Related obligations: Overview, definition, and example
What are related obligations?
Related obligations refer to contractual duties or responsibilities that are connected to a party’s primary obligations under an agreement. These obligations may arise from the need to fulfill the main contractual terms or ensure compliance with applicable laws, industry standards, or regulatory requirements.
For example, in a service agreement, a company that agrees to provide IT support may also have a related obligation to maintain data security and confidentiality while delivering those services.
Why are related obligations important?
Related obligations are important because they ensure that all necessary and connected responsibilities are addressed within a contract. They help prevent disputes by clarifying that certain duties are implied or required to support the overall performance of the agreement.
For businesses, explicitly stating related obligations helps manage expectations, reduces legal risks, and ensures compliance with broader contractual or regulatory frameworks. This is especially important in industries such as finance, healthcare, and construction, where additional requirements may impact performance.
Understanding related obligations through an example
A manufacturer signs a supply contract to deliver machinery to a retailer. The agreement includes a related obligation requiring the manufacturer to provide installation and training for the retailer’s employees. This ensures that the retailer can properly use the machinery without additional costs or delays.
In another case, a software company licenses its product to a corporate client. The contract states that, in addition to providing the software, the company has a related obligation to offer technical support and software updates for a specified period. This ensures the client receives ongoing assistance as part of the agreement.
Example of a related obligations clause
Here’s how a related obligations clause might appear in a contract:
“Each Party agrees to fulfill all related obligations necessary for the effective performance of this Agreement, including compliance with applicable laws, timely cooperation with counterparties, and adherence to industry best practices. Failure to meet related obligations shall constitute a breach of this Agreement.”
Conclusion
Related obligations help clarify additional duties that support the main contractual commitments, ensuring smooth execution and legal compliance. Clearly defining these obligations in a contract helps avoid misunderstandings and ensures that all necessary actions are taken to fulfill the agreement effectively. A well-drafted related obligations clause strengthens contracts by outlining expectations beyond the core terms of the agreement.
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.