Purpose of agreement: Overview, definition, and example
What is the purpose of an agreement?
The purpose of an agreement refers to the fundamental reason why two or more parties enter into a contract or arrangement. It defines the specific goals, intentions, and outcomes that the parties aim to achieve by entering into the agreement. The purpose outlines what each party expects from the agreement, the mutual benefits, and the context in which the agreement is being made.
In legal terms, the purpose is often summarized in the preamble or introductory section of an agreement, which provides an overview of the objectives and scope of the contract. The purpose of the agreement serves as the foundation for the terms and conditions set forth in the document, ensuring that all parties are aligned on the main goals.
Why is the purpose of an agreement important?
The purpose of an agreement is important because it provides clarity and direction to the parties involved. Clearly defining the purpose helps ensure that the agreement reflects the true intentions of the parties, reducing the likelihood of misunderstandings or disputes.
For businesses, understanding the purpose of an agreement is essential for aligning operations, ensuring that the contract serves its intended function, and meeting specific goals. For individuals or organizations entering into an agreement, a clear purpose helps them evaluate the potential benefits and risks, ensuring that they are entering into a meaningful and productive relationship.
Understanding the purpose of an agreement through an example
Imagine two companies entering into a partnership agreement to collaborate on developing a new product. The purpose of the agreement is clearly stated as the joint development and marketing of the product. This purpose defines the scope of the partnership, the roles of each party, and the intended outcomes of the collaboration, ensuring both parties understand what they are working toward and the benefits they hope to achieve from the agreement.
In another example, a company enters into an employment agreement with a new hire. The purpose of the agreement is outlined as the employment of the individual in a specific role with agreed-upon duties, compensation, and benefits. This purpose helps both the employer and employee understand the expectations and goals of their working relationship.
An example of a purpose of agreement clause
Here’s how a purpose of agreement clause might look in a contract:
“The purpose of this Agreement is to outline the terms and conditions under which the Parties will cooperate to develop, manufacture, and distribute the Product, as well as to establish the respective roles and responsibilities of each Party in the collaboration. The Parties agree that the goal of this Agreement is to jointly achieve success in bringing the Product to market, maximizing its commercial potential.”
Conclusion
The purpose of an agreement is a crucial component that outlines the goals, intentions, and desired outcomes for all parties involved. By clearly stating the purpose, an agreement ensures that the terms and conditions reflect the true objectives of the parties and provides a roadmap for how the relationship will function. Defining the purpose helps avoid misunderstandings, establishes expectations, and ensures that all parties are working toward the same goal.
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.