We see what we expect to see, and the fashion industry has been making $ billions exploiting this principle. Who wants a lawyer in a ripped pair of jeans – unless the jeans have a designer label, an expensive price tag, and are seen in fashion magazines? Better yet, we want our lawyer to look like they could star in Suits! In the world of fashion, the label changes everything.

We want our lawyers in suits that make them look like the lawyers in Suits.

In the world of legal (drafting) fashion however, it is common for agreements to contain the following type of clause: “The insertion of headings is for convenience only and shall not affect the interpretation of this Agreement”. This is the fashion equivalent of saying: ‘Don’t pay attention to any of the labels, or advertising, just look at the product for what it is worth’.

Lawyers, being human, will of course look at the headings, and must resist being influenced by them. You can check out our gap highlighting tool as a way to minimize the risk of being deceived by headings!

To test how powerful legal labelling can be, try the following experiment:

  1. Read the following clause very quickly, as you would when skimming through a long document.

Confidentiality of Agreement Itself:  The Parties agree that the information obtained in connection with the negotiation and execution of this Agreement or the effectuation of the Purpose, including any information provided in accordance with the Agreement, shall be deemed to be Confidential Information and governed by the terms of the Agreement.

  1. Close your eyes and classify what ‘type’ of clause it is. Don’t peek or cheat by rereading the clause.
  1. Open your eyes and look at the clause carefully now. Did you correctly interpret the clause, or were you influenced by the heading? Be honest!
  1. Try the experiment again, with the second clause.

Non-Competition: The Contractor will not directly or indirectly, for itself or on behalf of any other person, partnership, corporation or other entity, solicit or attempt to solicit, for the purpose of engaging in competition with the Corporation, any person or entity whose account was serviced by Contractor on behalf of the Corporation during the term of this Agreement. This clause shall apply during the term of this Agreement and for 2 years after any termination of this Agreement.

If you were even tempted to mislabel either clause, you have just experienced the power of the label. If you have wondered how to dress like the guys in Suits, you are thinking of making the power of the label work for you.

Do the same in your legal work – don’t trust someone else’s labels, and make sure yours are accurate and work for you.

Takeaways: 

  • don’t rely on headings when reviewing a legal document
  • be careful to add accurate headings when drafting a document
  • legal technology can minimize risk and assist with accurate document comparison

 

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This article is provided for informational purposes only and does not create a lawyer-client relationship with the reader. It is not legal advice and should not be regarded as such. Any reliance on the information is solely at the reader’s own risk. Clausehound.com is a legal tool geared towards entrepreneurs, early-stage businesses and small businesses alike to help draft legal documents to make businesses more productive. Clausehound offers a $10 per month DIY Legal Library which hosts tens of thousands of legal clauses, contracts, articles, lawyer commentaries and instructional videos. Find Clausehound.com where you see this logo.

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