If you’re one of those business owners who like to skip over what you may consider the introductory “fluff” of a contract and focus on the key points so that you know precisely what you’re agreeing to, you may largely ignore the contract recitals. However, you shouldn’t.
Contract recitals are sometimes referred to by other names like “preamble” or “introductory clauses.” They’re typically at or near the beginning of the contract.
Recitals typically provide some background information and discuss the intent of the agreement. This alone makes it worthwhile to read the recitals if another party drafted the contract to ensure that you’re on the same page regarding the scope of the project and your relationship with the other party(ies).
These recitals are generally – but not always — non-enforceable. This is another reason to read them carefully and have legal guidance when negotiating and signing a contract. You don’t want to assume that something isn’t legally binding just because it’s in a recital.
Common types of contract recitals
Not all contract recitals look alike or serve exactly the same purpose. For example:
Contextual and purpose recitals provide background information on why the project is being undertaken and what the intended outcome is. These are often called “whereas clauses” because they begin with that word.
Reference and integrating recitals are used when the contract is one of a number of agreements related to the same project or activity (like a merger). A reference recital might mention previous agreements.
Definition recitals are used to clearly define terms that are used throughout the contract. They help ensure that all parties to the agreement are working from the same definition. This can help prevent future legal disputes.
It’s crucial to read and understand contract recitals
Certainly, contract recitals can serve multiple purposes. If you’re the one drafting a contract, it’s crucial to be sure that any contract recital clause is clear and beneficial to the purpose of the contract.
If you’re the one signing a contract written by another party, you need to read all of the introductory language. As noted, it’s important to be certain that all parties have the same understanding of what they’re agreeing to and their roles.
Whether you’re creating, reviewing, negotiating or signing a contract, it’s always in your best interests to be sure you have experienced legal guidance. This will help you protect your rights and avoid costly disputes and litigation in the future.