Contractual Agreement Clause

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A Contractual Agreement Clause is a document section (or a provision) within a contract agreement that specifies terms, conditions, or obligations applicable to the parties involved.



References

2023a

2023b

  • (Bing chat, 2023) ⇒ Bing chat on: What is a "clause" in a contract agreement? (as opposed to an article or a provision)
    • A clause is a specific provision or section in a contract that defines the rights and obligations of the parties. A clause can also be called an article or a provision, depending on the context and the type of contract. There is no definitive rule on how to name the clauses in a contract, but some common practices are:
      • Articles are usually the main sections of a contract that are divided into subsections or paragraphs. Articles are often numbered with Roman numerals (e.g., Article I, Article II, etc.) and have a descriptive title (e.g., Article I: Scope of Work, Article II: Payment Terms, etc.).
      • Clauses are usually the subsections or paragraphs within an article that provide more details or specifications. Clauses are often numbered with Arabic numerals (e.g., 1.1, 1.2, etc.) or letters (e.g., (a), (b), etc.) and may or may not have a title (e.g., 1.1 Definitions, 1.2 Interpretation, etc.).
      • Provisions are usually the individual sentences or phrases within a clause that state a particular right or obligation. Provisions are not numbered or titled, but they may be separated by semicolons or bullet points.
    • For example, a contract may have the following structure:
    • Article I: Scope of Work
      • 1.1 The Contractor shall perform the following services for the Client:
        • (a) Design and develop a website for the Client's business;
        • (b) Provide training and support for the Client on how to use and maintain the website; and
        • (c) Deliver the website to the Client by the agreed deadline.
      • 1.2 The Contractor shall perform the services in accordance with the specifications and requirements set forth in Exhibit A, which is attached to this contract and incorporated by reference.
    • In this example, Article I is the main section that describes the scope of work. 1.1 and 1.2 are the clauses that provide more details on the services and the specifications. (a), (b), and (c) are the provisions that state the specific tasks that the Contractor shall perform.
    • Source: Conversation with Bing, 11/7/2023
      1. Types of Contract Clauses: What is a Clause in a Agreement - PandaDoc. https://www.pandadoc.com/blog/types-of-contract-clauses/.
      2. Contract Clause: What Is It? Examples - Contract Lawyers. https://www.contractscounsel.com/b/contract-clause.
      3. 29 Common Contract Clauses And What They Mean - Incorporated.Zone. https://incorporated.zone/29-common-contract-clauses-and-what-they-mean/.
      4. Common Clauses in a Contract | LegalMatch. https://www.legalmatch.com/law-library/article/common-clauses-in-a-contract.html.

2023c

2022

  • (Contract Safe, 2022) ⇒ https://contractsafe.com/glossary/contract-clause
    • QUOTE: A contract clause is a specific section or provision in a written contract. Depending on the structure of the contract, a clause may be identified numerically, alphabetically, or by heading. While the term “clause” most often refers to a specific paragraph of the contract, this is not necessarily true. For complicated issues, a clause might consist of multiple paragraphs.
    • Contract Clauses: Purposes Served

      Contract clauses serve several important purposes, including the following:

      • Structure – much like the outline in a textbook, a carefully crafted contract will follow a thoughtful topical structure, which flows with the purposes of the contract and promotes understanding of the contract’s purpose.
      • Assist with Navigation – some business contracts are extremely lengthy. Having an effective table of contents based upon clauses, or clearly marked headings, helps everyone find specific provisions of the contract which are buried deep within the agreement.
      • Ease of Reuse – many common contract provisions in an agreement are “boilerplate,” which means the clause is more or less standardized, or commonly included in contracts. The use of separate clauses within the contract simplifies drafting because some of these previously-used boilerplate clauses can be “plugged-in” to a new contract.
      • Severability – sometimes parties to a contract agree that if one provision fails, the remainder of the contract will be honored. Carefully using clauses helps the parties separate out provisions about which they have concerns.

2021a

  • (Hendrycks et al., 2021) ⇒ Dan Hendrycks, Collin Burns, Anya Chen, and Spencer Ball. (2021). “Cuad: An Expert-annotated Nlp Dataset for Legal Contract Review.” In: arXiv preprint arXiv:2103.06268. doi:10.48550/arXiv.2103.06268
    • QUOTE: ... There are different levels of work in contract review. The lowest level of work in reviewing a contract is to find needles in a haystack. At this level, a lawyer's job is to manually review hundreds of pages of contracts to find the relevant clauses or obligations stipulated in a contract. They must identify whether relevant clauses exist, what they say if they do exist, and keep track of where they are described. They must determine whether the contract is a 3-year contract or a 1-year contract. They must determine the end date of a contract. They must determine whether a clause is, say, an anti-assignment clause or a most favored nation clause. We refer to this type of work as "contract analysis."

      The highest level of work is to assess risk associated with the contract clauses and advise on solutions. At this level, a lawyer's business client relies on them to explain not only what each clause means, but also the implications such a clause has on its business and a transaction. ...

2021b