Precedence: Overview, definition and example
What is precedence?
Precedence in a contract determines the order of importance between different documents or clauses when there’s a conflict or inconsistency. It’s a way of deciding which terms take priority and should be followed. Precedence is particularly useful in contracts with multiple documents, such as agreements with schedules, annexes, or referenced policies.
For example, if the main contract says payments are due in 30 days, but a schedule attached to the contract says 60 days, the precedence clause will clarify which timeframe applies.
Why is precedence important?
Precedence is important because it eliminates confusion when different parts of a contract conflict. Without a clear precedence clause, disputes could arise about which terms or documents should be followed and take priority, leading to delays or even legal battles.
For businesses, having a precedence clause provides certainty. It ensures that everyone involved knows which terms override others, making the contract easier to interpret and enforce.
Understanding precedence through an example
Imagine a supplier agreement that includes a main contract, a pricing schedule, and general terms and conditions. The main contract states that the supplier must deliver within 14 days, but the general terms and conditions specify 30 days. A precedence clause in the main contract might state that the main agreement overrides the general terms and conditions in case of conflict. This ensures the 14-day delivery timeline applies.
In another scenario, an employment contract might refer to both a company handbook and specific job terms. If the handbook conflicts with the job terms, a precedence clause can clarify that the job terms take priority over the handbook.
An example of a precedence clause
Here’s how a precedence clause might look in a contract:
“In the event of any conflict or inconsistency between the provisions of this Agreement and its annexes, schedules, or referenced documents, the terms of this Agreement shall take precedence unless expressly stated otherwise.”
Conclusion
Precedence establishes the hierarchy of terms in a contract, ensuring that conflicts are resolved by following a clear order of importance. It’s an essential tool for managing complex agreements with multiple documents or layers of terms.
By including a well-drafted precedence clause, businesses can reduce misunderstandings, avoid disputes, and ensure that their contracts are easy to interpret and enforce. It’s a straightforward way to bring clarity to intricate agreements.
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.