If you’re a lawyer, chances are that at some point in your career you have had to write about payments. Depending on the contract, this can be either very easy or extremely difficult. In English-language contracts, there are many different ways to say that both parties will "pay" each other money, and sometimes it’s hard to get all of those right! There is no one way to do it though; lawyers have been writing about payments for hundreds of years. This blog post covers how I would recommend writing about payments in an English-language contract.
Writing about priceThe most straightforward way to write about price is as follows:
‘The price for X is USD 100,000.'
Digits and wordsAlthough it does not really make sense to use both words and digits when stating amounts of money (e.g. ten (10) US Dollars), it is a time-tested convention that is unlikely to disappear in the foreseeable future. If you choose to use both words and digits when stating amounts, note that in the English-speaking countries the most popular convention is to put words before digits and to put digits in brackets: ten (10) US Dollars.
Alternatively, the following convention is recommended by several authorities:
● use words for numbers from one to ten, e.g., ‘seven days';
● for numbers from 11 upwards, and for all non-integer numbers, use digits, e.g., 3.14, 2 000, etc.
Pick the convention you like, and stick to it.
Compound numbers written in wordsPut a hyphen between words representing numbers below one hundred, for example,
twenty-first, eighteen hundred and fifty-six.
Fractions and thousandsIn most English-speaking countries it is standard to use a decimal point to express fractions; EUR 0.33 is thirty-three euro cents. Most other countries use a comma instead (e.g., EUR 0,33). Note that the International Bureau of Weights and Measures allows using both a comma and a decimal point as decimal separators.
The use of space as separators between groups of numbers (e.g., 1 000 000) has been officially endorsed by the International Bureau of Weights and Measures and other international organizations since 2003. However, many drafters from English-speaking countries continue to use a comma instead (e.g., 1,000,000 for ‘one million').
Pick the convention you like and apply it consistently to all numbers in your contract.
CurrenciesYou can use signs ($), codes (USD) and currency names (United States dollar) to indicate the currency of your amount. Note that some currencies use the same sign (e.g., $ could refer to a US, Canadian or Australian dollar), so you need to either add a definition (e.g., ‘$ means United States dollar') or amend the sign to make clear which currency is being referred to (e.g., US$).
To indicate the currency of your amount,
- put the currency sign (e.g., $) before the amount without a space, e.g., $100;
- put the currency code (e.g., EUR) before the amount with a space, e.g., EUR 50; or
- put the currency name (e.g., US Dollar) after the amount with a space, e.g., 100 US Dollars.
This format is recommended by the European Union’s Publication Office and most authorities on contract drafting.
When a monetary unit is referred to generally, but an amount is not included, it is spelt out in letters, e.g.,
‘The Purchaser shall pay to the Seller an amount in euros equal to … '
If the deal is nominated in a lesser-known currency, make sure to check its ISO 4217 code. For example, the current code for Russian Ruble is RUB, but it was RUR prior to the 1998 denomination. To avoid any ambiguity, add a definition such as
‘RUB means Rubles, the official currency of Russia'.
What Noun to UseDepending on the context, there are different nouns you should use before stating the amount to be paid under the contract:
● Where the amount is paid for the sale of goods (including intangible goods such as shares), use ‘price' as in, ‘The price for the Vehicle shall be EUR 30 000'. Sometimes the word ‘price' is replaced by ‘consideration', reflecting the idea of exchange of promises the parties to the contract make to each other (goods in exchange for money).
● Where the amount is paid for a piece of work, a particular right or a service, use ‘fee' as in, ‘the total fee for the Services is EUR 30 000'.
● Often you do not need to use any noun at all as in, ‘Arnor shall pay Bree USD 10 000 for the sale of the Products'.
The price or fee can be paid in a single payment or in several payments.
Single paymentTo state that the price will be paid in a single payment, use the phrase ‘lump sum', e.g., ‘the Purchaser shall pay the Price in one lump sum payment'. Although there is a simpler and more straightforward alternative to ‘lump sum' (‘The Purchaser shall pay the Price in a single payment'), ‘lump sum' remains a popular drafting choice.
Several paymentsIf the price or fee is paid in several payments, use the term ‘installment':
‘The Purchaser shall pay the Second Installment by 1 January 2020.'
‘The Purchaser shall pay the Price in installments in accordance with the schedule set forth in the Annex.'
‘The Debtor shall repay the Debt in six equal monthly installments, and each monthly installment shall be paid no later than on the fifth Business Day of the respective calendar month.'