Survival of provisions: Overview, definition, and example
What is survival of provisions?
The survival of provisions clause in a contract refers to the terms that remain in effect even after the contract has been terminated, expired, or completed. This means that certain obligations or rights continue to apply beyond the end of the contract, regardless of the agreement's conclusion. The clause is typically included to ensure that specific provisions, such as confidentiality, indemnity, or dispute resolution clauses, remain enforceable even after the contract itself is no longer active.
For example, a contract may state that confidentiality obligations survive the termination of the agreement. This means that even after the contract ends, the parties are still legally bound to protect confidential information as outlined in the agreement.
Why is survival of provisions important?
The survival of provisions clause is important because it provides clarity on which obligations continue after the contract ends. This helps prevent misunderstandings or disputes, as it ensures both parties understand their ongoing responsibilities.
- Protection of interests: Certain clauses, such as non-disclosure agreements, indemnity provisions, and liability limits, need to be enforced even after the primary agreement is completed.
- Legal and financial security: By outlining the survival of specific provisions, parties can protect themselves from future risks or claims that might arise even after the contract expires.
- Avoiding unintended consequences: Without this clause, parties might mistakenly believe their responsibilities have ended with the contract, leading to potential legal or financial issues.
Understanding survival of provisions through an example
Imagine two companies enter into a partnership agreement. The contract includes a survival of provisions clause that specifies the confidentiality and non-compete provisions will remain in effect even after the partnership agreement ends. After the agreement is completed, one party begins to disclose proprietary information to competitors. Because of the survival of provisions clause, the other party can still enforce the confidentiality provision and seek damages.
In another example, consider an employment contract that includes a survival of provisions clause for non-disclosure, non-compete, and indemnity clauses. Even after the employee leaves the company, the company can still enforce these provisions to protect its intellectual property, prevent unfair competition, or seek compensation for any damages caused by the employee’s actions.
An example of a survival of provisions clause
Here’s how a survival of provisions clause might look in a contract:
“Notwithstanding the termination or expiration of this Agreement, the following provisions shall survive: Sections on Confidentiality, Indemnification, and Governing Law. These provisions shall remain in effect and continue to be binding upon the parties after the termination of this Agreement.”
Conclusion
The survival of provisions clause ensures that certain critical obligations remain in force after the expiration or termination of a contract. It is essential for maintaining long-term protections, such as confidentiality, indemnity, and other legal rights, that may be needed even after the agreement ends. Including this clause in contracts provides legal certainty and safeguards both parties' interests, preventing potential disputes and ensuring continued compliance with critical terms.
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.