Using “Shall” to Identify Contractual Obligations
Treating “shall” as a standard formula can obscure who must do what. Placing the party responsible for an obligation at the start of the sentence can make a provision easier to understand.
Who Must Pay?
“Payment shall be made within 30 days” does not itself identify the payer or the event that starts the period. “The Buyer shall pay the invoice within 30 days after receiving it” makes the actor, action and deadline clearer. This is an illustrative example; invoice disputes and payment methods need separate consideration.
Distinguish Duties from Rights
An obligation to pay or report differs from a right to terminate if certain conditions are met. Using wording such as “may terminate” for the latter helps distinguish a right from a duty. Review the relationship the provision is intended to create rather than replacing words mechanically.
Check the Actor in Passive Sentences
The passive voice or the phrase “shall have the right to” does not automatically make a provision invalid or incorrect. The approach described here is a drafting convention: identify the party with the duty as the subject and use “shall” consistently. When revising an existing contract, also check definitions and consistency with other provisions.
Keep Conditions and Obligations Distinct
Describing the account to which payment is to be made is different from requiring the other party to provide its account details. If payment cannot be made without those details, consider the notification deadline and its effect on the payment deadline. Reviewing the use of “shall” can reveal gaps in the transaction’s practical arrangements.
For advice on a specific contract, see our Contract Drafting & Review service for details of our work, fees and consultation process. Your initial consultation is free.
Reference
Tina L. Stark, Drafting Contracts: How and Why Lawyers Do What They Do, 2nd ed. (2014), pp. 183–186.