Purpose of Recitals in Contract

Recitals in contracts are statements that set out the reasons and intentions behind the agreement. These statements are often used to provide context and clarification of the agreement`s purpose. In essence, they are a preamble to the main body of the contract, providing a clear understanding of the parties` expectations of each other.

The purpose of recitals in a contract is to:

1. Clarify the Purpose of the Agreement

Recitals provide a brief explanation of why the parties are entering into the agreement. This helps to clarify the purpose of the contract, including the intent of the parties. By doing so, it helps to ensure that all parties are on the same page, thereby reducing the chances of disputes arising in the future.

2. Outline the Background and Scope of the Agreement

Recitals are also useful in outlining the background and scope of the agreement. They provide context for the main body of the agreement, helping to set the stage for the terms and conditions that follow. For example, if the agreement concerns an outsourcing arrangement, the recitals may provide information about the parties involved, the respective roles and responsibilities, and the context of the outsourcing arrangement.

3. Establish the Legal Basis of the Agreement

Recitals can also serve a legal purpose by establishing the legal basis for the agreement. This is particularly important in cases where parties may be required to rely on the agreement in legal proceedings. By setting out the legal basis of the agreement in the recitals, the parties are able to demonstrate that the agreement has a valid legal basis.

4. Provide Interpretive Guidance

Finally, recitals can also provide interpretive guidance in the event of a dispute. For example, if there is a disagreement about the meaning of a particular term or provision of an agreement, the recitals can be referred to as a means of interpreting the agreement. This is because the recitals provide an understanding of the parties` intentions when entering into the agreement, and can help to clarify any ambiguities that may arise.

In conclusion, the purpose of recitals in a contract is to provide context and clarification of the agreement`s purpose. They help to establish the legal basis of the agreement, provide interpretive guidance in the event of a dispute, and set out the background and scope of the agreement. By doing so, they help to ensure that all parties are on the same page, reducing the chances of disputes arising in the future.