Definitions

This subtopic focuses on definitions, boilerplate clauses and commercial clauses in the context of drafting for business to business contracts.

Definitions

The definitions and interpretation clause of an agreement should include all of the individual defined terms that are included in an agreement and all of the provisions that are to apply to the general interpretation of an agreement and, if necessary, of certain phrases used with it. The defined terms and the interpretation provisions will normally be set out in two separate sub-clauses. The definitions and interpretation clause will usually be found at the beginning of an agreement and the terms will be set out in alphabetical order for ease of reference.

The purpose of defining terms is to avoid:

1. •

   repetition within the main body of an agreement, particularly of long or complex phrases, so that it becomes easier to read and more concise, and

2. •

   ambiguity in the interpretation of an agreement, by giving specific meanings to words and setting out their scope, which may be different, wider or narrower than their natural, ordinary meaning

Care should be taken when drafting the individual