The term ”recitals” comes from the Latin term ”recitare”, which means ”to read aloud”. Whether or not the recitals can have legal effect depends on the interpretation of the contract as a whole. The main effect of the recitals is the possibility for a court or arbitrator to examine their content when a dispute over the interpretation of the contract results from ambiguities in the main part of the contract. Given their ability to influence a tribunal, Parties should carefully consider the reasons why they have included certain information in the recitals, the intended purpose that each statement or representation is intended to serve and, ultimately, whether this will have legally beneficial effects for either or both parties. To the extent that they are included, the recitals should be regarded as legal provisions and not as mere introductory prose and should therefore be drafted with the same degree of reflection and precision as the operational provisions of the Treaty. According to the Convention, most of the recitals begin with the word Expected. There is no predetermined format to follow or specific contractual language to use. In this context, the parties may establish recitals as follows: Types of recitals. The recitals provide general information on the parties, the context of the agreement and an introduction to the agreement itself. There are different types of clauses: an author must also refrain from interpreting the recitals with additional non-essential definitions (e.B. the shares, company or product) or a multiple of references ”(as defined in Article 1)” immediately after each defined term. Interestingly, some of the reasons for the contract are literally called ”recitals” and in other cases the term ”witness” can be seen. The recitals are formulated as traditional paragraphs with grammatically complete sentences and not as several sentences emanating from the original preamble.

Therefore, it is not necessary to limit the recitals to a single sentence. It is advisable to end each recital with a period instead of a semicolon. This is also preferable for contract assembly software, where paragraphs are automatically inserted or omitted. For example, do not write: Compliance-related considerations – in these, the parties involved may want to specify certain requirements or requirements that must be met before signing the contract. An example would be whether the required consent of an external party for the transaction must be respected before the contract is signed. Once approval has been granted, the recital clause explaining the measures taken will be included in the contract. For example, the GDPR in its current version has 173 paragraphs or in its recitals. The definition section allows the parties to explain the contact conditions in detail. You will recall the previous chapters of the discussion on the interpretation of the Treaty. The definition section allows the parties to define exactly what the terms mean in that specific agreement. It can be used to introduce and explain commercial terms or to give a particular meaning to words that may have other meanings. The content of the recitals generally refers to: in the case of commercial transactions where the parties sign several related contracts, it may be useful to briefly and not legally describe the context of the specific agreement to be signed.

The recitals may set out the fundamental objectives of the Treaty in such a laudable manner that the parties may endeavour to ensure that they are taken into account in all circumstances, even if it appears that the operational provisions are clear. If this is the case, the parties should include the recitals of the contract by including an explicit provision in the operational provisions (usually in the interpretative clauses) according to which the recitals should form part of the contract. They are therefore considered to be legally effective8. A word of warning, this approach should be chosen: the parties should ensure that the recitals are consistent with the operational provisions of the Treaty in order to avoid problems related to a contradictory interpretation, in particular where there are obligations in the operational provisions mentioned or summarised in the recitals. As noted above, in the absence of provisions to the contrary, the recitals have no legal effect if the contract is clear, but if the contract is ambiguous, a court or arbitrator may apply to them to support its interpretation of the parties` intentions. The best way for the parties to ensure that recitals do not need to be invoked in a dispute is to use clear and unambiguous language in the operational provisions and to ensure that the rights and obligations set out can be interpreted consistently (and that such interpretation is as provided). Parties may choose to expressly exclude recitals from being legally binding and effective for them, but this does not guarantee that they will be completely ignored in certain disputes. Here is an example of recitals in the Treaty in which he is presented as a `witness`: the decisive element is that the recitals are subordinate to the operational provisions of a contract where there is no doubt as to the meaning of the express wording of a contract. In these circumstances, the parties are fully subject to the operational part of the contract and the recitals cannot be invoked4.

However, if the contract is unclear, a court may seek in the recitals evidence of the actual intent of the parties, as well as guidance on how to interpret a contested provision.5 The main definitions used throughout the contract are better placed in the ”Definitions” section of the contract than in the recitals, as the recitals may not have legal effect. This is not necessarily the approach taken in practice, as is the case with the 2012 Model Agreement of the Association of International Petroleum Negotiator (appointing authority). In the official AIN JOA, the term `contract` is defined in the recitals by reference to the underlying production-sharing agreement, state concession, licence, leasing or any other instrument relating to that particular OJA. The term ”contract” is then defined in the ”Definitions” section as ”the instrument referred to in the recitals of this Agreement, including any renewal, extension and/or amendment”. As explained in the previous chapters, a contract requires an exchange of promises (or promises of immediate action). The terms of the agreement indicate the intention of the parties to express their agreement with the commitments (and other terms) contained in the rest of the agreement. Recitals are not mandatory, but are often included in commercial contracts to determine the context of the contract. There is no prescribed format for the drafting of recitals, but they usually contain concise factual claims describing the main circumstances and details relevant to the establishment of the contract. Letters of intent and references to related contracts may also be included.

In some treaties, the emergence of recitals is usefully indicated by the introductory text, which deals with `RECITALS`. Contractual obligations should not be included in the recitals, but should be included more appropriately in the legally binding operational provisions. The same principle applies to key definitions. According to the Convention, the paragraphs of the recital of a treaty begin with the expression ”in the light of the following reasons”. The parties must ensure the application of a full contractual clause. Such a clause is often found in commercial contracts and prevents previous statements or assurances that have not been expressly included in the contract from having legal effect. In order to ensure that any relevant information or representation contained in the recitals does not conflict with a full contractual clause, it is necessary to explicitly include the recitals in the agreement. Another approach could be to determine that a full contractual term applies ”unless the context requires otherwise”. However, such a qualifier is vague and may not be desirable as it can promote uncertainty.

From that moment on, the core of the contract is defined, which contains the legally binding rights and obligations between the parties. Whether or not there is clear language to that effect, it is important to consider the interpretative clauses that are normally found immediately after the definition clause, which should determine which parts of the contract are part of the legally binding agreement or are excluded from it. Annexes to the contract (which usually contain other important contractual clauses) are often expressly treated as part of the contract and therefore acquire legal effect. What about pre-contractual trading rules? For this reason, the importance of careful drafting of the recitals should not be dismissed. A well-worded recital could lead a court or arbitrator to favour one party`s argument over the other`s. For example, the examination of whether or not a clause should be included in a contract may be influenced by evidence in the recitals concerning the intentions of the parties. If a court considers that a recital is the expression of a clear intention to act in a prescribed manner, it may adopt a clause in respect of that act6. Recitals should accurately reflect the matrix of facts as they are known to constitute `agreed statements`.

Thus, even if a statement in the recitals contains the recognition of a proven fact which both parties know at that time to be false7, such a statement could nevertheless be binding on the parties in the event that the recitals are called upon. .