Clause

Legal documents are generally broken down into many numbered sections, making navigation through the document easier. These separate sections, paragraphs, segments, and phrases are called “clauses.” Clauses are commonly used in contracts, deeds, wills, settlement agreements, and other important documents. To explore this concept, consider the following clause definition.

Definition of Clause

Noun

1. A distinct provision, article, section, or paragraph in a written legal document.

Origin

1175-1225       Middle English  claus

What is a Clause

In a grammatical sense, a clause is a group of words that includes a subject and a verb, or it may refer to just a part of a sentence. For instance, the phrase “If Jerry gets that new job” is a clause, but not a sentence. In a legal context, a clause is a part of a written legal document. By breaking down such documents by section or paragraph, it becomes easier to refer to pertinent information. As an example of a clause, attorney Mark may direct the court to a specific section of his client’s employment contract, saying:

“In Section II, paragraph 3, the employment contract specifically allows Mr. Smith to continue his work on his book.”

Types of Contract Clause

When creating a contract, it is common for lawyers to use templates that contain certain standard language. They then add provisions that are specific to the agreement. Such contracts have usually already been formatted into sections, using a multi-level list. There are a number of types of contract clause that are regularly used. These examples of clause types include:

• Choice of Law Clause – A statement that the terms of the contract will be interpreted according to the laws of a specific state, and that litigation, should it be necessary, occur in a specific jurisdiction.
• Entire Agreement Clause – A section stating that all of the terms of the agreement between the parties are included in that same written contract. This expressly states that any changes or additions to the agreement must be made in writing. This section also commonly includes a severability clause, which states that, should any part of the contract be declared invalid, the remaining provisions will still be in effect.
• Time is of the Essence Clause – A statement of the time frame in which each party must complete his duties under the contract. Should either party fail to complete his obligations within the time limit, the other party may bring a breach of contract lawsuit.
• Indemnification Clause – A provision stating that one party will be held financially responsible for certain types of losses or damages incurred by, or claims against, the other party. This may include legal expenses, or other losses incurred by the other party as a result of the indemnifying party’s actions.
• Force Majeure Clause – A statement that, should unavoidable events, such as a natural disaster, “act of God,” or war, prevent a party from fulfilling his obligations under the contract, he will not be in breach of the contract.
• Confidentiality Clause – An agreement in which certain information is characterized as private, secret, or confidential, and its disclosure to anyone not specifically named in the clause is prohibited.
• Subordination Clause – An agreement specifying that the new debt or claim created by the contract will hold a position lower than, or subordinate to, a specific existing debt. This is most commonly seen in mortgage contracts.
• Grandfather Clause – A provision that exempts certain people or entities from fully complying with a new agreement, rule, or statute on the basis of preexisting agreements or statutes.

Clauses of the Constitution

Contracts are not the only legal documents broken down into clauses. In fact, the U.S. Constitution is made up of hundreds of clauses. These are often referred to by their Article, Section, and clause or paragraph numbers, though many clauses of the Constitution are referred to often enough to have been given names as well. Some of these oft-referred to or debated clauses include:

• Necessary and Proper Clause – Also known as the Elastic Clause, the Necessary and Proper Clause allows Congress to make laws not specifically listed in the Constitution if they are necessary to accomplishing those responsibilities that are specifically named.
• Full Faith and Credit Clause – The Founding Fathers addressed the issue of whether each state was required to respect the judicial proceedings, records, and public acts of another state. The Full Faith and Credit Clause, for instance, requires one state honor a restraining order issued by a court in another state.
• Due Process Clause – Spanning across the Fifth and Fourteenth Amendments to the Constitution, the Due Process Clause prohibits the government from depriving a person of his “life, liberty, or property, without due process of law.” This applies to both civil and criminal proceedings, ensuring all people a right to a timely and fair hearing. In addition, the government is prohibited from making any law that is vague, allowing many interpretations.
• Confrontation Clause – The Sixth Amendment to the Constitution specifically states that anyone accused of having committed a crime must be allowed to confront his accuser, or the witnesses against him.
• Search and Seizure Clause – The Fourth Amendment to the Constitution specifies that every individual is “secure in their persons, houses, papers, and effects, against unreasonable searches and seizures.” It further states that a warrant for search or seizure can only be issued if there is probable cause supporting the accusations of criminal behavior.

Clause Examples by Type of Provision

Examples of clause types that include wording specific to a certain type of contract follow. These are “boilerplate” clauses that require only a small amount of information be added, if any.

Example Clause for Time is of the Essence

Maria’s mother hires seamstress Louise to make a special dress for Maria to wear at her dance recital next month. The dress is to be made of satin and taffeta in Maria’s favorite color – purple, and her mother specifically tells Louise she will need the dress at least four days before her recital, which will be on the 15th of the month. Louise writes up the work order, making a notation to have the completed dress to Maria by the 11th.

Maria’s mother is getting nervous when she hasn’t heard anything more by the 9th, and begins calling Louise, who asks to have Maria come in for a “final fitting” on the 10th. At the fitting, it is clear that almost nothing has been done, as the fabric is only pinned together, and Maria is disappointed when her mother has to buy her a dress at a department store.

The following week, Maria’s mother files a civil lawsuit against Louise, demanding a full refund of what she had paid to her for the dress. Even though there was no formal contract with legal language, Louise’s notation on the work order that the dress needed to be completed and delivered by a certain specific date, prior to the dance recital, amounted to a time is of the essence clause.

Confidentiality – Example of Clause Breach

In 2011, Gulliver Preparatory School in Florida decided not to renew their headmaster’s employment contract. The headmaster, 60-year Patrick Snay, filed a civil lawsuit claiming age discrimination. The school settled with Snay, agreeing to pay him $150,000. The settlement contained a confidentiality clause that limited Snay to discussing the case only with his wife, his attorney, and other professional advisors. He probably didn’t think that telling his 18-year old daughter about the settlement would be included in that limitation, but it proved to be his undoing.

Snay’s daughter made a Facebook post saying that her father had “won” his lawsuit against the school, and that the school was “officially paying for [her] vacation to Europe this summer.” That post made the settlement information available to the daughter’s 1,200 Facebook friends, in violation of the confidentiality clause, which stated Snay could not directly or indirectly disclose that information.

The school then refused to pay the full settlement amount, and the trial court granted Snay’s motion to compel, or force, the school to pay the agreed amount. The school appealed the decision, arguing that the agreement specifically stated that, should Snay breach the confidentiality clause, he would forfeit $80,000 of the settlement amount. The appellate court ruled that the language in the confidentiality clause was quite clear about the restrictions, and overturned the trial court’s decision to compel the school to pay the full settlement amount.

Related Legal Terms and Issues

• Civil Lawsuit – A lawsuit brought about in court when one person claims to have suffered a loss due to the actions of another person.
• Damages – A monetary award in compensation for a financial loss, loss of or damage to personal or real property, or an injury.
• Due Process – The fundamental, constitutional right to fair legal proceedings in which all parties will be given notice of the proceedings, and have an opportunity to be heard.
• Injunctive Relief – A court-ordered act or prohibition against an act or condition.
• Jurisdiction – The legal authority to hear legal cases and make judgments; the geographical region of authority to enforce justice.
• Probable Cause – Facts and circumstances leading to the belief that an accused person has committed a crime. Probable cause does not arise from a suspicion or a “hunch,” but from observable facts and circumstances.