Paragraph numbering

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if you take your legal contracts seriously as a piece of code — not every lawyer does, and for some contracts there are reasons not to — then treat it like code, and number and nest every new proposition as if it were a subroutine in a programme.

Number every paragraph

Lawyers have a tendency to leave some paragraphs out of numbering schema. If a clause only has one subparagraph, or, if you have split into choices, where the paragraph rejoins there seems to be no option but to leave it without a number.

Consistent numbering

It should hardly need being said, but settle on a numbering schema and stick with it.

“Nested” statements

Legal drafting is a form is code. It should have a nested structure, as does computer code. Numbering levels— each indented to be nested inside the level above — instantly reveal the of the agreement’s exoskeleton.

Sub-levels break up the inevitably contorted syntax of commercial drafting, making the semantic content much, much easier to parse and understand. They also quickly reveal the manifold redundancies, illogicalities and non-sequiturs that stud all complex contracts.

If you are diligent in nesting your paragraphs, it will quickly highlight where you have overlawyered things. If the logical structure needs seven or more numbering levels, in all likelihood you've over-engineered it. The answer is not to reduce the number of paragraph levels and therefore bury that detail, but to simplify the logical structure so it doesn't need so many levels in the first place.

Use as many numbering levels as you need to fully reveal, and label, the logical structure of your document, bearing in mind that too many levels reveal prolixity and convolution in your drafting. Make sure your semantic structure is tight.

Worked example: “bankruptcy”, with and without paragraph numbering

To illustrate how much easier it is to navigate the text, consider the deal old definition of Bankruptcy in the ISDA Master Agreement. Now you can’t entirely defeat the crushing torpor of the Squad’s turgid drafting but at least if you pick out its skeleton you can make it more digestible.

In its original:

“A party is dissolved (other than by merger); (2) becomes insolvent, unable to pay its debts, or admits it in writing; (3) makes a composition with its creditors; (4) suffers insolvency proceedings instituted by: (A) a regulator; or (B) anyone other than a regulator, and (I) it results in a winding up order; or (II) those proceedings are not discharged within 15 days; (5) resolves to wind itself up (other than by merger); (6) has an administrator, provisional liquidator, or similar appointed for it or for substantially all its assets; (7) has a secured party take possession of, or a legal process is enforced against, substantially all its assets for at 15 days without a court dismissing it; (8) suffers any event which, under the laws of any jurisdiction, has the same effect as any of the above events; or (9) takes any action towards any of the above events”

With tables, and a run-in descriptor:

Bankruptcy. A party:

1. Dissolved: is dissolved (other than by merger);
2. Insolvent: becomes insolvent, unable to pay its debts, or admits it in writing;
3. Composition: makes a composition with its creditors;
4. Proceedings: suffers insolvency proceedings instituted by:
   1. a regulator; or
   2. anyone other than a regulator, and
      1. it results in a winding up order; or
      2. those proceedings are not discharged within 15 days;
5. Winding Up: resolves to wind itself up (other than by merger);
6. Administration: has an administrator, provisional liquidator, or similar appointed for it or for substantially all its assets;
7. Security Exercised: has a secured party take possession of, or a legal process is enforced against, substantially all its assets for at 15 days without a court dismissing it;
8. Similar events: suffers any event which, under the laws of any jurisdiction, has the same effect as any of the above events; or
9. Takes steps: takes any action towards any of the above events.
   

There’s a fashion for avoiding numbers because they seem intimidating, but pish and nonsense to that. This is a piece of technical writing, not literature, and numbers in a margin don't impede reading comprehension, so there is no harm in “overusing” numbering in a technical document. There is harm in underusing, however.

Besides, Nietzsche numbered his paragraphs!

Also the JC wants you all to admire the hierarchical numbering scheme, which has taken him years to figure out how to do in CSS/HTML.

He has also worked out how to do this flawlessly using Stylesheets in Microsoft Word, too. This is possibly the most important article on this whole site.

See also

• Stylesheets in Microsoft Word
• Microsoft Word
• Cross references