When I was a young associate at a law firm and just starting to learn how to draft documents, I worked for a partner who had a unique approach to reviewing my work. After I handed him my draft (this was post-computer (barely) but way before email) he would weigh my draft in his open palm and invariably say “feels light.” When he handed back his handwritten markup, his comments were almost always spot on, but I noticed that the most marked up section of every draft was the Miscellaneous section. I wasn’t the only associate to observe this pattern and it became of the subject of some humor: “your draft is malpractice per se, except for the Miscellaneous section, which is brilliant.”
And, to this day, when I get to the Miscellaneous section of a draft (whether I’m drafting or reviewing) I force myself to slow down and apply some of the things I learned, like the following:
1. Redundancy. Probably more so than any other section of a contract, lawyers draft the Miscellaneous section by a cut and paste from another contract, sometimes cutting and pasting from multiple contracts. And of course this leads to a Miscellaneous section that has both a “Severability” clause and an “Invalidity ” clause, both of which of course say exactly the same thing. Another common redundancy: a “No Amendments” section and a “Variation” section. Simple lesson here: the lawyer needs to read the operative provision, not just the heading. In fact most Miscellaneous sections have a section that says just that–it’s called “Headings” and it’s often redundant with a clause in the Interpretation section of the same contract that says the same thing.
2. Lack of consistency. There are a few sub-issues here:
(a) The most common mistake resulting from “cut and paste drafting” is a mismatch between parties and defined terms with the rest of the document. But there are also often substantive mismatches–e.g., Miscellaneous provisions addressing payment matters (e.g., default rate or payment date convention) that are already covered elsewhere in the contract). Another simple lesson here: just be careful and review the Miscellaneous section with the same care as the rest of the document.
(b) Most large commercial transactions involve multiple documents–e.g., a loan agreement and associated security agreement. Each of the documents in a transaction should have matching Miscellaneous sections. Better yet, the main document should have a Miscellaneous section that expressly applies to all “Related Documents” or “Operative Documents” or whatever term you like for the transaction documents; this approach not only ensures consistency but cuts down on the length of the ancillary documents (and I’m amazed how few people do this).
Rule of thumb: If in a document (or set of documents) you say the same thing twice but in different ways you should assume the other side is going to find some way to use that against you. If you must say something twice, use the same words.
(c) For most commercial attorneys there is really no excuse for not having your own boilerplate Miscellaneous section stored in a Word document. If you’re the drafter, it’s a simple cut and paste from the boilerplate; if you’re the reviewer the boilerplate serves as a handy checklist and source for drafting comments. Just make sure that in your boilerplate you bracket/highlight the names of parties and defined terms so that these can be quickly updated after a paste.
3. Lack of Proportionality
The number of provisions and the detail in the drafting of the Miscellaneous section should be proportional to the complexity and importance of the contract. If you’re drafting a one section letter agreement with a short performance period, you don’t need three pages of Miscellaneous provisions. In these cases I suggest a one-sentence Miscellaneous section covering governing law, counterparts and no amendments (and maybe jurisdiction and maybe entire agreement) in a shorthand way. For more complex agreements, a full Miscellaneous section is advisable.
What is a full Miscellaneous section? Below is my list. Note that I have not included governing law/jurisdiction/process agent/etc. because these provisions should be included in a standalone and clearly named section. Also I don’t include general payment provisions (e.g., application of payments) or default remedies (e.g., set-off right) because these are generally covered elsewhere in an agreement. The Miscellaneous section should be limited to provisions that don’t fit neatly in other sections of the contract.
No Implied Waivers
No Amendments Except in Writing
[Chattel Paper–where relevant]
[No Partnership/No Agent–where relevant]
Headings [if not contained in the “Construction” section]
Time of Essence
[Lessor] Determinations Binding Absent Manifest Error
Third Party Rights
Delegation by [Lessor] (to [Servicer])
Periodic Estoppel Certificate Required
I hope the above is helpful. I know you are not going to wow a client with your drafting of the Miscellaneous section–in fact it’s probably in your best interest never to mention the Miscellaneous section to a client–but you can take pride in a job well done. And I know one law firm partner who would appreciate your effort.