When it comes to drafting contracts, one common clause that you may come across is the “notwithstanding clause”. This is a powerful tool that allows parties to override or make exceptions to other clauses in the contract. In this article, we will dive into what the notwithstanding clause means, how it works, and its implications.

What is a Notwithstanding Clause?

A notwithstanding clause is a provision in a contract that allows a party to ignore or contradict any other clause in the document. It is often used as a catch-all provision that provides a degree of flexibility to the agreement.

To better understand how a notwithstanding clause works, let`s consider an example. Say you`re drafting a contract that includes a clause stating that all payments must be made within 30 days of receipt. However, if there is a situation where the party can`t make the payment within 30 days, they may want to include a notwithstanding clause that allows them to make the payment at a later date.

When the notwithstanding clause is invoked, any other clauses that would normally prevent this payment from being made would be overridden. Essentially, the notwithstanding clause takes precedence over any other provision in the contract.

Implications of a Notwithstanding Clause

While a notwithstanding clause can be a helpful tool in certain situations, it also has important implications that parties must consider. One of the most significant is that it can weaken the enforceability of the contract. By including a notwithstanding clause, parties may be giving up some of their rights and remedies under the agreement. This could make it harder to enforce the terms of the contract if there are disputes or breaches.

Another potential issue with a notwithstanding clause is that it may create confusion or ambiguity in the contract. If there are conflicting clauses, it can be difficult for parties to determine which provision takes precedence. This could lead to disagreements and further disputes, which can be costly and time-consuming to resolve.

In addition, parties must be careful when drafting a notwithstanding clause to ensure that it doesn`t violate any laws or regulations. The clause cannot override any legal requirements or public policy considerations, and it must be clear and specific in its scope and intent.

Conclusion

In summary, a notwithstanding clause is a provision in a contract that allows parties to override or make exceptions to other clauses in the agreement. While it can be a useful tool in certain situations, it also has important implications that parties must consider. Before including a notwithstanding clause, it is important to carefully weigh the potential risks and benefits and seek legal advice if necessary. By doing so, parties can ensure that their contract is clear, enforceable, and effective.