Notwithstanding: Definition in Law
The legal definition of the term "notwithstanding" is "despite the fact or in spite of". It is used to introduce a clause that qualifies or contradicts what has been previously stated. When a clause using the term "notwithstanding" is included in a contract, it has the effect of overriding any terms that may appear to be in contradiction with that which qualifies it.
An example of its use in practice can be found in the context of liability caps. As discussed in further detail here, the liability cap in a contract limits the maximum value of any awards that can be made against a contracting party. This clause may specify that a party’s liability "notwithstanding any other provision" in the contract shall not exceed a specified amount . In other words, the liability cap will be absolute and unaffected by other conflicting terms that could potentially be included in the contract. This wording is commonly used because both parties to the contract are presumed to be fully aware of the risk and consequence of unlimited liability, and therefore should understand that the failure to read the contract properly does not excuse them from liability.
The disparity between the familiar vernacular and the legal dictionary definition of "notwithstanding", and the tendency for people to misunderstand the legal dictionary definition, gives rise to a risk of misinterpretation.
Notwithstanding in Legal Context and Interpretation
The context of the use of "notwithstanding" can change its meaning, especially in a legal agreement. In various legal documents and clauses, it can serve as a trigger to contradict or limit other clauses within the same document. For example, an Indiana court found that a document known as a "contract for deed" was not actually a contract for deed after all because a "notwithstanding" clause within the document carved out that document from being a contract for deed.
The term is most commonly encountered as a "notwithstanding" clause designed to capture everything in the document, regardless of any conflicting clause. You could have a lengthy legal document which contradicts itself, and if you have a "notwithstanding" clause in there, the interpretation of the entire agreement will change. Now this includes things like court orders or custodial arrangements. So "notwithstanding" can be a real game changer.
This use of the word is often seen in wills and trusts as well. For instance, you could have a trust document which says that the trustees out there can do whatever they want for the beneficiaries so long as it is in their discretion. But that is sometimes not possible per law if you have a "notwithstanding" included. And you know, when someone is trying to interpret a will or a trust and they come across "notwithstanding," it may be time to get a lawyer involved, because this little word by itself could really change the whole document.
Examples of Notwithstanding in Contracts
"No indemnification obligation of the Indemnified Party after the Settlement Date and payout of the Indemnification Liability will exist as against the Indemnifying Party, notwithstanding the fact that the closing of the Merger for which such Settlement has been obtained is still pending; provided, however, that nothing in this Section 8.06 shall relieve the Indemnifying Party of its obligations under its right of indemnification as set forth in Section 8.02."
This example is pulled from an agreement that is rife with "notwithstanding" clauses. However, it is a good example of how it arises in the context of limitation of liability. "Notwithstanding" is used in this case to override other provisions (which in this case are not specified, but which appear throughout the agreement) where indemnification is extended past the closing.
Misinterpretations and Common Mistakes
A common misinterpretation of "notwithstanding" involves dismissing its significance altogether. It’s easy to think of the word as simply a replacement for "despite", when it is actually much more specific and should not be confused with that term. Disregarding the true meaning and scope of "notwithstanding" has led to loss of rights.
In an Assembly Bill, the intent was clearly elucidated in amended Section 226.7 of California Labor Code to explain the remedy for employer violations of the section. It was, however, nested in the middle of other language. An employer who did not review the entire statute might have presumed that the right to sue for employer violations of Labor Code 226.7 was not preserved by the amendment. The court found otherwise: The trial court concluded that the amendments to labor code section 226.7 were not intended to limit the private right of action authorized by the statute. . . We agree. The amendment did not expressly state that it was intended to eliminate private, civil enforcement. (Sullivan v. Oracle Corp (2011) 51 Cal.4th 1191 , 1199 – 1200 [citation omitted].) It is easy to make the mistake of thinking "notwithstanding" is only a restatement of a negation; it is not. If the phrase "notwithstanding this or any law or regulation" appears a legal document, you can be sure the intent is to limit application of a specific law.
A common, and related, misinterpretation is assuming that the use of "notwithstanding" means that the law or regulation at issue does not apply at all. The opposite is true; "notwithstanding" means that the law or regulation does not apply "[n]otwithstanding any other law or regulation."
Many ironies are present in the reuse of the same word in legal documents to mean two different things. When an exception just proves the rule, or the explanation clouds understanding, there is often a legal word involved. In the Amex case, the irony was that the Court’s finding that the fact that "statutes of repose bar the filing of certain claims after a fixed period" means that "an exception to the bar must explicitly and unequivocally permit the filing of a claim" ends up creating a roadblock for pursuing a legal claim.
It is essential to consider the context in which "notwithstanding" is used and the overall intent of the statute to determine the most appropriate meaning for the phrase.
The Use of Notwithstanding in Legislative Documents
With regard to legislative and statutory text, "notwithstanding" is often used as an exception, and to protect against statutory construction that would otherwise interfere with the intent of the legislature in enacting the legislation. For example, Labor Code section 3708 provides in part: 3152. Notwithstanding any other provision of this chapter, if an employee would have been covered by this division except for the fact that he or she was a minor, the employee shall be deemed to be covered by and entitled to benefits under this division if the injury or death occurs in the course of his or her employment and arises out of the employment. There is no prior "notwithstanding" in the statute, and it refers to another provision of the Labor Code – Division 4, Part 1, Chapter 1, Article 1.5 – which covers minors. It would be proper to read this in context to mean that minors covered by that article, and therefore "would have been covered by this division [workers’ compensation]", are deemed to – notwithstanding any contrary rules to the contrary – be covered by workers’ compensation. Unless we have this term in the statute, we may be tempted to try to analyze what "notwithstanding" means to determine whether or not one of the "contrary rules" applies. The use in the statute is discretionary. It arguably avoids an application of this "notwithstanding", however, it also protects against an argument that the term should not be read into the rules section to override the stated intent of the Legislature.
Drafting Notwithstanding Provisions
An effective "notwithstanding" clause must be unambiguous, clearly write the sentence in the positive, and look like you intended to use "notwithstanding." The best approach is to put the notwithstanding before the clause you intend to supersede, but even putting it at the beginning means you clearly had the ability to supersede it.
Since the effect of the clause is to trump other provisions of the document, it needs to be unambiguous. If it satisfies the plain meaning rule, then you are okay with an ambiguous provision. But you will find that courts will normally struggle to give a clear meaning to the "notwithstanding" clause as it may not be written clearly. As a best practice, use the express language of the document and insert "except for [whatever it is]." So if you were to say: "Notwithstanding anything to the contrary in this Note, any payment amount due under this Note will be calculated based on the amount due pursuant to a fixed interest rate of 3.2%." Change it to "Except for anything to the contrary in this Note , any payment amount due under this Note will be calculated based on the amount due pursuant to a fixed interest rate of 3.2%."
The second best way of drafting a "notwithstanding" clause is to write the "however" language into a provision to clarify which situations you intend to imply "however" therein. For instance, the best way to clarify that is to write: "Except for the foregoing, however, if the calculation of the indebtedness pursuant to the Loan Documents varies from the calculation of the indebtedness pursuant to the Agreement at any time, then the lower of the two calculations will govern for the term of such variation."
Using "notwithstanding" remains an effective means of conveying your intention and to place that intention in the document and control what you intended. If something arises out of nowhere and creates an ambiguity, a well-crafted "notwithstanding" clause will trump the other document provisions, thereby demonstrating that your application of that clause carried the day.