Limitations on rights of others: Overview, definition, and example
What are limitations on rights of others?
Limitations on rights of others refers to contractual provisions or legal principles that restrict or define the extent to which third parties or external entities can claim, interfere with, or enforce rights under an agreement. These limitations often aim to protect the interests of the contracting parties by ensuring that the rights granted within the contract are not overridden or diluted by external claims or actions.
For example, a licensing agreement may include a clause stating that third parties cannot use the licensed intellectual property without explicit permission from the licensor.
Why are limitations on rights of others important?
Limitations on rights of others are important because they safeguard the parties’ contractual rights and prevent external interference that could undermine the agreement's purpose. For SMBs, these provisions provide clarity, ensure exclusive rights, and protect against third-party claims that could lead to disputes or financial loss.
Including such clauses in contracts helps mitigate risks, particularly in situations involving intellectual property, proprietary information, or assets that could otherwise be exploited or challenged by external parties.
Understanding limitations on rights of others through an example
Imagine an SMB licenses its proprietary software to a client for internal use. The agreement includes a limitation stating that the client cannot grant sublicenses or allow third parties to access the software without prior approval. This provision ensures that the SMB retains control over how its software is distributed or used.
In another scenario, a lease agreement includes a clause that restricts the tenant from subletting the property or assigning the lease to another party without the landlord’s consent. This protects the landlord’s control over who occupies the property.
An example of a limitations on rights of others clause
Here’s how a limitations on rights of others clause might appear in a contract:
“The rights granted under this Agreement are exclusive to the Parties and may not be assigned, sublicensed, transferred, or otherwise extended to third parties without the prior written consent of the other Party. No third party shall have any right to enforce or claim benefits under this Agreement, except as explicitly stated herein.”
Conclusion
Limitations on rights of others are essential for protecting contractual rights and ensuring that third parties cannot interfere with or exploit the terms of an agreement. For SMBs, these provisions provide clarity, maintain control, and reduce risks related to third-party claims or disputes. A well-drafted limitations clause ensures transparency and fosters trust between parties while safeguarding the integrity of the agreement.
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.