Rules for the use of definitions

In using definitions in a document, the following rules should be observed.

4.2.1 Definitions should be placed at the beginning or end of the document

If definitions are needed, common sense dictates that they should be placed in the document where they can be found easily by anyone who needs to read it. It is usual to place them at the beginning or, as in statutes, at the end. Whether they are at the beginning or end is a matter of choice. However, in most commercial documents, definitions are placed at the beginning, because they will need to be referred to in reading the document and are less likely to be overlooked by the reader if placed there.

4.2.2 List definitions in alphabetical order

The list of definitions should be in alphabetical order to facilitate reference. This will be particularly important in a document with a long list of definitions, in order to avoid wasting the reader’s time going through all the definitions to discover whether a word or term has a specific meaning in the document. If dates are used to begin definitions as, for example, where an Act of Parliament is referred to as ‘the 1925 Act’ or ‘the 1990 Act’, these should be placed at either the beginning or the end of the list of definitions. In addition, words and terms chosen as definitions should be of a type which are commonly used in the context. For example, in a pension scheme trust deed, a definition of ‘Final Remuneration’ or ‘Final Salary’

might be expected. and the use of an unusual term in this context, such as ‘Ultimate Consideration’, would not be helpful. The definitions might be numbered consecutively, if it is felt that this would improve the document.

4.2.3 First letter of definitions in capitals

Words and terms used as definitions in a document must be distinguished from ordinary words and terms which are not so used, particularly those which are the same as the definitions. This distinction is normally made by commencing all words and terms which are used as definitions with a capital letter. For example, if a particular company was defined throughout an agreement as ‘the company’, it should be cited as ‘the Company’ to distinguish it from other companies, which may be referred to as ‘the company’.

Similarly, in a trust deed, the trustees of the trust may be defined in order to avoid confusion with the trustees of some other trust which is referred to in the deed, and the trustees of the trust will be defined as ‘the Trustees’ and referred to as such throughout the deed. If a definition consists of several words, then each word should begin with a capital. For example, if the term ‘final repayment date’ is defined in a loan agreement, it should be referred to as ‘Final Repayment Date’. Definitions may also be underlined wherever they are used if it is felt this would help identify them in the document.

4.2.4 Redundant definitions

A word or term used in a document does not need to be defined if it is unambiguous in the context in which it is used. A definition for such a word or term is redundant as it serves no purpose. Indeed, the addition of a useless definition could cause trouble as it may lead the reader of the document to suppose that it has some purpose and waste time fruitlessly in searching for this. Although this may seem a statement of the obvious, redundant definitions are found in surprisingly large numbers. Often this is because a definition is not struck out of a precedent when it is redundant, or because a document is an amalgam of material from several sources and care has not been taken to check the relevance of all the definitions used. Whether a definition is redundant will be apparent from the document, and the following are examples of definitions which serve no purpose:

‘Deed’ means a legal document.

‘Agreement’ means a contract.

4.2.5 Once-only definitions

There is no point in using a definition as a label to refer to a company or a person referred to only once or twice in a document.

Instead, they should be referred to by their proper names. However, some words or terms may need to be defined, even if they are used only once or twice, if it is intended that they should have a meaning either wider or narrower than that which they would ordinarily have or they are necessary to give guidance on an important matter. For example, the trust deed of a company pension scheme will normally contain discretionary trusts for the payment of a cash lump sum on the death of a member in employment. The class of beneficiaries to whom this may be paid will usually be defined by the trust deed as the ‘Discretionary Beneficiaries’, and this definition may only be mentioned once or twice. The definition will, nevertheless, be necessary, since the trustees need a specific reference to ensure that they are exercising their discretion in favour of an object of their power.

4.2.6 Unnecessary definitions

The use of ambiguous words or terms which will, in turn, require definitions to resolve their inherent ambiguity should be avoided.

Unambiguous terms should be used wherever possible to cut down the need for unnecessary definitions. For example, if a particular date is referred to in a document, it should not be referred to as ‘the relevant date’ and then defined as, say, ‘12 January 2001’, when it would be possible to refer to 12 January 2001 everywhere the term

‘the relevant date’ was used. Indeed, ‘the relevant date’ as a term tends to detract from the clarity of the document. Similarly, in a will it would be inappropriate to set out a testator’s wish to leave all his property to X by drafting it as ‘all my Money to X’ and then defining

‘Money’ as being all the testator’s property. There is no need for a definition in this case if the gift is drafted as ‘all my property to X’.