Definitions and construction: Overview, definition, and example
What is definitions and construction?
Definitions and construction refers to the section of a contract that explains the specific meaning of certain words or phrases used throughout the agreement (“definitions”), as well as the general rules for interpreting the contract (“construction”). This section sets the foundation for how the rest of the contract should be read and understood.
Why is definitions and construction important?
Clear definitions prevent confusion and reduce the chances of disputes by making sure both parties understand key terms in the same way. Construction rules help interpret the contract consistently—for example, clarifying that singular terms include the plural, or that section headings don’t affect the meaning of the actual terms. Without this section, even simple words can lead to serious disagreements.
Understanding definitions and construction through an example
Here’s how a definitions and construction section might work in practice. A SaaS contract says that “Service” means the software platform provided by the vendor, including all updates and support. Later in the contract, whenever “Service” is mentioned, it refers only to what’s covered in that definition—not anything extra the vendor might offer elsewhere.
In the construction part of the contract, there may be a rule that says: “Headings are for convenience only and do not affect interpretation.” That way, if a section heading seems misleading or vague, it won’t change the legal meaning of the contract.
Example of a definitions and construction clause
Here’s how an example definitions and construction clause may look like in a contract:
For purposes of this agreement, capitalized terms shall have the meanings set forth in this section or elsewhere in the agreement. Any reference to the singular includes the plural, and vice versa, unless the context requires otherwise. Section headings are inserted for convenience only and shall not affect the interpretation of this agreement.
Conclusion
The definitions and construction section helps create a shared understanding between the parties. It makes the contract clearer, more predictable, and easier to enforce. If you ever feel confused by a term or how to interpret a clause, this is one of the first places to check.
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.