Recitals in Commercial Contracts: What They Are and Why They Matter
When it comes to drafting commercial contracts, it`s essential to pay attention to every detail. One critical aspect that`s often overlooked is the recitals. Many people assume that recitals are just an introduction to the contract, but they can actually hold significant legal weight.
So what are recitals?
Recitals are the introductory paragraphs in a commercial contract that provide contextual information about the agreement. They typically outline the background, purpose, and intent behind the contract.
Why are recitals important?
Recitals serve several crucial purposes in commercial contracts. Firstly, they provide clarity and context for the parties involved. By outlining the agreement`s background and intent, the parties can ensure they`re working toward the same goal.
Secondly, recitals can help interpret ambiguous language in the contract. Suppose there are conflicting clauses or terms that are not entirely clear. In that case, the recitals may provide contextual information to help the parties resolve the ambiguity.
Finally, recitals can provide additional legal remedies to the parties. For example, if one party breaches a contract, the other party may be able to point to the recitals as evidence of the breaching party`s intent. This could be grounds for seeking specific performance or damages.
How should recitals be drafted?
When drafting recitals, it`s essential to keep them concise and straightforward. Avoid using overly legalistic language, as this can cause confusion or misunderstandings. The recitals should clearly state the purpose and intent of the contract, but not delve into the details of how the agreement will be executed.
Additionally, it`s important to ensure that the recitals are consistent with the rest of the agreement. If there are any inconsistencies, they should be addressed and resolved before finalizing the contract.
Conclusion
Recitals may seem like a minor part of a commercial contract, but they can have significant legal implications. By outlining the agreement`s background and intent, recitals can provide clarity, interpretation, and legal remedies to the parties involved. So don`t overlook the importance of recitals when drafting commercial contracts. Take the time to ensure they`re clear, concise, and consistent with the rest of the agreement.