Recitals relating to related transactions – in the preamble to the treaty, it is possible to add more than one recital if several agreements are concluded simultaneously. It is essential that recitals be subordinated to the operational provisions of a treaty where there is no doubt as to the meaning of the explicit terms of a treaty. In this case, the parties are fully subject to the contract and the recitals cannot be invoked4. However, if there is ambiguity in the contract, a court may consider the recitals in order to prove the parties` actual intent, as well as guidance on the interpretation of a contentious provision5. Compliance recitals – in which the parties can indicate certain requirements or conditions that must be met before the contract is signed. An example would be compliance with the required authorization of an external party for the transaction prior to the signing of the contract. Once the authorization has been granted, the consideration clause explaining the measure would be included in the contract. Party-related recitals – one or more recitals/considering that clauses can be inserted to reflect the relevant business activities for each party. An example of the traditional format was used in recitals in an agreement between Microsoft Corporation and Expedia, Inc. Here`s what the format looked like: the contracting parties entered into an agreement (type of agreement and date); 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. To the extent that it is intended, recitals must be considered legislation, contrary to preliminary prose, and are therefore drafted with the same level of thought and precision as the operational provisions of the treaty.
Conventionally, most considerations begin with the word Whereas. 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. preamble. The preamble is usually given the title considerations, during or background, probably written in all-caps or bold. They address some of the key features of the agreement, the associated transaction or the parties` transactions and help the reader understand the background before looking at the Definitions section. Considerations are not mandatory, but are often used in trade agreements to define the context of the treaty. There is no mandatory format for the drafting of recitals, but these generally contain concise factual assertions that describe the main circumstances and details relevant to the termination of the contract. Statements of intent and references to related contracts may also be included.