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Definition Of A Legal Agreement

Trade agreements assume that the parties intend to be legally bound, unless the parties explicitly state otherwise, as in a heads of agreement document. For example, in Rose & Frank Co v. JR Crompton & Bros Ltd, an agreement between two commercial parties was not obtained because an “honour clause” in the document says, “This is not a commercial or legal agreement, but only a declaration of the parties` intention.” This is an important principle of good practice. Ignoring this rule thwarts the principle of replacing the defined term with its definition, with all the negative consequences. The inclusion of obligations, conditions or guarantees creates ambiguities in the interpretation of the text that uses the defined term. .

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Teisha Rowland, PhD, is the author of this blog.

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