Recitals: Overview, definition and example
What are recitals?
Recitals are the introductory section of a contract that explain the background, purpose, and context of the agreement. They provide a summary of why the parties are entering into the contract and outline key facts or intentions relevant to the deal.
Recitals are not legally binding but can help interpret the contract if there’s a dispute.
Why are recitals important?
Recitals are important because they set the stage for the agreement, helping everyone understand the context and reasons behind it. While they don’t create enforceable rights or responsibilities, they can clarify the intent of the parties if parts of the contract are unclear or ambiguous.
In business, recitals help provide a clear narrative about the deal, making it easier for all parties (and their lawyers) to understand the agreement’s purpose.
Understanding recitals through an example
Imagine two companies sign a distribution agreement. The recitals might state that one company manufactures eco-friendly packaging, and the other is a leading distributor of sustainable products. This background helps explain why the companies are partnering and what they aim to achieve through the contract.
In another example, a technology company licenses software to a client. The recitals might explain that the software was developed to address specific industry challenges, giving context to the licensing terms that follow.
An example of a recital in a contract
Here’s how a recital might look in a contract:
“WHEREAS, Party A is engaged in the manufacture of sustainable packaging materials; and WHEREAS, Party B operates a distribution network for eco-friendly products; and WHEREAS, the Parties wish to collaborate to bring these materials to a wider market.”
Conclusion
Recitals are the storytelling part of a contract, outlining the background and intentions of the parties. While not legally binding, they provide valuable context that can guide interpretation and understanding.
By including clear and concise recitals, businesses can create agreements that are easier to follow, ensuring everyone is aligned on the purpose and scope of the deal. It’s about setting the stage for a successful partnership.
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.