Today, I’m pleased to share a guest post from Kenneth A. Adams, the author of the terrific book, “A Manual of Style for Contract Drafting.” After I submitted a guest post on his site last week, I asked Ken to share his thoughts on one area of contract drafting. It is particularly relevant for companies that use employment agreements. I’ll share some of my own thoughts on the subject and on Ken’s book in some followup posts. My thanks to Ken for sharing his wisdom on this notable subject.
When drafting a contract, it’s good to be precise. But it might be that for purposes of a given provision, it wouldn’t work to precise, so instead you make use of vagueness and its uncertain boundaries—you use words such as reasonable. Or promptly. Or material. Although vagueness entails risk of dispute, it’s an essential tool of the contract drafter.
But some vague words offer nothing but risk. That’s because once you lose the reasonableness standard inherent in, for example, promptly, the uncertainty become unmanageable.
A good example of this is the phrase moral turpitude, a fixture of old-school contract drafting. A dictionary will tell you that turpitude means “depravity.” That doesn’t suggest a workable legal standard, and moral turpitude is no better, with one legal authority saying that it means “shameful wickedness.”
The problem with moral turpitude is that once you switch from a reasonableness standard to one geared to probity, it’s utterly subjective where on the spectrum from saint to sinner a given action falls.
My favorite bit of evidence on that score is the court’s opinion in Marmolejo-Campos v. Gonzales, 503 F.3d 922 (9th Cir. 2007). The court concluded that driving drunk isn’t an act of moral turpitude, but driving drunk without a license is. Go figure!
Despite its shortcomings, moral turpitude is often used in contract provisions that aim to give one party an out if the other party acts badly. In particular, it routinely appears in employment agreements as one of the grounds for termination for cause:
the Executive’s admission or conviction of, or plea of nolo contendere to, a felony or of any crime involving moral turpitude, fraud, embezzlement, theft or misrepresentation; . . .
Coming up with an alternative to moral turpitude for purposes of termination provisions requires that one consider more generally termination provisions that feature moral turpitude. I refer to such provisions as “termination-for-crime provisions.”
Termination-for-crime provisions allow a party to terminate if another party has been involved in a crime. They feature a number of possible elements that can be structured in different ways.
- How do you refer to the crime? For example, you could refer to it as a felony, but the meaning of felony varies from state to state. The same goes for misdemeanor. So I recommend not using such labels.
- What does the crime involve? Instead of invoking vague concepts such as moral turpitude or deceit, you could be specific and say, for example, that the crime has to relate to the employee’s employment.
- Do you want to exclude some crimes? For example, you could exclude crimes for which a fine or other noncustodial penalty is imposed.
- When does the right to terminate kick in? A termination-for-crime provision could be tied to one of various points in the criminal-law process from committing the crime to being convicted of it.
One could conceivably cobble together a truly complicated termination-for-crime provision out of the above parameters. But it’s best to keep things simple, unless one has good reason to opt for complexity, so here’s what I suggest is a reasonable pro-employer termination-for-crime provision to use in an employment agreement:
. . . the Employee is charged with a crime that (1) is punishable by a custodial penalty, instead of or in addition to a fine or other noncustodial penalty, or (2) is related to the Employee’s employment; . . .
For the reasons noted above, it would be best to avoid a formal label such as felony in referring to the kind of crime. And if the offense doesn’t merit jail time, it shouldn’t be of undue concern, unless the conduct relates directly to the employee’s job. Furthermore, a company wouldn’t want to be compelled to keep someone as an employee until he or she had been convicted or pleaded guilty. It’s possible that the charges might be dismissed, but that eventuality could be addressed elsewhere in the contract.
But whatever language you use, dispense with moral turpitude.
[For a more detailed discussion of moral turpitude, see A Manual of Style for Contract Drafting 13.406–24 (3d ed. 2013).]