Permitted activities: Overview, definition, and example
What are permitted activities?
Permitted activities refer to the specific actions, operations, or business activities that a party is allowed to carry out under a contract, law, or agreement. These activities define the scope of what is legally or contractually acceptable, preventing disputes over what is allowed.
Permitted activities can apply to various situations, such as how a tenant can use a rental property, what services a business partner can offer, or what actions an employee can take within a company.
Why are permitted activities important?
Clearly defining permitted activities helps prevent misunderstandings, legal conflicts, and breaches of contract. Without these guidelines, one party might assume they have more freedom than the other intended, leading to potential disputes or even legal liability.
For example, in a lease agreement, specifying permitted activities ensures that a commercial tenant doesn’t use the property for purposes that violate zoning laws or disturb neighbors. In a business contract, it ensures a service provider operates within agreed-upon limits.
Understanding permitted activities through an example
Imagine a business signs a franchise agreement to open a café under a well-known brand. The contract states that the franchisee is permitted to sell coffee, pastries, and sandwiches but is not allowed to sell alcoholic beverages.
If the franchisee starts serving wine without approval, they would be violating the permitted activities clause, which could lead to legal action or termination of the franchise agreement. This example highlights why it's crucial to define what is and isn’t allowed.
An example of a permitted activities clause
Here’s an example of how permitted activities might be written in a contract:
“The Tenant shall use the Premises solely for the operation of a retail clothing store and shall not engage in any other business activities without prior written consent from the Landlord. The Tenant shall comply with all applicable laws and regulations related to the permitted activities.”
Conclusion
Defining permitted activities in contracts and agreements helps ensure all parties understand their rights and limitations. Whether in a lease, partnership, or service agreement, setting clear boundaries prevents disputes and protects both parties.
Before signing any agreement, review the permitted activities carefully—because knowing what you can (and can’t) do upfront helps avoid costly misunderstandings 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.