Hello there and welcome back! This is part 2 of my four-part post on contracts.
If you read my first post, then you learned about the essential elements of a contract. Part 2 looks at the introduction, i.e. the part of the contract that gets the ball rolling before all the big clauses come into play.
As you might imagine, what we usually see first is a title. The title gives the reader a general idea of what the contract is about. Next comes the opening paragraph (a.k.a. preamble). The preamble tells the reader who the parties are and provides general information about them, e.g. their addresses and whether they are individuals or legal entities. This is followed by the recitals, which provide context about the contract; in other words, the recitals provide the reader with background information about the circumstances and reasons for the agreement. The paragraphs in the recitals usually begin with “Whereas,” which is a fancy way of saying “Since” or “Because.” Next comes the lead-in which, naturally leads to the body of the contract. The lead-in tells the reader that the parties agree to the terms and conditions that follow. Below is a handy list of the elements we see in the introduction. I have color coded them to make identifying them easier.
- The preamble/opening paragraph
- Recitals (Whereas clauses)
This is what we might see in each of the foregoing sections:
This XXX AGREEMENT, dated as of [Month XX, Year] (this “Agreement”), is made by and between PARTY OF THE FIRST PART, a corporation incorporated under the laws of the State of [STATE] (Hereinafter referred to as “PARTY A”), and PARTY OF THE SECOND PART, a corporation incorporated under the laws of the State of [STATE] (Hereinafter referred to as “PARTY B”).
Whereas, PARTY A…
Whereas, PARTY B…
Whereas, pursuant to…
NOW THEREFORE, the parties hereby enter into this Agreement to set forth their mutual promises and understandings, and mutually acknowledge the receipt and sufficiency of valuable consideration in addition to the mutual promises, conditions and understandings set forth below.
Generally, what follows is the body of the contract, which is the subject of the post 3. Because the body of the contract is the most substantive part, I will be subdividing post 3 into two parts (A and B) in order to avoid an overload. Stayed tuned for the next post and thanks for reading.