Legal Writing

?Satisfactory?

By Ken Adams

If you say that something has to be satisfactory to Acme, the standard might be an objective one, in that it would be met if a reasonable person in Acme?s position would be satisfied. Alternatively, it could mean that Acme actually has to be satisfied, subject only to the implied duty of good faith?the standard is a subjective one. The result is ambiguity. Courts prefer the former meaning; see 2-5 Corbin on Contracts § 5.33; Williston on Contracts § 38:22.

Saying instead reasonably satisfactory to Acme would make it clear to the parties, and to any court, that the former meaning is intended. To make it clear that the latter meaning is intended, drafters customarily say satisfactory to Acme at its [sole] discretion, but strictly speaking that doesn?t go to the meaning of satisfactory. The following formula is wordier but explicit: satisfactory to Acme, with Acme?s satisfaction in this instance being a function of whether Acme is actually satisfied (subject to any implied obligation of good faith), rather than whether a reasonable person in Acme?s position would be satisfied.

Full post as published by AdamsDrafting on June 22, 2008 (boomark / email).