Statutory references: Overview, definition, and example
What are statutory references?
Statutory references are mentions of specific laws, regulations, or legal codes within a contract. These references ensure that certain provisions of the agreement align with the relevant legal framework. They can point to national laws, state laws, or international regulations that govern the contract’s terms.
For example, an employment contract might reference the Fair Labor Standards Act (FLSA) in the U.S. to define wage and hour obligations. This makes it clear which legal standard applies, reducing ambiguity and ensuring compliance.
Why are statutory references important?
Statutory references are important because they help clarify the legal obligations of each party. They ensure that contracts remain enforceable and consistent with applicable laws, reducing the risk of disputes over legal interpretation.
If laws change, outdated statutory references can create confusion or even invalidate parts of a contract. That’s why contracts often include wording that allows references to apply to updated or successor laws.
Understanding statutory references through an example
Imagine a business signs a lease agreement that states compliance with "the Occupational Safety and Health Act (OSHA)." This means the tenant must follow workplace safety regulations under that law. If OSHA is updated, the contract might automatically apply the latest version of the law to avoid conflicts.
In another example, a supplier contract might reference "the General Data Protection Regulation (GDPR)" to ensure data privacy compliance. This signals that both parties must handle customer data according to GDPR requirements, even if they operate in different countries.
Example of a statutory reference clause
Here’s how a statutory reference clause might appear in a contract:
"All references to statutes, laws, or regulations in this Agreement shall include any amendments, replacements, or successor legislation as may be in effect from time to time."
Conclusion
Statutory references help connect contracts to the legal rules that govern them. They provide clarity, ensure compliance, and help parties avoid disputes over outdated or ambiguous legal obligations.When drafting or reviewing a contract, it’s essential to check that statutory references are accurate and up to date.
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.