Allocation clause: Copy, customize, and use instantly
Introduction
An allocation clause defines how costs, liabilities, risks, profits, or other contractual responsibilities are divided between parties. This clause ensures transparency and fairness in distributing obligations, particularly in joint ventures, partnerships, leases, service agreements, and multi-party contracts. It may cover expense allocation, risk distribution, revenue sharing, or asset assignment.
Below are templates for allocation clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Pro-rata allocation clause
This variation ensures that costs or responsibilities are divided based on a party’s proportionate share.
All expenses, liabilities, and obligations arising under this Agreement shall be allocated among the Parties on a pro-rata basis, determined by each Party’s percentage interest in the transaction or shared resource.
Fixed allocation clause
This variation assigns a set percentage or fixed amount to each party.
The [Parties] agree that all costs and liabilities under this Agreement shall be allocated as follows: [Party A] shall be responsible for [X]% and [Party B] for [Y]%, with no further adjustments unless otherwise agreed in writing.
Allocation based on usage clause
This variation ensures that costs are allocated based on actual usage.
All operating costs, maintenance expenses, and service fees under this Agreement shall be allocated among the Parties based on actual usage, as determined by metering, invoicing, or other objective measurement methods.
Revenue allocation clause
This variation defines how revenue is divided between parties.
All revenue generated under this Agreement shall be allocated as follows: [Party A] shall receive [X]%, [Party B] shall receive [Y]%, and [Party C] shall receive [Z]%, with distributions made on a [monthly/quarterly] basis.
Joint venture allocation clause
This variation specifies how profits, expenses, and liabilities are allocated in a joint venture.
The [Parties] agree that all profits, expenses, and liabilities of the joint venture shall be allocated as follows: [Party A] shall receive [X]% and [Party B] shall receive [Y]%, with adjustments made annually based on contributions and performance.
Allocation of tax liabilities clause
This variation clarifies how tax obligations are shared between the parties.
Any tax liabilities arising under this Agreement shall be allocated among the Parties based on their respective ownership interests in the assets or revenues that generated the tax obligation.
Risk allocation clause
This variation assigns specific risks to each party.
The [Parties] agree that all financial and operational risks related to [specific activity] shall be allocated as follows: [Party A] assumes responsibility for [Risk X], and [Party B] assumes responsibility for [Risk Y].
Allocation of legal fees clause
This variation specifies which party is responsible for legal costs.
In the event of a dispute under this Agreement, legal fees shall be allocated as follows: Each Party shall bear its own legal costs unless otherwise determined by arbitration or court ruling.
Allocation based on contribution clause
This variation ensures that costs or revenues are distributed based on the contributions made by each party.
Each Party’s share of expenses and revenues under this Agreement shall be allocated in proportion to the contributions made, as determined by a mutually agreed-upon accounting method.
Expense allocation cap clause
This variation limits the total amount a party can be allocated for expenses.
The [Tenant/Party] shall not be responsible for more than [$X] per year in allocated expenses, with any excess covered by the [Landlord/Other Party].
Capital expenditure allocation clause
This variation defines how capital investment costs are divided.
The cost of capital expenditures for [Project/Asset] shall be allocated among the Parties based on their ownership percentages, with each Party contributing its proportionate share of the total expenditure.
Insurance cost allocation clause
This variation specifies how insurance costs are shared between parties.
All insurance premiums, deductibles, and related expenses shall be allocated among the Parties based on their percentage of liability exposure or asset ownership under this Agreement.
Allocation of maintenance responsibilities clause
This variation outlines how maintenance obligations are divided.
The [Parties] agree that maintenance costs shall be allocated as follows: [Party A] shall be responsible for interior maintenance, [Party B] shall be responsible for exterior maintenance, and shared expenses shall be split equally.
Loss allocation clause
This variation ensures that financial losses are distributed fairly.
In the event of financial losses arising under this Agreement, the [Parties] shall allocate such losses in accordance with their respective ownership shares, unless otherwise specified herein.
Allocation of intellectual property rights clause
This variation defines ownership and allocation of intellectual property rights.
All intellectual property created under this Agreement shall be allocated as follows: [Party A] retains full ownership of [Technology X], [Party B] retains full ownership of [Technology Y], and jointly developed innovations shall be co-owned in equal shares.
Overhead cost allocation clause
This variation specifies how overhead costs are allocated.
All overhead costs incurred in connection with this Agreement shall be allocated proportionally based on each Party’s revenue share or operational footprint within the business.
Allocation based on performance clause
This variation allows allocation of benefits or expenses based on a party’s performance.
Compensation, cost reimbursements, and revenue shares under this Agreement shall be allocated in proportion to each Party’s performance metrics as agreed upon in Schedule A.
Cost-plus allocation clause
This variation allows for the allocation of costs plus a margin.
The [Party] responsible for incurring operational costs shall allocate such costs to the other [Parties] based on actual expenses incurred plus a markup of [X]% for administrative handling.
Allocation of regulatory compliance costs clause
This variation ensures that compliance-related costs are fairly distributed.
Any expenses related to regulatory compliance, including reporting, audits, and legal reviews, shall be allocated among the [Parties] in proportion to their operational activities under this Agreement.
Force majeure cost allocation clause
This variation determines how costs due to force majeure events are handled.
In the event of a force majeure event that impacts financial obligations under this Agreement, all related costs shall be allocated in good faith negotiations, with each Party assuming a fair share based on their contractual responsibilities.
Revenue allocation with profit-sharing clause
This variation allocates revenue while accounting for profit-sharing arrangements.
Revenue generated under this Agreement shall be allocated as follows: [X]% to [Party A] and [Y]% to [Party B], with additional profit-sharing incentives calculated quarterly.
Allocation of subcontractor costs clause
This variation defines how costs associated with subcontractors are divided.
All costs incurred from subcontracted work shall be allocated based on the portion of work each Party has assigned to the subcontractor, with direct expenses billed accordingly.
Allocation of excess costs clause
This variation assigns responsibility for unexpected cost overruns.
If actual costs exceed estimated expenses by more than [X]%, the excess costs shall be allocated equally among the [Parties], unless otherwise agreed.
Allocation of research and development (R&D) expenses clause
This variation ensures fair distribution of R&D costs.
All research and development costs incurred under this Agreement shall be allocated among the [Parties] in accordance with their respective contributions to the project.
Allocation of severance costs clause
This variation ensures that severance payments are distributed appropriately.
If an employee termination requires severance pay, the severance costs shall be allocated among the [Parties] based on their share of the employee’s employment period under this Agreement.
Allocation of benefits and incentives clause
This variation specifies how employee benefits and incentives are shared between parties.
Any employee benefits, including bonuses and stock options, shall be allocated based on each Party’s share of the employee’s salary and contributions to the business.
Liability allocation clause
This variation assigns liability among the parties.
Each Party shall be responsible for liabilities arising from its own negligence or willful misconduct, with liability allocated proportionally in cases of shared fault.
Security cost allocation clause
This variation determines how security costs are shared.
All costs associated with security services, cybersecurity protection, and access control shall be allocated based on the level of security required by each Party’s operations.
Allocation of administrative expenses clause
This variation ensures that general administrative costs are distributed fairly.
All administrative costs, including office space, personnel salaries, and general overhead, shall be allocated proportionally based on each Party’s involvement in the business.
Allocation of debt obligations clause
This variation specifies how shared debt obligations are distributed.
Any debts incurred under this Agreement shall be allocated based on each Party’s financial stake, with repayment obligations divided accordingly.
Allocation of shipping and logistics costs clause
This variation ensures that transportation costs are fairly divided.
All shipping and logistics costs incurred in fulfilling orders under this Agreement shall be allocated based on the shipping destination and order volume of each Party.
Environmental compliance cost allocation clause
This variation specifies how environmental compliance costs are distributed.
Costs incurred for environmental compliance, including permits and waste disposal, shall be allocated among the [Parties] based on their proportionate contribution to environmental impact.
Allocation of capital investment returns clause
This variation ensures that returns on capital investments are distributed fairly among stakeholders.
Any returns generated from capital investments under this Agreement shall be allocated based on each Party’s initial capital contribution, with distributions made on a [monthly/quarterly/annual] basis.
Allocation of dispute resolution costs clause
This variation defines how arbitration or litigation costs are shared.
In the event of a dispute under this Agreement, all costs related to arbitration, mediation, or litigation shall be allocated in proportion to each Party’s liability as determined in the final resolution.
Allocation of real estate expenses clause
This variation ensures that real estate costs such as property taxes and maintenance fees are fairly divided.
All expenses related to the property, including taxes, maintenance, and utilities, shall be allocated among the [Parties] based on their percentage of ownership or leased square footage.
Allocation of government incentives clause
This variation determines how government grants or incentives are distributed among the parties.
Any financial incentives, grants, or tax credits received under this Agreement shall be allocated among the [Parties] in proportion to their respective contributions to the qualifying activity.
Allocation of marketing and advertising expenses clause
This variation ensures fair distribution of promotional costs.
All marketing and advertising expenses incurred under this Agreement shall be allocated among the [Parties] based on their share of revenue generated from the campaign.
Allocation of unforeseen costs clause
This variation assigns responsibility for unexpected expenses.
Any unforeseen costs arising during the execution of this Agreement shall be allocated proportionally based on each Party’s financial stake, unless otherwise agreed in writing.
Allocation of loan guarantees clause
This variation defines how loan guarantee obligations are divided.
Any guarantees made under this Agreement shall be allocated among the [Parties] based on their percentage of ownership or financial stake in the transaction.
Allocation of audit and compliance costs clause
This variation ensures fair division of costs related to audits and regulatory compliance.
Any costs associated with financial audits, regulatory filings, and compliance obligations shall be allocated among the [Parties] based on their role and level of responsibility under this Agreement.
Allocation of pension and retirement plan contributions clause
This variation clarifies how pension and retirement benefits are funded.
Contributions to employee pension and retirement plans shall be allocated among the [Parties] based on their respective payroll obligations for covered employees.
Allocation of cybersecurity costs clause
This variation ensures that costs for data security and IT protections are fairly divided.
All costs related to cybersecurity, including software, personnel, and data protection services, shall be allocated among the [Parties] based on their respective system usage and risk exposure.
Allocation of intellectual property enforcement costs clause
This variation ensures fair distribution of legal costs for protecting IP rights.
Any costs associated with enforcing intellectual property rights, including litigation and administrative fees, shall be allocated among the [Parties] based on their ownership interest in the protected property.
Allocation of disaster recovery costs clause
This variation defines how expenses related to disaster recovery efforts are distributed.
All costs incurred for disaster recovery, including repairs, temporary relocations, and business continuity efforts, shall be allocated among the [Parties] based on their level of operational impact.
Allocation of environmental liability clause
This variation clarifies each party’s responsibility for environmental cleanup and compliance.
Any environmental liabilities arising under this Agreement shall be allocated among the [Parties] based on their respective contributions to the environmental impact, as determined by independent assessment.
Allocation of force majeure relief funds clause
This variation determines how funds set aside for force majeure events are distributed.
Any funds designated for force majeure relief shall be allocated proportionally among the [Parties] based on their financial stake in the affected operations.
Allocation of recruitment and hiring costs clause
This variation ensures fair distribution of expenses for employee recruitment.
Any costs incurred in recruiting and hiring personnel under this Agreement shall be allocated based on each Party’s percentage of workforce utilization.
Allocation of severance costs in mergers clause
This variation ensures severance obligations are distributed fairly after a merger.
If severance costs arise due to a merger, such costs shall be allocated among the merging entities based on the number of employees terminated from each entity.
Allocation of infrastructure development costs clause
This variation assigns responsibility for financing infrastructure improvements.
Any costs associated with infrastructure development or upgrades shall be allocated among the [Parties] in proportion to their usage and benefit from the improvements.
Allocation of freight and logistics costs clause
This variation defines how shipping and delivery expenses are split.
Freight, shipping, and logistics costs shall be allocated based on the volume and weight of goods shipped for each Party under this Agreement.
Allocation of software licensing fees clause
This variation ensures that software costs are shared fairly.
All software licensing and subscription fees incurred under this Agreement shall be allocated among the [Parties] based on their number of active users or usage level.
Allocation of professional development and training costs clause
This variation determines how employee training expenses are shared.
The costs of employee training and professional development programs shall be allocated among the [Parties] based on their respective workforce participation in such programs.
Allocation of intellectual property royalties clause
This variation ensures that licensing revenue is distributed fairly.
All royalties and licensing fees earned under this Agreement shall be allocated among the [Parties] based on their ownership percentage of the intellectual property.
Allocation of warranty obligations clause
This variation defines how warranty costs are divided among manufacturers, suppliers, and vendors.
Warranty obligations, including repair and replacement costs, shall be allocated among the [Parties] based on their role in the supply chain and level of responsibility.
Allocation of early termination penalties clause
This variation assigns responsibility for penalties incurred due to early termination of the contract.
Any penalties arising from early termination of this Agreement shall be allocated among the [Parties] in accordance with their share of contract value and respective responsibilities.
Allocation of shared advertising and branding costs clause
This variation ensures fair distribution of expenses for joint marketing campaigns.
All expenses related to shared advertising, branding, and promotional efforts shall be allocated among the [Parties] based on their expected share of the campaign’s benefits.
Allocation of leasehold improvement costs clause
This variation ensures that costs for property modifications are fairly divided.
The costs of leasehold improvements and facility upgrades shall be allocated based on the proportion of space occupied by each [Tenant/Party].
Allocation of financial advisory fees clause
This variation determines how costs for financial consultants and advisors are distributed.
Any fees incurred for financial advisory services under this Agreement shall be allocated among the [Parties] based on their financial interest in the transaction.
Allocation of third-party liability claims clause
This variation clarifies responsibility for third-party claims.
Any third-party liability claims arising under this Agreement shall be allocated among the [Parties] based on their degree of fault or exposure.
Allocation of supply chain disruptions clause
This variation assigns responsibility for managing supply chain delays.
Any costs or losses resulting from supply chain disruptions shall be allocated among the [Parties] based on their reliance on affected suppliers or logistics channels.
Allocation of recruitment agency fees clause
This variation ensures that the costs of external recruitment agencies are fairly divided.
Any recruitment agency fees incurred for hiring personnel under this Agreement shall be allocated among the [Parties] in proportion to the number of employees hired for each Party.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.