When it comes to contracts, there are many different terms and phrases that are used to describe the various parts of the document. One such term that often causes confusion for both lawyers and laypeople alike is the “whereas clause.” So, what exactly are these clauses, and what do they do?
In simple terms, whereas clauses are statements of fact that are included at the beginning of a contract to provide background information for the document. They typically begin with the word “whereas” and are followed by a brief statement of fact or background information that is relevant to the agreement being made.
For example, a whereas clause in a contract for the sale of a business might read something like this:
“Whereas, the Seller owns and operates a business engaged in the sale of widgets and wishes to sell said business to the Buyer…”
The purpose of this clause is to set the stage for the agreement that follows by providing a brief summary of the relevant facts and circumstances that led to the contract being created.
While whereas clauses are not strictly necessary in contracts, they are commonly included as a way to provide context for the agreement being made. They can also serve as a way to clarify any ambiguities or misunderstandings that may arise during the negotiation process.
In terms of terminology, whereas clauses are sometimes referred to as “recitals” or “preamble clauses.” These terms are used somewhat interchangeably and essentially refer to the same thing. However, recitals are more commonly used in legal documents such as deeds, leases, and other agreements, while preamble clauses are more commonly used in statutes or constitutions.
So, there you have it – whereas clauses, recitals, and preamble clauses all refer to the same thing: statements of fact or background information included at the beginning of a legal document to provide context and clarification. While they may seem insignificant, these clauses can be important tools for ensuring that all parties involved in a contract have a clear understanding of the agreement at hand.