Contract Recitals: The Background Behind the Deal

What Is a Recital?

Recitals are the introductory statements at the beginning of a contract that provide context and background for the agreement. They explain who the parties are, why they are entering the contract, and what they intend to accomplish. Recitals typically appear after the preamble and before the operative provisions.

You can recognize them by the traditional "WHEREAS" format, though modern contracts sometimes skip this formality.

What Recitals Typically Include

• Party background — A brief description of each party's business or role.
• Purpose of the agreement — Why the parties are entering into the contract.
• Prior agreements — References to previous contracts or negotiations.
• Key assumptions — Facts or circumstances that form the basis of the deal.
• Definitions of relationships — How the parties relate to each other (e.g., buyer-seller, licensor-licensee).

Are Recitals Legally Binding?

This is a common question with a nuanced answer:

• Generally, recitals are not independently enforceable obligations. They do not create rights or duties on their own.
• However, courts use recitals to interpret ambiguous operative provisions. If a clause is unclear, a court may look to the recitals to understand what the parties intended.
• Recitals can serve as evidence of the parties' intent, which can be decisive in a dispute.
• Some contracts include language stating that recitals are incorporated into and form part of the agreement, which gives them greater weight.

Why Recitals Matter

Even though recitals are not typically binding on their own, inaccurate or poorly drafted recitals can cause problems:

• They may create unwanted interpretations of ambiguous terms
• They could be used against you in a dispute as evidence of intent
• Incorrect factual statements in recitals may undermine your position

When to Consult a Lawyer

If you are reviewing a contract, do not skip the recitals. Consider having an attorney verify that the background statements accurately reflect the deal and will not create unintended interpretive issues.

This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.