Definitions and other provisions of general application: Overview, definition, and example
What are definitions and other provisions of general application?
Definitions and other provisions of general application refer to a section in a contract or legal document that provides clear meanings for key terms and establishes rules for interpreting the agreement. This section ensures that all parties have a consistent understanding of the terms used throughout the document and sets general principles for applying the contract’s provisions.
For example, it might define terms like "business day" or "affiliate" and clarify how singular terms should be interpreted as plural when necessary.
Why are definitions and other provisions of general application important?
This section is important because it eliminates ambiguity, ensures consistency, and provides a clear framework for interpreting the contract’s language. For SMBs, having well-defined terms and general provisions reduces the risk of misunderstandings or disputes, ensuring that all parties interpret the agreement in the same way.
By including this section in a contract, businesses can avoid costly litigation over ambiguous terms and ensure that the document is enforceable and practical to implement.
Understanding definitions and other provisions of general application through an example
Imagine an SMB enters into a supplier agreement. The agreement includes a section titled "Definitions and Other Provisions of General Application," which specifies:
- “Business Day” means any day other than a Saturday, Sunday, or public holiday.
- “Delivery Date” means the date specified in the purchase order for delivery of goods.
- A rule stating that any reference to a "person" includes individuals, corporations, and partnerships.
This ensures that both the SMB and the supplier understand and interpret these terms consistently throughout the agreement.
In another scenario, a lease agreement includes a similar section clarifying that terms like "month" refer to calendar months and that words used in the singular also apply to the plural, unless otherwise specified. This avoids confusion about the scope and application of the lease terms.
An example of a definitions and other provisions of general application clause
Here’s how this section might appear in a contract:
“For the purposes of this Agreement: (a) ‘Business Day’ means any day other than a Saturday, Sunday, or public holiday in [Insert Jurisdiction]. (b) ‘Affiliate’ means any entity that controls, is controlled by, or is under common control with a Party. Unless the context otherwise requires, words importing the singular include the plural, and words importing gender include all genders. References to sections, schedules, or exhibits are to those contained in this Agreement unless otherwise specified.”
Conclusion
The "Definitions and Other Provisions of General Application" section ensures clarity, consistency, and enforceability in contracts by standardizing the meanings of key terms and setting rules for interpreting the document. For SMBs, this section is crucial for avoiding disputes, ensuring all parties have the same understanding, and creating a solid foundation for the agreement. A well-drafted definitions and provisions section promotes transparency and confidence in business relationships.
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.