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Dec 17

Settlement Agreement Recitals

Types of clauses of consideration. The recitals provide general information on the parties, the context of the agreement and the introduction into the agreement itself. There are several types of clauses in the recital: where trade agreements contain a recital section that precedes the operational provisions, the recitals are part of the sections of the contract that were least taken into account by the parties during the development phase. It is widely considered that the recitals are not legally relevant, as their role is in principle “scenic” and is not automatically part of the operational and legally binding agreement reached between the parties. However, in the event of a treaty interpretation dispute and where a court or arbitrator is tasked with deciphering an ambiguous provision, the recitals can be invoked as an aid to interpretation. After all, they are part of the written contract in one way or another. The preamble to a contract usually consists of one to five paragraphs that identify the entire transaction. For most relatively standard types of contracts, the list of recitals is limited to a few. On the other hand, highly customized (complex) transaction agreements and agreements may have a dozen or more considerations that list any fact or event, the uncertainty to be settled or each party`s position on a dispute. The 2006 AIPN-Model-Form gas sales contract states that its interpretive clause applies to “this agreement, including recitals and annexes, unless expressly provided otherwise: . .

. In the event of a conflict, the provisions of the main body of this agreement prevail over the provisions of the annexes.” The fact that the recitals of the second half of this provision are not mentioned suggests that the recitals will not prevail over the operational provisions (except, as noted above, in case of ambiguity) and that there is therefore no need to make an explicit statement to that effect. Considerations in the treaties. Most contracts contain, under the title and the bloc of parties, but before the text of the agreement, a group of paragraphs, also called “preamble,” “considerants” or “considerants.” The result is the question of which parts of the treaty constitute the legally binding agreement, referring to the explicit provisions agreed between the contracting parties. If the answer to this question is not the treaty as a whole, then it should be clear where legally binding rights and obligations begin and end. Whether or not the recitals may have a legal effect depends on the design of the contract as a whole. The main effect associated with recitals is the potential of a court or arbitrator to pay attention to their content when a dispute over the interpretation of the contract arises due to ambiguities in the main part of the contract. Given their ability to influence a court, the parties should carefully consider their reasons for including specific information in the recitals, the desired purpose of any statement or representation and, ultimately, whether it will have legal benefits for one or both parties.