context in which the words appeared in the letter inferred that the agents were directed to invest in silk and had no discretion in the matter.

Drafter’s Tip

When conferring a discretion, use additional words which leave no doubt that such discretion is intended, e.g.

“The Trustees may pay in their [absolute] discretion…” or

“The Trustees may pay if they think fit…”

Less than 7 days (0-6) £100
More than 7 days but less than 14 days (8-13) £200
More than 14 days but less than 21 days (15-20) £300

Drafter’s Tip

The danger can be avoided by the correct use of “exceeding” and “not exceeding”. The above list should read:

Not exceeding 7 days (0-7) £100
Exceeding 7 days but not exceeding 14 days (8-14) £200
Exceeding 14 days but not exceeding 21 days (15-21) £300

Drafter’s Tip

Stock opening phrases

This is in reference to your letter of May 31.

We have received and thank you for the information you sent concerning…

We are in receipt of your…

This is to advise you that…

Pursuant to our conversation (your e-mail, your letter, your request),…

Further to our conversation…

Stock closing phrases

Thank you for your (prompt) attention to this matter.

I look forward to hearing from you (in the near future).

Please feel free to contact me if (should) you have any (further) questions.

I would appreciate a response by (date).

I will contact you after I have consulted with my client. (Avoid saying “I will revert to you”—native English speakers do not generally use that phrase.)

Smooth Transitions

Accordingly,

On one hand…on the other hand…

As you can see from the enclosed…

In light of …

For the time being…

Not only… but also

Notwithstanding the foregoing (the above, the aforesaid, the aforementioned)…

Bearing in mind…

Drafter’s Tip

Words are superfluous if they can be replaced with fewer words without changing the meaning, for example:

Examples of awkward sentences:

Awkward: Mango paid said fine two (2) weeks subsequent to the trial, which cost €100,000.
Revised: Mango paid the €100,000 fine two weeks after the trial.

Here, the amount of the fine causes confusion, and “said fine” and “two (2) weeks” do not make the sentence more precise. In the first sentence, the reader is unsure whether the trial or the fine cost €100,000. By changing the noun into an adjective, and placing the adjective closer to the noun it modifies, and eliminating the superfluous “said” and “(2)” the sentence becomes clearer and less awkward.

Grammatical errors often contribute to awkward sentences:

Awkward: Lawyers and judges receive similar training, the public views them with less respect.
Revised: While lawyers and judges receive similar training, the public views lawyers with less respect.

The first sentence is awkward because the subordinate clause is not subordinate, causing a comma splice, and “them” is ambiguous — does it rename “lawyers” or “judges”? By simply adding “while” at the beginning of the subordinate clause and changing “them” to the specific group (lawyers), the sentence becomes grammatically correct and understandable.

Whereas means literally “given the fact that” and it used to be every lawyer’s idea of how to begin a contract. The “whereas clause” of a contract functions as an introduction or preamble and it is not a part of a contract’s operative provisions.

Drafter’s Tip

Instead of prefacing each introductory fact by whereas, the more modern way to draft a contract is to begin with a section headed “Recitals” or an introductory statement, such as: “This contract is made with reference to the following facts.” In the Recital format you can, for example, introduce the subject matter of the contract and state the objective of the parties. For example:

Recitals

The respective Boards of Directors of X Corp, and Conglomerate have approved the merger of X Corp with and into Conglomerate (the “Merger”) upon the terms and subject to the conditions of this Agreement and in accordance with the Business Corporation Act of the Jurisdiction; and

The respective Boards of Directors of X Corp and Conglomerate have determined that the Merger is in furtherance of and consistent with their respective business strategies and is in the best interest of their respective shareholders.

Drafter’s Tip

The wise drafter will take into account the general rules for the construction of insurance policies:

Insurance policies are to be construed according to the principles applicable to commercial contacts in general. Regarding the meaning of words in a policy, the overriding consideration is whether the word or phrase has previously been construed by a court in the same context.