Interested persons: Overview, definition, and example
What are interested persons?
"Interested persons" refers to individuals or entities who have a vested interest or stake in the outcome of a contract or legal agreement. These may include parties to the contract as well as other third parties who may be impacted by the terms of the agreement, even though they are not signatories to it. Interested persons might include investors, beneficiaries, guarantors, or any other stakeholders who could be affected by the performance of the contract.
For example, in a real estate agreement, interested persons could include the bank providing financing, the tenant leasing the property, and any third-party inspectors or contractors involved in the project.
Why are interested persons important?
Interested persons are important because their interests or rights may be impacted by the performance or non-performance of the contract, even if they are not direct parties to the agreement. Acknowledging interested persons in contracts helps ensure transparency and can clarify the extent of their involvement or rights. This is important for avoiding conflicts or misunderstandings regarding who is entitled to what and under what circumstances.
Understanding interested persons through an example
Let’s say a business signs a lease agreement for office space. While the landlord and the business are the primary parties to the contract, the lender who provided financing for the landlord's property might also be an interested person, as the agreement affects their financial stake in the property. Similarly, if the business has employees who will work in the space, they could also be considered interested persons, as the terms of the lease might impact their working environment.
In another example, a company signs a contract with a supplier to provide materials for manufacturing. While the supplier and manufacturer are the primary parties, a third-party distributor who sells the finished products might also be an interested person, as any delays in delivery could affect their ability to meet their own sales targets.
An example of an interested persons clause
Here’s how an interested persons clause might appear in a contract:
“The Parties acknowledge that third parties, including but not limited to investors, lenders, and contractors, may be considered interested persons in relation to this Agreement and may be entitled to receive notices or other communications as specified herein.”
Conclusion
"Interested persons" are individuals or entities who, while not directly involved in a contract, have a stake in the agreement's performance or outcome. Acknowledging interested persons in contracts is important for ensuring that all relevant parties are aware of and can act on their rights or interests. This helps reduce the potential for disputes and ensures that everyone with a stake in the contract’s outcome is considered.
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.