No further claims: Overview, definition, and example
What is no further claims?
A no further claims clause is a contract provision that prevents parties from making additional claims against each other beyond what is explicitly stated in the agreement. Once a dispute is settled or a payment is made, this clause ensures that neither party can come back later demanding more compensation or raising new claims related to the same issue.
For example, if a business pays a supplier a final settlement for a defective product, a no further claims clause would prevent the supplier from later requesting additional payment or raising new disputes over the same issue.
Why is no further claims important?
This clause is important because it provides legal certainty and finality. Without it, one party could try to reopen disputes even after a resolution has been reached, leading to ongoing legal costs and uncertainty.
For businesses, especially SMBs, having a no further claims clause in contracts and settlement agreements helps avoid prolonged disputes, ensuring that once an issue is resolved, it stays resolved.
Understanding no further claims through an example
Imagine a small business hires a contractor to build a website, but the project runs into delays. The business negotiates a partial refund due to the delays. A no further claims clause in the refund agreement would mean the contractor cannot later demand additional payments or claim further compensation for work already done.
In another scenario, a supplier agrees to compensate a retailer for late deliveries with a discount on future orders. A no further claims clause ensures that after this discount is applied, the retailer cannot demand additional compensation for the same late deliveries.
An example of a no further claims clause
Here’s how a no further claims clause might appear in a contract:
“Upon execution of this Agreement, the Parties agree that no further claims, demands, or actions shall be made in relation to [specific issue], and any such claims are expressly waived.”
Conclusion
A no further claims clause helps businesses achieve finality in agreements and settlements, preventing ongoing disputes. It protects parties from unexpected claims after a resolution is reached, ensuring predictability and reducing legal risks. Including this clause in contracts can save time, money, and frustration by clearly defining the limits of any future claims.
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.