Here's a breakdown of what recital clauses do:
Key Functions:
* Explains the parties' intentions: Recitals describe the parties' motivations and goals for entering into the agreement.
* Provides context for the agreement: They lay out the circumstances leading up to the agreement, such as previous negotiations or events.
* Establishes a common understanding: Recitals ensure both parties are on the same page regarding the background and purpose of the agreement.
* Supports interpretation: In case of disputes, recital clauses can help courts interpret the meaning of the agreement's main provisions.
Commonly Found In:
* Contracts: Business contracts, real estate agreements, employment contracts, etc.
* Trusts and wills: Recitals explain the reasons for creating the trust or will and the testator's intentions.
* Mortgages and loans: They outline the purpose of the loan and the borrower's financial situation.
Example:
"WHEREAS, the parties desire to enter into this Agreement for the purpose of [state the purpose of the agreement]; and
WHEREAS, [state the specific background or relevant facts leading up to the agreement];
NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants contained herein, the parties agree as follows..."
Important Note:
* Recitals are not legally binding in the same way as the main provisions of the agreement. They are not used to create new obligations or rights.
* They are used to provide context and understanding, which can be helpful during interpretation but are not enforceable on their own.
In summary, recital clauses are like the "why" section of a legal agreement. They tell you the backstory and intentions behind the document, making it easier to understand the main provisions and the overall agreement.