Agreement Recitals And

In the recitals, the fundamental objectives of the Treaty may be set out with such merit that the parties may attempt to ensure that they are taken into account in all circumstances, even if it appears that the operational provisions are clear. If this is the case, the parties should include the recitals in the contract by expressly providing in the operational provisions (usually in the interpretative clauses) that the recitals must form part of the contract. They are therefore considered to be legally valid8. A word of caution, this approach should be adopted: the Contracting Parties should ensure that the recitals comply with the operational provisions of the Treaty in order to avoid issues related to a divergent interpretation, in particular where there are obligations in the operational provisions referred to or summarised in the recitals. 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. Recitals are not mandatory, but are often incorporated into trade agreements to reflect the context of the Treaty. There is no mandatory format for the drafting of recitals, but they usually contain concise factual statements describing the main circumstances and details relevant to the explanatory memorandum to the Treaty. Declarations of intent and references to related contracts may also be included. In some treaties, the advent of recitals is useful through the introductory text entitled `RECITALS`. Contractual obligations should not be included in the recitals, but should be more appropriately integrated into legally binding operational provisions. The same principle applies to key definitions.

Can the effectiveness of the recitals be totally excluded? The 2006 Standard Form IIA contract states that its interpretative clause applies to “this agreement, including the recitals and annexes, unless expressly provided otherwise:. . . in the event of an objection, the provisions of the main part of this Agreement shall prevail over the provisions of the Appendices. The fact that the recitals are not mentioned in the second half of that provision indicates that the recitals do not take precedence over the operational provisions (except, as has already been said in the event of ambiguity), and that there is therefore little need to make an explicit statement to that effect. Toomey reminds us that innocent recitals can take on unexpected significance in a contractual dispute. It is also worth mentioning two observations of the Court: first, it might be possible that the recitals form the basis of a general duty of action in good faith; and, second, that an assignment clause abandoning previous transactions could increase the relevance of the parties` business history in the interpretation of the contract. These observations show that recitals play a role in both the drafting and conduct of a treaty. The preamble to a contract usually consists of one to five paragraphs describing the entire transaction. For most relatively standardised types of contracts, the list of recitals is limited to a few.. . .

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