Unreasonably withheld: Overview, definition and example
What does unreasonably withheld mean?
Unreasonably withheld refers to a situation where a party in a contract has the right to withhold consent or approval, but does so without a valid or justified reason. In legal terms, it means that the decision to withhold consent is made in a manner that is unfair, arbitrary, or not based on a reasonable evaluation of the circumstances.
Why is unreasonably withheld important?
This term is important because it prevents one party from unfairly blocking progress or taking advantage of their power in a contract. When consent or approval is required from one party for certain actions, the other party is entitled to expect that this decision will be made reasonably. If approval is "unreasonably withheld," it can lead to delays, disputes, or an inability to carry out agreed actions, ultimately causing harm to the contractual relationship.
For example, a landlord may have the right to approve a tenant's sublease, but if the landlord refuses approval without a reasonable cause (like financial stability of the subtenant), the tenant may argue that the approval was unreasonably withheld.
Understanding "unreasonably withheld" through an example
Imagine a company that is selling its product to a buyer, and the contract requires the buyer’s approval before shipment. The buyer, however, refuses to approve the shipment without providing any valid reason, despite the product meeting all agreed specifications. In this case, the buyer is unreasonably withholding approval.
In another case, a tenant may ask a landlord for approval to make improvements to a rental property. If the landlord refuses without a valid reason, such as the proposed changes being within the lease terms, the refusal could be seen as unreasonably withheld.
An example of unreasonably withheld clause
"The Landlord agrees not to unreasonably withhold approval for any alterations to the property requested by the Tenant, provided the alterations comply with all legal and regulatory requirements."
Conclusion
Unreasonably withheld is a key phrase in contracts that ensures fairness and transparency in decision-making processes. It guarantees that one party cannot block an action or request without a justifiable reason. By including this term in contracts, businesses can protect themselves from arbitrary or unfair decisions, helping to avoid unnecessary delays or disputes.
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.