Documents incorporated by reference: Overview, definition, and example
What are documents incorporated by reference?
Documents incorporated by reference are external documents that are made part of a contract without being fully included in the main agreement. Instead of repeating lengthy terms, a contract can simply refer to another document, such as policies, technical specifications, or industry standards, which are then considered legally binding as if they were written directly in the contract.
For example, a contract for software services might incorporate a separate "Terms of Use" document by reference, meaning those terms apply even though they are not physically included in the main contract.
Why are documents incorporated by reference important?
Using incorporated documents helps simplify contracts while ensuring all necessary terms are legally binding. This approach:
- Keeps contracts concise by avoiding repetition of lengthy or technical details.
- Ensures consistency by applying standardized terms across multiple agreements.
- Reduces drafting errors by referencing up-to-date documents instead of copying outdated terms.
However, for an incorporated document to be enforceable, it must be clearly referenced in the contract, easily accessible to both parties, and relevant to the agreement. Courts may reject vague or unclear references, so precise language is key.
Understanding documents incorporated by reference through an example
Imagine a company signs a contract with a vendor to supply materials. Instead of listing all material specifications in the contract, the agreement states: "All materials shall meet the specifications set forth in Document A, which is incorporated by reference." This means that Document A’s terms automatically apply to the contract without needing to be copied in full.
In another example, an employment contract might state: "This Agreement incorporates the Company’s Employee Handbook, which outlines workplace policies and procedures." This ensures that employees are bound by those policies without making the contract excessively long.
An example of a documents incorporated by reference clause
Here’s how an incorporation by reference clause might appear in a contract:
“The following documents are incorporated by reference into this Agreement: [List Documents]. These documents shall be deemed an integral part of this Agreement and shall have the same force and effect as if fully set forth herein.”
Conclusion
Documents incorporated by reference allow contracts to remain clear and concise while still including all necessary terms. They help streamline agreements, maintain consistency, and reduce drafting errors. However, proper referencing is essential to ensure enforceability and avoid disputes over unclear or inaccessible documents.
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.