When a Party Has a Limited Role in a Transaction

Special thanks to reader Tony for reminding me of a usage that had slipped my mind: becoming party to a contract with respect to only certain provisions.

For example, in an acquisition, the buyer’s parent might be party to the acquisition agreement solely to guarantee the buyer’s obligations or solely to undertake to pay a termination fee in certain circumstances.

It’s appropriate to reflect a party’s limited role by stating in the introductory clause, before the party’s name, between offsetting commas, solely with respect to [specified provisions]. It’s best for a party with a limited role to come last in the introductory clause.

In specifying what sections apply, bear in mind that a party with a limited role would presumably also be subject to provisions with respect to governing law, notices, and related matters.

And you’d want to add solely with respect to [specified provisions] to the party’s signature block, too. Followed by a colon, it could go above the party’s name in the signature block, or, preceded by a comma after the party’s name, it could go immediately below the party’s name. The latter approach is slightly more economical.

Any thoughts?

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.

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