Additional terms: Overview, definition, and example
What are additional terms?
Additional terms refer to extra provisions or conditions that are added to a contract, agreement, or legal document beyond the standard or initial terms already outlined. These terms are used to address specific circumstances, clarify ambiguities, or tailor the agreement to the unique needs of the parties involved. Additional terms can cover a wide range of topics, including but not limited to payment schedules, dispute resolution mechanisms, performance milestones, confidentiality obligations, and more.
In contracts, additional terms are often negotiated and incorporated to ensure that the agreement fully addresses all aspects of the parties' expectations and obligations. They can be added as amendments to existing contracts or as supplementary clauses.
Why are additional terms important?
Additional terms are important because they allow the parties to customize a contract to better fit their specific requirements or deal with unique situations that may arise. They help clarify issues not covered by the primary agreement, reducing the likelihood of misunderstandings, disputes, or gaps in the contract.
For businesses, additional terms provide the flexibility to address changing circumstances, evolving needs, or specific legal requirements. For individuals, these terms can help protect personal interests and ensure that all aspects of the agreement are covered.
Understanding additional terms through an example
Imagine two companies entering into a contract for the sale of goods. The initial agreement outlines the quantity, price, and delivery schedule. However, one company requests additional terms to address the quality control process, payment method, and the procedure for handling late deliveries. These additional terms are incorporated into the contract to ensure both parties are clear on their responsibilities and expectations.
In another example, an employment contract may include standard clauses related to salary and benefits. However, the employer and employee might agree to additional terms that address bonuses, stock options, or specific non-compete provisions that are important to the employee’s role or industry.
An example of additional terms clause
Here’s how an additional terms clause might look in a contract:
“The parties agree that in addition to the terms set forth in the main body of this Agreement, the following additional terms shall apply: (i) the Seller shall provide monthly performance reports for a period of six months following delivery; (ii) the Buyer shall pay an additional 5% of the total contract price as a bonus if all performance targets are met within the agreed timeline; and (iii) the parties shall resolve any disputes through arbitration, rather than litigation, in accordance with the rules of the American Arbitration Association.”
Conclusion
Additional terms are crucial for ensuring that a contract meets the specific needs and circumstances of the parties involved. By including additional provisions, parties can better address unique requirements, clarify obligations, and avoid potential conflicts. These terms provide flexibility in tailoring contracts to ensure that all relevant issues are covered, ultimately helping both parties achieve their desired outcomes and maintain a smooth, mutually beneficial relationship.
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.