What Does “Whereas” Mean in a Contract?
An introductory word used in contract recitals to provide background context and explain why the parties are entering into the agreement.
Detailed Explanation
"Whereas" clauses appear at the beginning of contracts, typically before the main terms. They set the stage by describing the parties, their relationship, and the purpose of the agreement. While traditionally considered non-binding background information, courts may use whereas clauses to interpret ambiguous terms elsewhere in the contract.
These clauses help establish the intent of the parties and can be crucial if disputes arise about what the contract was meant to accomplish. Modern contracts sometimes replace "whereas" with "Background" or "Recitals" sections.
Example in a Contract
“WHEREAS, Company is engaged in the business of software development; and WHEREAS, Contractor possesses specialized skills in cloud architecture; and WHEREAS, Company desires to engage Contractor to provide consulting services;”
Why It Matters
Although whereas clauses are typically not binding obligations, they can influence how a court interprets the rest of the contract. If there's ambiguity in the main terms, judges often look to the recitals to understand what the parties intended.
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