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What Is a Contract Clause?

There are instances when it is necessary for an agreement to be formalized and legally recognized. These agreements are referred to as contracts. A contract is a verbal agreement that stipulates certain terms and conditions that have been agreed upon by the parties involved in the agreement. These terms and conditions outline an exchange between the parties, a promise of exchange of goods or services. Such terms and conditions are found within a contract clause, a section of the agreement.

The purpose of creating sections or contract clauses is to address specific issues or matters concerning the agreement made. The actual terms and conditions are written and found within the body of a contract clause. Because there exists many types of contracts, there exist varying forms of contract clauses. The general format of a contract clause may vary depending upon the laws of the jurisdiction where it is enacted and the kind of agreement that exists between the involved parties.

A contract clause is meant to provide a definition of certain rights, privileges, or commitments that one party or the other must abide by during the duration of the agreement. These rights, privileges, and commitments are the terms and conditions set by the involved parties that will serve as a guideline as to how to approach the working relationship established.

For example, a supply contract provides the rights, privileges, and commitments that can be asserted by each involved party depending upon the definitions and stipulations provided for in the contract clauses.

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