Table of Contents
In Short
- ‘Notwithstanding’ clauses in contracts specify that certain provisions take precedence over others, ensuring clarity in complex agreements.
- These clauses help prevent conflicts between contract terms by clearly indicating which provisions override others.
- Proper drafting of ‘notwithstanding’ clauses is essential to avoid ambiguity and potential legal disputes.
Tips for Businesses
When drafting contracts, use ‘notwithstanding’ clauses to clearly establish which terms take precedence, especially in complex agreements. Ensure these clauses are unambiguous to prevent misunderstandings. Consult a legal professional to review your contracts and confirm that ‘notwithstanding’ clauses are appropriately used and enforceable.
As a small or medium-sized enterprise (SME) owner, reviewing legal contracts can often be daunting, especially when encountering unfamiliar terminology. One term that frequently appears and can cause confusion is “notwithstanding.” This short word carries significant weight and has crucial implications for interpreting certain parts of a contract. In this article, we will break down the meaning and purpose of “notwithstanding” clauses clearly and understandably.
The Meaning of “Notwithstanding”
At its core, the term “notwithstanding” simply means “despite” or “regardless of.” Including this in a contract signals that the following statement or condition takes priority and overrides other parts of the contract.
Imagine a contract with a general rule stating that you must provide a 30-day notice before terminating the agreement. However, another section includes a “notwithstanding” clause:
- “Notwithstanding the 30-day notice requirement, either party may terminate immediately in the event of a material breach.”
The Overriding Effect of “Notwithstanding”
“Notwithstanding” clauses give certain parts of a contract more weight and allow them to override or take precedence over other potentially conflicting sections. It creates a hierarchy within the contract terms, ensuring that the provision introduced by “notwithstanding” takes priority.
Here are some additional examples to illustrate this concept:
- “Notwithstanding anything contrary, all payment obligations shall survive termination.”; and
- “Notwithstanding the foregoing, the Consultant shall not disclose confidential information.”
In both cases, the “notwithstanding” part makes payment duties and confidentiality rules exceptions that override anything else in the contract.
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The Purpose of Using “Notwithstanding”
Lawyers drafting contracts often use “notwithstanding” to address potential contradictions or ambiguities upfront. It helps avoid disputes later by clarifying which terms should take priority if there is any confusion or conflict within the contract.
“Notwithstanding” clauses are often used to:
- spell out exceptions to general rules or obligations;
- prioritise crucially important terms or provisions over others; and
- override parts that may conflict with certain clauses’ intended meaning or application.
Drafting and Interpretation Considerations
When drafting “notwithstanding” clauses, it is essential to exercise care and precision. Use these clauses carefully and address specific conflicts or potential ambiguities only when necessary. Overuse or improper drafting of “notwithstanding” clauses can lead to further confusion and unintended consequences.
Additionally, draft the clause clearly and unambiguously to avoid misinterpretation. State the specific terms or conditions being prioritised explicitly, and define the scope of the exception or limitation precisely.
When interpreting “notwithstanding” clauses, it is important to consider the overall context and hierarchy of terms within the contract to avoid unintended consequences. If unsure about the usage or implications of a “notwithstanding” clause, it is advisable to seek legal guidance from experienced professionals.
Practical Example
To further illustrate the usage and impact of “notwithstanding” clauses, let’s explore another practical example and scenario that SMEs may encounter:
Non-Disclosure Agreements (NDAs)
In an NDA, you may come across a clause stating:
- “Notwithstanding the termination of this Agreement, the confidentiality obligations shall remain in full force and effect for five (5) years after such termination.”
This “notwithstanding” clause means that even if the NDA is terminated, the confidentiality requirements will still apply for the specified period. It overrides any contradictions or implications that the termination might have on those obligations.
The Role of Legal Professionals
While “notwithstanding” clauses can be powerful tools for clarifying and prioritising contractual terms, their complexity and potential legal implications often warrant seeking professional legal assistance. An experienced contract lawyer or legal professional can provide valuable insights and advice on the appropriate use and drafting of “notwithstanding” clauses within the specific context of your contract.
Legal professionals can help interpret and apply “notwithstanding” clauses in line with the parties’ intentions and the applicable legal framework. They can guide SMEs in understanding the potential consequences and risks associated with these clauses and advise on alternative approaches or language that may better serve the business’s interests.
Use this checklist to ensure your supplier contracts contain all necessary terms.
Key Takeaways
As an SME owner, it is essential to understand the significance of “notwithstanding” clauses in legal contracts. While “notwithstanding” may seem like a complex legal term, understanding its meaning, purpose, and implications can help you navigate contracts more effectively and protect your business interests. By proactively addressing potential conflicts through well-drafted “notwithstanding” clauses and seeking professional assistance, SMEs can foster greater clarity and certainty in their contractual relationships, minimising the risk of disputes and fostering successful business partnerships.
If you need assistance with “notwithstanding” contract clauses, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to solicitors to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
“Notwithstanding” means “despite” or “regardless of.” It introduces an exception to a general rule or term in the contract.
They establish which specific term or condition takes priority over others if there is a conflict or contradiction within the contract.
Yes, if not drafted clearly. The prioritised term and scope of the exception must be explicitly stated to avoid ambiguity.
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