No violation of law: Overview, definition, and example
What does "no violation of law" mean?
"No violation of law" is a common clause in contracts and agreements that ensures all actions taken by the parties involved are in full compliance with applicable laws and regulations. This clause states that the parties affirm they are not violating any local, state, or national laws by entering into or performing the terms of the agreement.
For example, a business entering into a contract with a supplier would include this clause to confirm that neither party is involved in illegal activities, such as fraud, bribery, or violating industry-specific regulations.
Why is "no violation of law" important?
This clause is important because it helps protect both parties in the contract from legal issues that could arise if one or both parties are found to be in violation of the law. It ensures that the contract remains enforceable and provides a clear legal foundation for dispute resolution.
For businesses, including this clause reduces the risk of liability for illegal actions and helps demonstrate good faith compliance with the law. It also provides a layer of protection in the event of legal audits, investigations, or enforcement actions.
Understanding "no violation of law" through an example
Imagine a company enters into a partnership agreement with another business to develop a new product. The agreement includes a no violation of law clause, ensuring that neither company is involved in illegal activities such as price-fixing, intellectual property theft, or environmental violations.
In another example, a company enters into a licensing agreement to distribute a software product. The no violation of law clause ensures that the company is not violating any intellectual property rights, ensuring the licensing is legal and legitimate.
An example of a "no violation of law" clause
Here’s how a no violation of law clause might appear in a contract:
“Each Party represents and warrants that, as of the date of this Agreement, it is not in violation of any applicable local, state, or national laws or regulations that would affect its ability to perform its obligations under this Agreement.”
Conclusion
The no violation of law clause ensures that all actions taken by the parties in a contract are in compliance with relevant laws. It helps protect businesses from potential legal disputes and strengthens the enforceability of the agreement.
For businesses, this clause provides reassurance that the contract is grounded in legal compliance, reducing the risk of liability and safeguarding reputation.
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.