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Why Affiliates Should Not be Grouped in as “Parties” to a Contract

Why Affiliates Should Not be Grouped in as “Parties” to a Contract

December 13, 2021 at 11:48 AM - commercial contracts,

Most commercial contracts include defined terms to improve readability and reduce ambiguity. In some cases, however, those definitions do not receive the same scrutiny as other clauses and their application throughout the rest of the agreement can be overlooked. For example, when a party to a contract is defined “together with its affiliates,” the language may seem innocuous, but this linking of entities significantly impacts the nature of the contract and can result in a host of unanticipated risks and liabilities not only for the contracting entities but for those unnamed entities who may be inadvertently bound to a contract to which they are not even aware they are a party.

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