Contract Language-based Rule
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A Contract Language-based Rule is a contract policy rule that is applied in the context of a contractual language.
- Context:
- It can be used to operationalize a Contract-Related Legal Principles into specific, actionable guidelines.
- It can (typically) be used to ensure Contractual Clarity, Contractual Consistency, and Legal Compliance.
- It can range from being an Exact Matching Contract-Related Language Rule (for precise legal terms) to being an Approximate Matching Contract-Related Language Rule (for broader interpretations).
- It can range from being a Pre-Signature Contract Language-Based Rule (such as a contract review-supporting language-based rule) to being a Post-Signature Contract Language-Based Rule.
- It can be included in a Contract Language-based Rule Repository, such as a Contract Drafting Guideline and Contract Policy Playbook.
- …
- Example(s):
- General Contract Language Rules, such as:
- Plain Language Rules: Require the use of clear and concise language to avoid ambiguous contract language.
- Rule:
IF a clause contains technical jargon THEN replace it with plain language alternatives
.
- Rule:
- Explicit Enumeration Rules: Require the explicit enumeration of contractual obligations and contractual rights of parties in a contract.
- Rule:
IF a section discusses party responsibilities THEN create a numbered list of obligations
.
- Rule:
- Plain Language Rules: Require the use of clear and concise language to avoid ambiguous contract language.
- Contract Clause-Specific Rules, such as:
- Confidentiality Clause-Specific Rules: Provide guidelines for managing and safeguarding confidential information or proprietary information in a contract's confidentiality clause.
- Rule:
IF the confidentiality clause lacks a time limit THEN add a reasonable duration for maintaining confidentiality
.
- Rule:
- Force Majeure Clause-Specific Rules: Offer recommendations on classifying, addressing, and managing unforeseen events impacting contract performance in a contract's force majeure clause.
- Rule:
IF a force majeure event occurs THEN notify the other party within 48 hours
.
- Rule:
- Limitation of Liability Clause-Specific Rules: Define the boundaries of responsibilities and potential legal liability for parties involved in a contract's limitation of liability clause.
- Rule:
IF the limitation of liability clause caps damages THEN ensure the cap is reasonable and enforceable
.
- Rule:
- Arbitration Clause-Specific Rules: Provide recommendations for drafting and including arbitration clauses in contracts.
- Rule:
IF including an arbitration clause THEN specify the arbitration rules and venue
.
- Rule:
- Governing Law and Jurisdiction Clause-Specific Rules: Offer guidelines for specifying the applicable governing law and jurisdiction for contract disputes in a contract's governing law and jurisdiction clause.
- Rule:
IF the parties are from different countries THEN choose a neutral governing law and jurisdiction
.
- Rule:
- Termination Clause-Specific Rules: Establish rules for drafting and including termination clauses in contracts.
- Rule:
IF a party wants to terminate the contract THEN require a written notice period of at least 30 days
.
- Rule:
- Automatic Renewal Clause-Specific Rules: Provide guidelines for including and managing automatic renewal provisions in contracts.
- Rule:
IF including an automatic renewal clause THEN allow parties to opt-out with a 60-day notice
.
- Rule:
- Confidentiality Clause-Specific Rules: Provide guidelines for managing and safeguarding confidential information or proprietary information in a contract's confidentiality clause.
- Contract Negotiation Support Rules, such as:
- Model-Language Rules: Provide example text to propose or respond with during contract negotiations.
- Rule:
IF the other party proposes an indemnification clause THEN respond with model language limiting indemnification to third-party claims
.
- Rule:
- Model-Language Rules: Provide example text to propose or respond with during contract negotiations.
- Contract Financial Terms Rules, such as:
- Payment and Penalty Guidelines: Establish protocols defining non-compliance's financial terms, schedules, and repercussions.
- Rule:
IF a party fails to make a payment on time THEN impose a 5% late fee
.
- Rule:
- Payment and Penalty Guidelines: Establish protocols defining non-compliance's financial terms, schedules, and repercussions.
- Contract Type-Specific Rules, such as:
- Lease Agreement Policy Rules: Specify rules unique to lease agreements.
- Rule:
IF drafting a commercial lease THEN include a clause requiring the tenant to maintain liability insurance
.
- Rule:
- Lease Agreement Policy Rules: Specify rules unique to lease agreements.
- Contract Interpretation Rules, such as:
- Contra Proferentem Rules: Provide guidelines for interpreting ambiguous contract terms against the drafting party.
- Rule:
IF a clause is ambiguous and was drafted by Party A THEN interpret it in favor of Party B
.
- Rule:
- Parol Evidence Rules: Establish rules for considering evidence outside the written contract when interpreting its terms.
- Rule:
IF the contract terms are ambiguous THEN consider email communications between the parties to clarify the meaning
.
- Rule:
- ...
- Contra Proferentem Rules: Provide guidelines for interpreting ambiguous contract terms against the drafting party.
- ...
- General Contract Language Rules, such as:
- Counter-Example(s):
- See: Contract Drafting, Legal Document Review, Natural Language Processing in Law, Contract Management System.