Expenses clause: Copy, customize, and use instantly
Introduction
An expenses clause determines how costs related to a contract will be handled, such as administrative fees, travel expenses, or legal costs. It ensures transparency and avoids disputes by clearly assigning responsibility for expenses between the parties.
Below are expenses clause templates for various scenarios. Copy the one you need, customise it, and add it to your contract.
Neutral expenses clause
This clause ensures that each party bears its own expenses.
Each party will bear its own expenses incurred in connection with the negotiation, execution, and performance of this agreement, including legal and professional fees.
Reimbursement expenses clause
This clause allows one party to reimburse the other for certain approved expenses.
[Party A] agrees to reimburse [Party B] for all reasonable expenses incurred in connection with the performance of this agreement, provided such expenses are pre-approved in writing by [Party A] and accompanied by appropriate documentation.
Shared expenses clause
This clause splits expenses equally between the parties.
The parties agree to share equally all expenses incurred in connection with the performance of this agreement, unless otherwise specified in writing. Each party will provide the other with receipts or other documentation supporting the shared expenses.
Capped reimbursement clause
This clause limits reimbursable expenses to a specified amount.
[Party A] will reimburse [Party B] for reasonable expenses incurred in connection with the performance of this agreement, up to a maximum of [insert dollar amount]. Any expenses exceeding this amount must be approved in advance by [Party A].
Travel-specific expenses clause
This clause assigns responsibility for travel-related costs.
Each party will bear its own travel-related expenses incurred under this agreement, including transportation, lodging, and meals, unless otherwise agreed in writing. Reimbursement for travel expenses must be pre-approved and supported by itemized receipts.
Expenses with approval process clause
This clause outlines a formal process for approving reimbursable expenses.
All expenses incurred in connection with this agreement must be pre-approved in writing by [insert approving party]. Reimbursement will only be made for reasonable expenses supported by appropriate documentation, submitted within [insert time period, e.g., “30 days”] of incurring the expense.
Expenses with cost-sharing formula clause
This clause provides a formula for dividing expenses.
The parties agree to share expenses related to the performance of this agreement in accordance with the following formula: [insert formula, e.g., “60% [Party A] and 40% [Party B]”]. Each party will submit supporting documentation for its share of expenses within [insert time period].
Exclusive liability for expenses clause
This clause assigns all costs to one party.
[Party A] will be solely responsible for all expenses incurred in connection with the negotiation, execution, and performance of this agreement. [Party B] will have no obligation to bear or reimburse any expenses under this agreement.
Indirect expenses exclusion clause
This clause excludes certain types of expenses from reimbursement.
Neither party will be responsible for reimbursing the other for indirect or incidental expenses, including but not limited to administrative overhead, employee wages, or general operating costs, unless expressly agreed in writing.
Expenses with milestone-based reimbursement clause
This clause ties reimbursement to the completion of specific milestones.
[Party A] will reimburse [Party B] for expenses incurred in connection with this agreement upon completion of the following milestones: [list milestones]. Reimbursement will be contingent upon submission of appropriate documentation and adherence to pre-approved budgets.
Legal and regulatory expenses clause
This clause assigns responsibility for legal and compliance-related costs.
Each party will bear its own legal and regulatory expenses incurred in connection with this agreement, including but not limited to filing fees, permits, and compliance costs. Any shared legal expenses must be mutually agreed upon in writing.
Expenses with tax implications clause
This clause clarifies how taxes related to expenses will be handled.
All reimbursable expenses under this agreement will exclude applicable taxes, which each party will bear individually. Any expenses involving tax implications must be documented separately and comply with applicable tax laws.
Retrospective reimbursement clause
This clause allows for reimbursement of expenses incurred before the agreement’s execution.
[Party A] will reimburse [Party B] for reasonable expenses incurred prior to the execution of this agreement, provided such expenses are directly related to the negotiation or preparation of this agreement and are supported by appropriate documentation.
Escalating cost-sharing clause
This clause adjusts expense-sharing proportions over time.
The parties agree to share expenses related to this agreement, with [Party A] bearing [insert percentage] and [Party B] bearing [insert percentage] for the first [insert time period]. Thereafter, the proportion will escalate by [insert percentage] annually.
Expense dispute resolution clause
This clause outlines a method for resolving disagreements over expenses.
Any dispute regarding expenses incurred under this agreement will be resolved through good faith negotiation between the parties. If no resolution is reached within [insert time period], the matter will be submitted to [insert arbitration or mediation process].
Pre-approved categories expenses clause
This clause limits reimbursable expenses to specific pre-approved categories.
Reimbursement will only be provided for expenses incurred under this agreement that fall within the following categories: [list categories, e.g., “travel, lodging, materials”]. All reimbursable expenses must be pre-approved in writing and supported by itemized receipts.
Expenses tied to performance metrics clause
This clause conditions reimbursement on meeting certain performance benchmarks.
[Party A] will reimburse [Party B] for expenses incurred under this agreement, provided that [Party B] achieves the following performance metrics: [list metrics]. Failure to meet these metrics will relieve [Party A] of any reimbursement obligation.
Pro-rata expense allocation clause
This clause assigns expenses proportionally based on participation or usage.
Expenses incurred under this agreement will be allocated on a pro-rata basis, determined by each party’s level of participation or usage as specified in [insert section or schedule]. Invoices and supporting documentation must be submitted for verification.
No-fault expense absorption clause
This clause requires one party to absorb all expenses regardless of fault.
[Party A] agrees to absorb all expenses incurred under this agreement, regardless of any fault, negligence, or unforeseen circumstances that may arise during its performance.
Project-specific expenses clause
This clause ties expenses solely to a defined project under the agreement.
Expenses under this agreement will be limited to costs directly attributable to [insert project name or description]. Any expenses outside the scope of this project will not be reimbursed unless explicitly agreed in writing.
Time-limited reimbursement clause
This clause restricts reimbursement to expenses incurred within a specific timeframe.
Reimbursement under this agreement will only be provided for expenses incurred between [insert start date] and [insert end date]. Expenses outside this timeframe will not be eligible for reimbursement unless pre-approved.
Expenses with bulk payment clause
This clause provides for a single payment to cover all anticipated expenses.
[Party A] will provide [Party B] with a single bulk payment of [insert amount] to cover all anticipated expenses under this agreement. No further reimbursement will be provided unless the actual costs exceed the bulk payment by more than [insert percentage or dollar amount].
Tiered expense responsibility clause
This clause splits expenses into tiers, assigning responsibility by tier.
Expenses incurred under this agreement will be divided into the following tiers: [list tiers, e.g., “Tier 1: Administrative costs,” “Tier 2: Project-specific costs”]. [Party A] will bear all Tier 1 expenses, and [Party B] will bear all Tier 2 expenses unless otherwise agreed in writing.
Expenses with periodic reconciliation clause
This clause requires regular reconciliation of expenses.
The parties will reconcile all expenses incurred under this agreement on a periodic basis, every [insert time period, e.g., “quarterly”]. Any overpayments or underpayments will be corrected in the subsequent reconciliation period.
Forward-looking expenses clause
This clause accounts for anticipated future costs based on agreed budgets.
[Party A] will reimburse [Party B] for all reasonable expenses anticipated under this agreement, provided they fall within the budget outlined in [insert section or schedule]. Any deviations from the budget must be pre-approved in writing.
Expenses contingent on third-party funding clause
This clause makes expenses contingent on receiving external funding.
Expenses under this agreement will only be reimbursed if [Party A] secures third-party funding from [insert source, e.g., “grant provider” or “investor”]. Reimbursement will not exceed the amount allocated by such funding.
Expenses tied to deliverables clause
This clause conditions expense reimbursement on the completion of deliverables.
[Party A] will reimburse [Party B] for expenses incurred under this agreement upon the successful completion and acceptance of the following deliverables: [list deliverables]. Reimbursement will not be provided for incomplete or rejected deliverables.
Delegated expenses clause
This clause delegates expense management to a specific individual or team.
Responsibility for managing expenses under this agreement will be delegated to [insert name or role, e.g., “Project Manager”]. All expenses must be approved and documented by the delegate prior to submission for reimbursement.
Expenses with offset clause
This clause allows expenses to be offset against other payments due.
Any expenses reimbursable under this agreement may be offset against amounts owed by [Party B] to [Party A], provided the offset is documented in writing and agreed upon by both parties.
Expenses with rolling cap clause
This clause sets a cap on expenses but allows it to roll over unused amounts.
Reimbursable expenses under this agreement will be capped at [insert amount] per [insert time period, e.g., “month”]. Unused amounts from one period may roll over to subsequent periods, up to a maximum of [insert total cap].
Expenses with escalation provision clause
This clause adjusts expense responsibilities based on cost escalation thresholds.
If total expenses under this agreement exceed [insert amount or percentage], the parties agree to renegotiate the allocation of costs. Until renegotiation is complete, each party will continue bearing its previously assigned responsibilities.
Pre-set expense pools clause
This clause establishes predefined pools for expense categories.
The parties agree to establish expense pools for [list categories, e.g., “travel,” “materials,” “administration”]. Each party’s contribution to each pool will be determined by [insert method, e.g., “percentage of overall budget”].
Expenses linked to operational thresholds clause
This clause ties reimbursement or responsibility for expenses to operational milestones.
Reimbursement of expenses under this agreement will only occur if [Party B] achieves operational thresholds outlined in [insert reference, e.g., “Schedule A”]. If thresholds are not met, [Party A] will not be obligated to reimburse any costs incurred.
Expenses tied to pre-negotiated discount agreements clause
This clause accounts for discounts negotiated with suppliers or vendors.
Expenses incurred under this agreement must leverage any pre-negotiated discounts with third-party suppliers. Any costs exceeding the discounted rates must be justified in writing and approved by [Party A].
Currency fluctuation expenses clause
This clause addresses expenses incurred in foreign currencies and fluctuating exchange rates.
Expenses incurred in a currency other than [insert currency, e.g., “USD”] will be reimbursed based on the exchange rate published by [insert source, e.g., “the central bank”] on the date the expense was incurred. Currency fluctuations exceeding [insert percentage] will be subject to renegotiation.
Expenses with layered responsibility clause
This clause assigns different responsibilities based on expense type and threshold.
Expenses under this agreement will be divided into the following layers: (i) [Party A] will bear all administrative costs up to [insert threshold], (ii) [Party B] will be responsible for operational costs exceeding [insert threshold], and (iii) shared costs will be allocated equally unless otherwise agreed.
Predictive budgeting expenses clause
This clause incorporates advanced cost predictions into the expense-sharing model.
Expenses incurred under this agreement will be based on predictive budgeting models provided by [insert party or tool]. Adjustments to actual costs exceeding predictions by more than [insert percentage] must be approved by both parties.
Dynamic expense allocation clause
This clause adjusts responsibility dynamically based on real-time conditions.
The allocation of expenses under this agreement will adjust dynamically based on [insert factor, e.g., “profitability metrics,” “resource utilization,” or “project milestones”]. Changes in allocation will be communicated and documented quarterly.
Escrow-funded expenses clause
This clause establishes an escrow account to fund reimbursable expenses.
Reimbursable expenses under this agreement will be funded through an escrow account established by [Party A]. Funds will be disbursed upon submission of valid receipts and compliance with the reimbursement conditions outlined in [insert section].
Expenses with punitive cost-sharing clause
This clause penalizes excessive or unnecessary expenses by increasing one party’s responsibility.
If expenses incurred under this agreement are deemed excessive or unnecessary by [insert party], the responsible party will bear [insert percentage, e.g., “100%”] of the associated costs, unless pre-approved in writing.
Expenses tied to exclusivity clause
This clause makes expense responsibility conditional upon exclusivity commitments.
[Party A] agrees to reimburse [Party B] for all reasonable expenses incurred, provided that [Party B] refrains from engaging in similar agreements with [insert competitors or entities]. Violation of exclusivity will void reimbursement obligations.
Community-benefit expenses clause
This clause allocates expenses based on broader community or societal impact.
Expenses related to activities benefiting the community, such as sustainability initiatives or charitable projects, will be shared equally between the parties. Costs not directly contributing to community benefits will remain the responsibility of the incurring party.
Multi-tiered approval expenses clause
This clause requires multiple levels of approval for expenses exceeding specific thresholds.
Expenses under this agreement that exceed [insert threshold, e.g., “$10,000”] must be approved by [Party A]’s operational team and subsequently ratified by its legal department before reimbursement will be provided.
Revenue-sharing expense allocation clause
This clause ties expense responsibilities to revenue generated through the agreement.
Expenses incurred under this agreement will be allocated in proportion to the revenue each party derives from the activities outlined herein. Revenue allocation and corresponding expense responsibilities will be reviewed quarterly.
Sustainability-based expense clause
This clause prioritizes sustainable practices and allocates costs accordingly.
Expenses under this agreement must adhere to sustainable practices outlined in [insert reference, e.g., “Schedule B”]. Costs associated with non-sustainable practices will not be reimbursed unless explicitly pre-approved by [Party A].
Expenses with force majeure exemption clause
This clause excludes reimbursement for costs incurred during force majeure events.
Expenses incurred as a result of a force majeure event under this agreement will not be reimbursed, except for costs directly related to mitigating the event’s impact as approved in writing by [Party A].
Expenses tied to shared technology platforms clause
This clause addresses shared technology or infrastructure expenses.
Costs associated with shared technology platforms or infrastructure under this agreement will be allocated based on usage metrics as reported by [insert source, e.g., “the service provider”]. Adjustments will be made quarterly based on updated usage data.
Expenses with mandatory audit clause
This clause requires regular audits of all expenses incurred.
All expenses incurred under this agreement will be subject to quarterly audits conducted by [insert party or third-party auditor]. Reimbursement will only be provided for expenses verified during the audit process.
Usage-based expenses clause
This clause ties expense allocation to service usage metrics.
Expenses under this agreement related to the use of [insert SaaS product] will be allocated based on the actual usage data recorded during the billing period. Each party will receive an itemized invoice detailing usage and corresponding costs.
Platform integration expenses clause
This clause assigns costs for integrating third-party tools into a SaaS platform.
[Party A] will bear the expenses related to integrating third-party tools or APIs into the [insert SaaS platform]. Any customization costs requested by [Party B] will be reimbursed only upon mutual written agreement.
Material cost adjustment clause
This clause adjusts responsibility for material costs based on market fluctuations.
Material costs incurred under this agreement will be reviewed quarterly. If the market price of materials fluctuates by more than [insert percentage], the parties agree to renegotiate the allocation of material-related expenses.
Training expenses clause
This clause addresses costs related to training employees or third-party staff.
[Party A] will reimburse [Party B] for all reasonable training expenses incurred under this agreement, provided such training is pre-approved in writing and directly benefits the performance of this agreement.
Client-requested customization expenses clause
This clause assigns costs for services customized at a client’s request.
Customization expenses incurred at the request of [Party B] will be the sole responsibility of [Party B], including but not limited to additional time, resources, or third-party service fees required to meet the customization specifications.
Regulatory compliance expenses clause
This clause allocates costs for meeting healthcare compliance standards.
[Party A] will bear all costs related to ensuring compliance with applicable healthcare regulations, including but not limited to HIPAA audits, reporting requirements, and third-party certifications necessary for this agreement.
Patient-centric expenses clause
This clause specifies how costs directly benefiting patients will be handled.
Expenses incurred directly for the benefit of patients, such as specialized equipment or patient outreach programs, will be allocated equally between the parties unless otherwise agreed in writing.
Supply chain disruption expenses clause
This clause assigns responsibility for unexpected supply chain costs.
Any additional expenses incurred as a result of supply chain disruptions will be borne by the party responsible for the affected supply chain component. Shared disruptions will be addressed through a mutually agreed cost-sharing arrangement.
Defect-related expense clause
This clause addresses costs for rectifying manufacturing defects.
Costs associated with rectifying defects in manufactured goods will be borne by the party responsible for the defect. If the defect arises from joint processes, the parties will share expenses proportionally based on their respective contributions.
Promotional expense clause
This clause specifies responsibility for marketing and promotional costs.
[Party A] will bear the costs of all marketing and promotional activities under this agreement. Any co-branded promotions will require prior written approval, with expenses shared equally between the parties.
Inventory management expense clause
This clause allocates costs for inventory-related activities.
Expenses related to inventory management, including storage, tracking, and distribution, will be allocated based on the quantity of inventory each party contributes to the agreement.
Maintenance expense clause
This clause assigns responsibility for property maintenance costs.
[Party A] will bear all routine maintenance expenses related to the property covered under this agreement. Extraordinary maintenance expenses exceeding [insert dollar amount] will require mutual agreement for allocation.
Utilities expense clause
This clause covers allocation of utility costs for leased properties.
Utility expenses for the leased property, including electricity, water, and internet, will be borne by [Party B], while [Party A] will cover any infrastructure upgrades necessary to provide these utilities.
Grant-specific expenses clause
This clause restricts reimbursable expenses to grant-funded activities.
Expenses under this agreement must be directly related to grant-funded activities as outlined in [insert grant agreement]. Any non-grant-related expenses will not be reimbursed.
Fundraising expense clause
This clause allocates responsibility for costs incurred during fundraising efforts.
Fundraising expenses incurred under this agreement will be allocated based on the funds raised. Each party will bear a proportional share of costs corresponding to the percentage of funds they generated.
Environmental compliance expense clause
This clause addresses costs for meeting environmental standards.
Costs related to environmental compliance, including audits, certifications, and waste management, will be borne equally by the parties unless one party is directly responsible for a violation requiring such compliance.
Renewable project expense clause
This clause focuses on cost-sharing for renewable energy initiatives.
Expenses incurred in connection with renewable energy projects under this agreement will be shared equally, provided the project aligns with the mutually agreed sustainability goals outlined in [insert section or schedule].
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.