Recently, I have heard many attorneys and experts in legal writing touting the importance of eliminating the use of the term “shall” in contracts. Generally speaking, this may seem like the right approach given that “shall” may be interpreted to mean something that could be done or “shall” may be interpreted to mean something that has to be done.
But, no matter what, the key goal for attorneys is to make sure the contract, when taken as a whole, is clear in its intent and meaning.
That said, I couldn’t resist doing a little more research into case law on how “shall” is interpreted in private agreements. The results of this research led to what many of us attorneys already expect the answer to be – it depends on the facts and circumstances of the agreement and the language in the agreement.
Since my interest in this topic arose out of reviewing an agreement that was initially proposed to have the Commonwealth of Virginia as the governing law, I thought I would start there. The oft cited case on this topic in Virginia dates back to 1912, but it is far from conclusive on the impact of the use of the term “shall”.
“[W]hile the word “shall” is primarily mandatory in effect, and “may” is primarily permissive in effect, “courts, in endeavoring to arrive at the meaning of written language, whether used in a will, a contract, or a statute, will construe ‘may’ and ‘shall’ as permissive or mandatory in accordance with the subject matter and context.” See Pettus v. Hendricks, 74 S.E. 191, 193 (Va. 1912).
In Illinois, however, the oft cited case appears more conclusive.
“Illinois courts interpret the word “may” as permissive and “shall” as mandatory in private contracts.” See Professional Executive Center v. LaSalle Nat. Bank, 570 N.E.2d 366, 37 (Ill.App. 1 Dist. 1991).
That said, it is well settled in Illinois that a contract must be considered in its entirety.
“Moreover, because words derive their meaning from the context in which they are used, a contract must be construed as a whole, viewing each part in light of the others. Board of Trade of the City of Chicago v. Dow Jones & Co., 456 N.E.2d 84 (1983). The intent of the parties is not to be gathered from detached portions of a contract or from any clause or provision standing by itself. Martindell v. Lake Shore National Bank, 154 N.E.2d 683 (1958).” See Gallagher v. Lenart, 874 N.E.2d 43, 58 (Ill. 2007).
So, alas, while eliminating the word “shall” could be helpful in certain circumstances, our objective remains to make sure the contracts we write are clear in intent and meaning.
As an important note, there is a significant body of case law that relates to use of the term “shall” in the context of a statute vs. the context of a private agreement.
Have you have had any debates on whether to use terms like may, will, shall, only, exclusive or any other similar terms? Feel free to email me with thoughts, anecdotes or questions at firstname.lastname@example.org.