Preamble: Overview, definition and example
What is a preamble?
A preamble in a contract is an introductory section that sets the stage for the agreement by providing background information about the parties, the purpose of the contract, and the context in which the agreement is being made. While the preamble itself is not legally binding, it helps clarify the intent of the parties and provides context for interpreting the contract’s terms.
For example, the preamble of a licensing agreement might state that the licensor owns specific intellectual property and is granting the licensee rights to use it under certain conditions.
Why is the preamble important?
The preamble is important because it establishes the foundation and intent of the agreement, helping to prevent misunderstandings or disputes about the contract’s purpose. By providing context, the preamble aids in interpreting the terms of the contract in cases of ambiguity or conflict.
Though not enforceable on its own, the preamble often serves as a useful reference for courts or arbitrators when determining the parties’ intentions.
Understanding the preamble through an example
In a merger agreement, the preamble might state that the two companies seek to combine their operations to enhance efficiency and expand their market presence. This context provides insight into the broader goals of the agreement, helping to frame the terms that follow.
An example of a preamble
Here’s how a preamble might appear in a contract:
“This Agreement is made and entered into as of [Insert Date] by and between [Party A], a [Insert Type of Entity] organized under the laws of [Insert Jurisdiction], and [Party B], a [Insert Type of Entity] organized under the laws of [Insert Jurisdiction]. WHEREAS, [Party A] desires to [Insert Purpose or Intent of the Agreement], and [Party B] agrees to provide such services in accordance with the terms of this Agreement.”
Conclusion
The preamble is a crucial introductory section of a contract that outlines the purpose, background, and intent of the agreement. While not legally binding, it provides valuable context and aids in interpreting the contract’s provisions. A well-crafted preamble establishes clarity and ensures that all parties share a common understanding of the agreement’s purpose and goals.
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.