Every Contract Tells a Story (or Should)
Readers have little patience. They want to know from the start what they are reading and why. Like other legal writers, contract drafters should make the document’s context and purpose clear from the beginning.
The purpose of a mortgage, lease, or purchase agreement is generally made clear by the title of the document, and the parties and property bound by it are generally set out in the first page or two. Many agreements do not fit into a particular type, however, and as a consequence do not have an easy descriptive title. Sometimes the parties don’t want to fit their agreement into a particular category; for example, they may want to preserve their ability to characterize a right to conduct certain activities on a piece of property as either a sublease or as a license agreement, depending on the situation. In each of these cases, the reader still needs to be told at the beginning what the contract aims to accomplish.
In a very simple contract, the drafter can describe the parties and purpose of the contract in its first sentence: “Judgmental Gourmet, L.L.C. (‘Judgmental’) hereby agrees to permit Green Goober (‘Goober’) to sell its fried organic peanuts in the storefront area of Judgmental’s store, Foo-Foo Foods, located at the corner of Locally and Sourced Streets under the terms set out in this agreement.”
In more complex contracts more explanation is needed, and recitals accomplish the goal of telling the reader the parties’ purpose. Recitals also can describe a contract that is being amended and provide the background of an ongoing relationship between the parties or a larger transaction of which the contract is only a part.
In old-school contracts, the word WITNESSETH, often followed by a colon and centered on the page, precedes the recitals, but WITNESSETH is neither substantive nor necessary. It’s also not grammatically correct. Prof. Garner points out that this word is actually “a command in the imperative mood.” Bryan A. Garner, A Dictionary of Modern Legal Usage 938 (2d ed. 1995). This means that the drafter is actually saying “witnesses”—from the old introductory phrase, “This document witnesseth [read ‘witnesses’] that . . . .” Id. Introducing the recitals with RECITALS makes much more sense.
Traditionally, recitals are separated into individual clauses, each of which contains a single thought, is indented as if it were its own paragraph, and is introduced by the word WHEREAS. In fact, drafters commonly refer to recitals as “whereas clauses.” WHEREAS, too, is an archaic word. Id. at 929. As a native speaker of the Southern Dialect of American English, I’ve always wanted to start my recitals with “SEEING AS HOW,” but that would be inelegant. Modern drafters often introduce each recital with a letter or number.
If Judgmental’s lawyer wants to make it clear that Judgmental is more interested in the nature of Goober’s product than it is in the money it will receive from Goober, he can start the document with recitals such as:
Judgmental operates the Foo-Foo Foods health food store at the corner of Locally and Sourced Streets and sells only organic products in this store.
Judgmental wishes to promote locally grown organic products in its store.
Goober raises peanuts grown organically on its local farm, fries them using only organic oil, and wishes to sell them at Judgmental’s store.
Judgmental is willing to permit Goober to sell these locally grown organic fried peanuts at Foo-Foo Foods on the terms set out in this agreement.
Now that Judgmental has explained that the organic and local nature of Goober’s product is very important to Judgmental, the parties can detail their agreements, including the hours of and limitations on Goober’s operations and the amount that Goober will pay Judgmental.
Many authorities say that recitals are not enforceable. Id. What courts have actually said is that contracts are interpreted as a whole, specific provisions will be given more weight than general ones, and “[a]lthough a statement in a ‘whereas’ clause may be useful in interpreting an ambiguous operative clause in a contract, it cannot create any right beyond those arising from the operative terms of the document.” Aramony v. United Way of Am., 254 F.3d 403, 413 (2d Cir. 2001). See also OBG Technical Servs., Inc. v. Northrop Grumman Space & Mission Sys. Corp., 503 F. Supp. 2d 490, 515 (D. Conn. 2007).
As a consequence, in the agreement sections of the document, Judgmental’s lawyer will still need to obligate Goober to sell only organic and locally sourced fried peanuts. But if the document does not define “organic” and “local,” Goober could assert to Judge “Fatty” Snacks that all peanuts contain organic material, that the ones Goober sells are at least raised in this hemisphere, and that Judgmental cannot deprive Goober of its right to sell processed American peanuts as long as Goober is paying for the privilege. At this point, Judgmental can at least point to the recitals to show that when it signed the document, Goober understood that Judgmental would permit Goober to sell only peanuts that were organic and local in the more technical U.S. Department of Agriculture health-food-store sense, and perhaps the judge will understand, even if he reads only the first page of the document.