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Incorporation by reference is a legal principle that allows terms from a separate document to be included in a new document, often for convenience. It is commonly used in commercial contracts and wills, but may not be permitted in all jurisdictions. Clear and unambiguous references are required.
Incorporation by reference is a common law principle that allows you to include terms enumerated in a separate legal document in any newly created document. It is usually for convenience and can be done in any situation where a contract is being formed. Incorporating by reference is also a common term used when discussing the making and execution of a will.
At common law, incorporation by reference is permitted to interlace the content of a separate document into the incorporating document. The most common purpose for doing this is to avoid having to go through the process of rewriting terms that have previously been articulated in a second document. It is in the interest of expediency to incorporate such terms by simply referring to the already existing document of which all parties are aware. By clearly stating within the incorporating document that the parties agree to include the terms of the reference document, those terms become legally binding on the parties upon execution of the incorporating document.
Incorporating by reference is especially common in drafting commercial contracts. Quite often, two parties who are agreeing to a business agreement of some sort will have another document that contains information pertinent to the contract, and instead of rewriting all of this information, they will simply refer to the document. For example, in the case of a multi-property owner who has agreed to allow a company to act on his behalf in leasing the properties, the agency agreement may refer to a list of properties and their addresses and attach that list to the reverse side of the attached agreement. A different type of scenario would be the incorporation of the terms of a previous agreement into this agreement by means of a clear unambiguous reference to the previous agreement.
While not permitted in some jurisdictions, the other common way documents are incorporated by reference is in the creation of wills. Typically the three requirements are that the will must clearly and unambiguously reference the document as part of the will, must be identified with reasonable certainty, and must have existed at the time the will was made. A common restriction on incorporation by deferment in wills is that the testator, the person for whom the will is being drawn up, must have signed the reference document. Also, if there are conflicts between the body of the will and the referring deed, the conflicting terms must be reconciled.
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