Automatic renewal clauses are contract provisions that renew a contract unless one party notifies the other by a certain date. They are used in various commercial contracts, but some jurisdictions have made them illegal or require issuers to make them obvious. Critics argue they can be unfair and buried in contracts, leading to penalties for […]
An incontestability clause limits the reasons for which an insurance provider may cancel coverage due to an omission or misstatement by the insured party. It sets a time limit of two to three years after the establishment of coverage, and does not protect against attempts to defraud the insurance provider. Invoking the clause may lead […]
An escape clause in a contract allows one party to terminate it without penalty in certain situations. They are common in real estate contracts and other agreements, and it’s important to read the contract carefully to see if there is one. Real estate contracts often have due diligence and financing escape clauses. Cooling-off periods are […]
An indemnification clause in a contract allows one party to compensate the other for losses incurred during or in connection with the contract. It can work one way or both ways and can cover a variety of situations. Small businesses may find it critical. It is important to read and understand the clause, and consult […]
A sunset clause is a provision in a law that can repeal the law or parts of it after a specified period of time. It dates back to the Roman Republic and is used in modern democratic laws, such as limitations on tenure. Laws with sunset clauses can be flexible and subject to trial periods, […]
Anti-dilution provisions protect shareholders from devaluation of their shares due to demergers or the issue of further shares, and ensure advance notification of any changes to the share issue process or number of shares issued. Most shareholders choose to invest financial resources in the hope not only of maintaining the value of their original investment, […]
De-escalation clauses in contracts allow customers to request a decrease in price if the supplier’s costs decrease significantly. This is opposite to escalation clauses, which allow suppliers to increase prices if costs increase. It is recommended that customers request de-escalation clauses in contracts. De-escalation clauses are provisions in contracts that address the question of obtaining […]
An adverbial clause modifies the verb of a main clause, functioning like an adverb in a sentence. It often begins with a subordinate conjunction and shows the time or reason for the verb. Adverbial clauses cannot stand alone and modify the main clause to provide more information. An adverbial clause is an English grammatical construction […]
An unfinished clause is a dependent or subordinate clause with an unfinished verb, often in the infinitive form or with “-ed” or “-ing” suffixes. It requires an independent clause to form a complete sentence and lacks tense or aspect. An unfinished clause is the part of a sentence that typically functions as a dependent or […]
A red clause letter of credit allows sellers to receive an unsecured loan or down payment from buyers before the goods are received, benefiting both parties by allowing for quicker shipping and managing shipping costs. This type of financial instrument can be used in any business transaction. A red clause letter of credit is a […]
Mortgage agreements often include an acceleration clause, which allows the lender to demand payment of the outstanding balance of the loan under certain circumstances. The clause can include terms such as prohibiting the resale of the property without the lender’s permission and outlining consequences for late or non-payment. It is important for borrowers to review […]
A noun clause is a sentence or part of a sentence that functions as a noun. It can be the subject or object of a verb, and there are three main types: those beginning with question words, “if” or “whether,” and “that.” Noun clauses are identified by locating the verb and asking who or what […]
Non-restrictive clauses provide additional information and should start with “which” or “who,” and be punctuated by commas. They are not essential to the sentence’s meaning. Restrictive clauses are necessary and often start with “that.” A nonrestrictive clause describes a noun or pronoun, providing additional information that is not necessarily essential to the meaning of the […]
A relative clause is a sentence part that provides additional information about a name or object, beginning with a relative pronoun. It is not a complete sentence and requires correct punctuation depending on whether it is restrictive or non-restrictive. Examples show the difference in punctuation and importance to the sentence. A relative clause is part […]
Understanding the difference between independent and introductory clauses can prevent punctuation errors and sentence fragments. Introductory clauses are preceded by words like before, after, when, and while. Independent clauses can stand alone, while introductory clauses cannot. Commas should follow introductory clauses. Understanding the difference between an independent clause and an introductory clause can help prevent […]
A habendum clause in property transfer documents sets restrictions on ownership and rights of the new owner or lessee, including use restrictions and ownership limitations. It is located below the grant clause and may detail how long or to what condition the owner’s rights extend. A habendum clause is a type of clause commonly found […]
An undefined relative clause provides extra information but is not essential to the sentence’s meaning. It is separated by commas and begins with a relative pronoun. It is non-defining and can be identified by commas and a relative pronoun. It is important to ensure it only provides additional information and not something crucial to the […]
An incontestability clause limits the reasons an insurer can cancel coverage, usually related to innocent omissions. It has a time limit of 2-3 years, but does not protect against deliberate fraud. Invoking the clause may lead to an investigation into the omission’s intent. An uncontestability clause is a type of provision that is often included […]
Reduced relative clauses omit the relative pronoun and verb “be” to make sentences more concise. They can be used after prepositions, with passive verbs, and with progressive verbs, but not after adjectives or nouns. A reduced relative clause is a relative clause with the relative pronoun and the verb “be” omitted. For example, the sentence […]
An adverb clause is a dependent clause that functions as an adverb in a sentence, providing additional information about a verb or action. It includes a subject and predicate, and is identified by subordinating conjunctions and answering “why?” or “where?” questions. An adverb clause is part of a sentence that includes both a subject and […]
