Agreement Recitals

10. September 2021

A recital can and should be taken into account when interpreting the importance of a contractual agreement. [6] Pre-contractual negotiations (the evidence of which may be included in recitals) are generally inadmissible as a design instrument in contractual disputes. In English law, there is a presumption (rebuttable) that a written contract contains the entire agreement between the parties (the „exclusion rule“)2. However, pre-contractual negotiations may be permitted to establish facts relevant to the context of the contract3, such as.B. the commercial purpose of the transaction. The information contained in the recitals, which could help a court or arbitrator to determine the context, could therefore be used in a dispute. Title of the preamble. The preamble is usually written with the title Recitals, Where or Background, probably in capital letters or bold. They discuss some key features of the agreement, associated transaction, or transactions of the parties and help the reader understand the background before looking at the definition section. In the Toomey Motors/Chevrolet case, the Commercial Court examined the legal effect of the recitals of a contract. In the present case, the parties had explained in the recitals and in certain details what they considered to be the subject matter of the agreement. This wording has been called the „purpose clause“. As noted above, the recitals have no legal effect, in the absence of a provision to the contrary, when the contract is clear, but if the contract was ambiguous, a court or arbitrator may comply with them to support its interpretation of the intentions of the parties.

The best way for the parties to ensure that recitals are not invoked in a dispute is to use clear and clear language in the provisions of the operative part and to ensure that the rights and obligations set out can be directed towards a uniform interpretation (and that this interpretation is the interpretation envisaged). Parties may choose to expressly exclude recitals from their legally binding nature and effectiveness, but this does not guarantee that they will be completely ignored in certain disputes. This article aims to underline once again the importance of the modest recital and recalls that, in certain circumstances, the recitals could be legally binding on the parties and that they could also play an important role in enabling a third party (in particular a court or arbitrator) to refer to relevant substantive information in order to determine the true intention of the parties. . . .