No injunctions: Overview, definition, and example
What does "no injunctions" mean?
A no injunctions clause is a contractual provision that prevents parties from seeking injunctive relief—such as court orders to stop an action—against each other in the event of a dispute. Instead, the parties agree to resolve conflicts through monetary damages or other specified remedies. This clause is often used in commercial contracts to prevent disruptions to business operations.
For example, a software company may include a no injunctions clause in its licensing agreement to ensure that a customer cannot obtain a court order stopping the distribution of its software due to a contractual dispute.
Why is a no injunctions clause important?
A no injunctions clause is important because it protects businesses from legal actions that could halt operations, disrupt ongoing projects, or delay transactions. Injunctions can be powerful legal tools, but they may cause unnecessary harm if used in business disputes where monetary damages would be a sufficient remedy.
For businesses, this clause ensures that any disputes are resolved without causing immediate operational risks, particularly in industries where continuity is crucial, such as technology, manufacturing, and financial services.
Understanding no injunctions through an example
Imagine a supplier and a retailer have a long-term contract for product distribution. The retailer later claims the supplier breached the contract and seeks an injunction to prevent the supplier from selling the product to other clients. If the contract contains a no injunctions clause, the retailer would be limited to seeking monetary damages rather than stopping the supplier’s sales.
In another case, a media streaming service enters a licensing agreement with a content provider. If a dispute arises over payment terms, the content provider cannot seek an injunction to block streaming access, ensuring uninterrupted service for users while the dispute is resolved.
An example of a no injunctions clause
Here’s how a clause like this might appear in a contract:
“The Parties agree that in the event of a dispute, neither Party shall seek injunctive or equitable relief to restrict, delay, or prohibit the other Party’s operations or activities under this Agreement. The sole remedy for any alleged breach shall be monetary damages or such other relief as expressly provided herein.”
Conclusion
A no injunctions clause prevents parties from seeking court orders that could halt business operations, ensuring that disputes are resolved through financial compensation or alternative remedies. This provision is particularly useful in commercial agreements where continuity is critical. By including a no injunctions clause, businesses can protect themselves from legal disruptions while maintaining flexibility in dispute resolution.
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.