Agreement to Agree Sample Clause: What You Need to Know
When you`re drafting a contract, you want to ensure that both parties are satisfied with the terms and conditions. Sometimes, however, it`s not always possible to determine every detail of the agreement up front. In these cases, an “agreement to agree” clause may be used.
What is an Agreement to Agree Clause?
An agreement to agree clause is a term used in a contract which states that the parties involved will meet at a later date to discuss certain terms and come to an agreement. This type of clause is commonly used when the parties want to finalize the details of an agreement at a later stage.
An agreement to agree clause is quite common in situations where the parties involved have not yet agreed upon a specific price, service, or product. For example, imagine you`re buying a house from a seller. The seller provides you with a contract that states the price of the house is “to be agreed upon.” You, as the buyer, can`t agree to buy the house until you know the actual price. In this case, an agreement to agree clause could be added to the contract which would allow for a future meeting to finalize the details of the agreement.
What Are the Benefits of an Agreement to Agree Clause?
An agreement to agree clause can be beneficial in a number of different situations. For one, it allows for both parties to continue with negotiations without having to stop completely due to disagreements. It also gives each party more time to make sure they`re making the best decision without feeling rushed.
In addition, an agreement to agree clause can help reduce the risk of legal disputes. By outlining the specific terms and conditions in an agreement to agree clause, you can help to prevent misunderstandings and ensure that both parties know what to expect.
What Should Be Included in an Agreement to Agree Clause?
When drafting an agreement to agree clause, there are several key components that should be included. These include:
1. Details of the Agreement to Be Decided
The agreement to agree clause should clearly outline what terms and conditions are to be decided at a later date. This could include details such as price, delivery dates, or specific services.
2. Timeline for Decision-Making
It`s important to include a timeline for when the parties involved will come to a final decision. This could involve a certain number of meetings or a specific deadline by which both parties will have reached an agreement.
3. Consequences of Not Reaching an Agreement
In some cases, it may be necessary to outline what will happen if an agreement is not reached. This could involve the termination of the contract or a penalty fee for one or both parties.
4. Applicable Law
Finally, the agreement to agree clause should specify which law will be applicable to the agreement. This can help to prevent legal disputes and ensure that both parties are aware of their rights and obligations.
An agreement to agree clause can be a useful tool in contract negotiation. By outlining the specific terms and conditions that need to be decided at a later date, it can help to prevent disagreements and misunderstandings. Just make sure to include all the necessary components and consult with a legal professional to ensure that your agreement to agree clause is legally binding and enforceable.