No release: Overview, definition, and example
What is "no release"?
"No release" refers to a contractual provision stating that a party remains responsible for its obligations, even if certain conditions change or other parties fail to perform their duties. This clause ensures that commitments are upheld, preventing parties from avoiding liability due to external circumstances.
For example, in a loan agreement, a guarantor may be subject to a no release clause, meaning they remain liable for repayment even if the borrower defaults or the lender grants extensions.
Why is "no release" important?
A no release clause is important because it reinforces accountability in contracts. It prevents one party from escaping its obligations simply because of changes in circumstances, non-performance by others, or modifications to the contract.
This type of clause is commonly used in financial agreements, guarantees, and multi-party contracts where obligations must be maintained, even if certain aspects of the agreement change.
Understanding "no release" through an example
A personal guarantor signs an agreement to back a company’s bank loan. The bank later modifies the loan terms, giving the company more time to repay. Without a no release clause, the guarantor might argue that their responsibility ended when the loan terms changed. However, if the agreement includes a no release provision, the guarantor remains liable for repayment regardless of modifications.
In another case, a construction company enters a contract with a developer, agreeing to complete a project within six months. The developer changes some project requirements midway, delaying completion. A no release clause in the contract ensures that the construction company is still bound to finish the project under the original agreement, even if conditions change.
An example of a no release clause
Here’s how a no release clause might appear in a contract:
“The obligations of each Party under this Agreement shall not be released, discharged, or otherwise affected by any amendments, extensions, waivers, or non-performance by any other Party, unless expressly agreed in writing.”
Conclusion
A no release clause ensures that contractual responsibilities remain in force, even when conditions change or others fail to fulfill their obligations. It provides certainty in agreements by preventing parties from avoiding liability due to modifications or external factors. Including a no release provision in contracts helps maintain accountability and protects against unforeseen disputes.
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.