No conflict with other instruments: Overview, definition, and example
What is "no conflict with other instruments"?
"No conflict with other instruments" is a legal provision in contracts that ensures a party's obligations under the agreement do not contradict or violate any other agreements, laws, or governing documents they are bound by. This clause helps confirm that signing the contract will not create legal or financial conflicts with existing commitments.
It is commonly used in business contracts, loan agreements, and corporate governance documents to protect parties from unintended breaches of other agreements.
Why is "no conflict with other instruments" important?
This clause is crucial because it prevents legal disputes and ensures that all parties can fulfill their obligations without violating existing agreements or laws. Without it, a party might unknowingly sign a contract that contradicts another agreement, leading to potential lawsuits or financial penalties.
For example, a company entering into a loan agreement must ensure that taking on new debt does not breach any existing financial covenants with other lenders. By including a "no conflict with other instruments" clause, the company confirms that the new contract aligns with its current obligations.
Understanding "no conflict with other instruments" through an example
Imagine a business signs an exclusive distribution agreement with a supplier, meaning the supplier cannot sell to other distributors in a specific region. Later, the supplier tries to sign a new agreement with another distributor for the same territory.
If the supplier had already agreed to a "no conflict with other instruments" clause in the first contract, the new agreement would be a breach of contract. The original distributor could take legal action to enforce their exclusive rights.
An example of a "no conflict with other instruments" clause
Here’s an example of how this clause might appear in a contract:
“The execution, delivery, and performance of this Agreement by the Party do not and will not conflict with, violate, or result in a breach of any existing contract, obligation, law, or governing document applicable to the Party.”
Conclusion
A "no conflict with other instruments" clause protects all parties by ensuring that signing a new agreement won’t create legal conflicts with existing obligations. It helps prevent unintended breaches of contract, regulatory violations, and financial risks.
Before signing any contract, always review existing agreements and legal obligations—because avoiding conflicts upfront can prevent costly legal issues later.
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.