Once Upon A Time The Parties Agreed To Execute This Agreement

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Once again, we’ve been pondering the utility of using recitals for agreements, for example, within a lease amendment. There seems to be three perspectives: that of the author, that of the counter-author, and that of someone who comes across the document later, often years and years later.

One of the recurrent Ruminations’ themes is explaining that words matter and we all have an obligation to choose the right ones. By “the right ones,” we mean the ones that express the intent of the contracting parties. The commercial world works on the assumption that the parties to an agreement share the same intent and will honor that intent. To that end, when an author uses a recitals section to explain the purpose of an agreement, the counter-author (that being the person on the other side of the deal) gets a first look at what the author thinks is the deal. Just as the first chapter of a (non-fiction) book is almost always an introduction to the book itself, the recitals can serve a similar purpose.

How do recitals aid interpretation by people who weren’t there at the time the agreement was reached and written? Try following this train of thought.

An oral agreement is (almost always) enforceable (by a court). Don’t believe the old saw that they are only worth the paper they are printed on. In its most basic function, all a written agreement does is to memorialize an oral agreement. Of course, over time, written agreements have grown and grown and grown and include tons of things the contracting parties never discussed or even contemplated. There is nothing wrong with that.

There was a time when no one in “town” could write. Yet, agreements were made between “townspeople.” Does anyone think their dialog consisted of hours and hours of back and forth detailing every element of what constituted their agreement? Of course not. The way it worked was that there were local customs, ones known to the contracting parties and the other townspeople. Most people were born and died right there in town. So, there was an institutional knowledge and memory as to “how things worked.”

This knowledge and memory served two purposes. For one, the townspeople remembered what the parties had agreed. Second, they could interpret agreements based on what was said and what was meant to happen if something was unsaid. Basically, if the parties wanted to deviate from local custom, they would have to say so in the course of reaching their agreement.

Here’s an example. Way, way back, there were no deeds. Land was transferred by way of a ceremony – livery of seisin. In the presence of the townspeople as witnesses, the “seller” took some symbolic element of the land – a twig, a clump of grass, a clod of soil – and handed it to the “buyer.” Absent some words to the contrary, everyone knew this was a conveyance of the seller’s entire interest in the land, not a sharecrop agreement. Further, from generation to generation, the townspeople “remembered” who, at any one time, owned that land.

We live in a more transient society. That is antagonistic to the continued viability of this very simple land conveyance process. For one, customs vary from locality to locality, and when a community’s population is made up of people who have lived in many other localities, disagreements as to what is actually the local custom are guaranteed. Here is a simple example. Absent a specific agreement to the contrary, some communities had the custom that employers (generally farmers) were required to provide meals to their day workers. Others had a custom to the contrary.

Another outgrowth of a transient society is that witnesses could not be relied upon to be available if a dispute arose. In addition, as “towns” grew, convening all of the townspeople to witness an agreement or transaction was no longer possible. So, some might know of one transaction (say, a conveyance), but not know of a subsequent transaction (also a conveyance). That being the case, you could no longer rely on what the townspeople “knew.”

What does this have to do with the utility of recitals? Basically, there is an overlap between townspeople and recitals. Recitals can mimic as the townspeople’s “memory.” They can chronicle the history of an agreement. Think of an old lease, one that has seen changes in the identity of the landlord and of the tenant. Recitals can answer the question of “how did ‘A’ become ‘G’”? They provide a road map or index to the various assignment documents that replaced those clods of dirt. Recitals can also catalog amendments, some of which might be found in a letter and hardly be expected.

So, for that reason, let’s do those who follow us a big favor – use recitals to tell the history of an agreement.

But, that’s not the only good reason for using recitals. They are good as reminders as to why the parties were “doing” their agreement – what was their objective? After all, the original negotiators or deal makers may not be around when a later disagreement arises. All that will be available is the document. And, as many of blog postings have related, that’s when interpretive disagreements will arise. Without much of a direct statement as to what the original parties intended, the Johnny come latelies often try to do mischief by ascribing “intent” to words they had never seen before. Basically, advocates for dueling parties are the haruspices of today.

Lastly, there is another totally unrelated use for recitals – they help the document-crafter get the job done. Starting with recitals serves to focus the drafting process. Recitals aren’t an afterthought; they are a forethought. The recitals section is the place to design the forest before planting the trees. Think of the use of recitals as building a roadmap. A roadmap (check your history books to learn about this ancient tool) is useful to get you to your destination, at which point it can be tossed. But, given the other two reasons we’ve highlighted for the utility of recitals, why throw them away – leave them right where they belong: at the beginning of the agreement.

Whatever your tradition may be, Ruminations wishes that 2017 will be the best calendar year you’ve yet experienced.

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Comments

  1. I was struck by your comment on how the “townspeople” had an oral tradition that defined how a particular type of legal relationship was supposed to work. That oral tradition filled the gaps in an agreement, or even substituted for the entire agreement. Today in the US we need to “say it all in the document,” subject only to limited application of general legal principles to fill gaps or restrict freedom of contract. It’s different in civil law countries. There, statutes largely define the relationship of, e.g., “landlord and tenant” or “borrower and lender.” So a lease or a loan agreement can be very short, because the statute says most of what needs to be said to define the legal relationship. This is why people in civil law countries don’t understand the girth of our documents. It’s also why banks in those countries often don’t use outside counsel to close loans. I’m not suggesting the US should switch to such a system but I do think it’s worth noting that something like your historical “townspeople” still exists in civil law countries, in the form of very extensive statutes to define legal relationships.

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