Continuing effect: Overview, definition, and example
What is a continuing effect?
A continuing effect refers to the ongoing impact or consequence of a legal action, agreement, or provision, which persists even after the event or action that triggered it has concluded. In legal terms, it means that certain obligations, rights, or conditions remain in force for a defined period, or indefinitely, as specified in a contract, law, or agreement. For example, certain clauses in contracts, like confidentiality or non-compete agreements, may have continuing effects, meaning that they remain enforceable even after the contract has been completed or terminated.
The continuing effect can apply to a variety of situations, such as the enforcement of warranties, indemnities, or post-termination obligations in agreements. It ensures that certain terms continue to have legal consequences beyond the immediate duration of the contract or event.
Why is a continuing effect important?
A continuing effect is important because it ensures that the obligations and consequences of specific actions, even after the primary event or contract has ended, are still upheld. This can provide long-term protection for parties involved, particularly in situations where one party’s actions or obligations extend beyond the contract’s completion, such as confidentiality or the settlement of financial obligations.
For businesses, the continuing effect ensures that critical terms—like non-disclosure or indemnification clauses—remain enforceable even after the end of a business relationship or contract. For individuals, understanding continuing effects helps ensure that their rights and obligations are protected over time, even after the conclusion of the main agreement or action.
Understanding continuing effect through an example
Imagine a company enters into a contract with a supplier for the provision of materials over the course of one year. The contract includes a confidentiality clause, stipulating that the supplier cannot disclose any proprietary information even after the contract ends. This confidentiality obligation continues to have an effect beyond the term of the agreement, ensuring that the supplier is legally bound to keep the company’s sensitive information private long after the business relationship has concluded.
In another example, a contract between a contractor and a client may include an indemnification clause, where the contractor agrees to protect the client from any legal claims arising from the contractor’s work. Even after the contract ends, the continuing effect of the indemnity provision ensures that the contractor is still liable for claims that arise post-termination if related to work done during the contract term.
An example of a continuing effect clause
Here’s how a continuing effect clause might appear in a contract:
“The provisions of Sections 5 (Confidentiality), 7 (Indemnification), and 9 (Non-Compete) shall survive the termination or expiration of this Agreement and shall remain in full force and effect for a period of [X] years following the termination of the Agreement.”
Conclusion
A continuing effect ensures that certain provisions or obligations remain enforceable even after the primary contract, agreement, or action has ended. This is critical for maintaining protection over time, particularly in areas like confidentiality, indemnification, and post-termination rights.For businesses and individuals, understanding the continuing effect of specific clauses helps manage expectations and ensures that key legal protections endure beyond the duration of the agreement. For legal professionals, drafting clear continuing effect clauses helps ensure that important terms remain in force as intended.
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.