Are recitals legally binding?

In general, recitals in legal contracts are not legally binding. Notwithstanding the foregoing, recitals are taken into account and construed by the reader (be it the contracting parties, an arbitrator, a judge, or any other parties) to guide the interpretation of the intention and the operative clauses in the agreement of the contracting parties.
In the event that there are operative clauses within the recitals which could resolve any obvious ambiguity in the terms of the agreement, there is a possibility that the reader may construe them to be legally binding on the contracting parties.

What is the difference between recitals and preambles?

Recitals are typically set out immediately after the preambles in a legal contract. Recitals should be factual statements which are mutually agreed by the contracting parties, and should provide: (a) a brief background of the legal relationship between (or amongst) the contracting parties; (b) the purpose and objectives of the parties in entering into such agreements; and (c) the context of the legal contract. As best practice, recitals should omit to include any rights and obligations of the contracting parties.
Preambles are typically set out at the beginning of a legal contract. The parties to a contract are set out in the preambles, which should include comprehensive details about each party, including their full legal names, identification / registration numbers (whether individual or corporate) and their physical addresses. The contact information of the parties is usually stated in the notice clause of legal contracts (i.e. the clause which states the physical address or email address to which notices should be sent to when the need arises) and not in the preambles.

What makes a well-written recital?

A well-written recital should be: (a) concisely written; (b) written in plain English; (c) detailed; and (d) unambiguous.

• Concisely written: The recitals should reflect the intention of the parties in as few words as possible. If a sentence appears to be difficult for the reader to follow because of its length or style, consider breaking it up into two or more sentences. This practice would also reduce the likelihood of ambiguity of each sentence, and thereby mitigate the risk of misinterpretation and future dispute.
• Written in plain English: The recitals should be drafted using plain English rather than legalese where possible. This is so that they can be easily understood by the reader.
• Detailed: The recitals should comprehensively provide the details of the purpose and the objective of the agreement in clear and concise language. All the salient details which the contracting parties mutually agree would reflect their common intention should be captured in the recitals as far as possible.
• Unambiguous: A good guiding principle is to always draft the recitals with the mentality that the contract will one day come before a judge or an arbitrator, who should have no doubt about what the recitals intend to convey. It should be drafted with such precision so that there is only one possible interpretation of it (i.e. the interpretation which the drafter intends).

What are some common mistakes found in writing recitals?

The common mistakes which are found in writing recitals include: (a) insufficient details regarding the background and context of the contract; (b) ambiguity in drafting; and (c) omitting to review for consistency, clarity and completeness.

• Insufficient details regarding the background and context of the contract: As mentioned in paragraph 3(c) above, the recitals should comprehensively provide the details of the purpose and the objective of the agreement. Recitals which are not well-drafted may include information which are inconsistent or incomplete such that the reader is unable to determine the context, purpose and objective of the legal contract.
• Ambiguity in drafting: As mentioned in paragraph 3(d) above, clarity in drafting is of utmost importance. Recitals which are not well-drafted may cause confusion as to the actual agreement of the contracting parties. Any ambiguity in the meaning of the recitals would heighten the risk of misinterpretation and disputes, which could have an impact on the business relationships of the contracting parties.
• Omitting to review for consistency, clarity and completeness: Before marking the agreement as the final version for parties to execute, the contracting parties are responsible for conducting a thorough review of the recitals. A common mistake is that parties fail to double-check the recitals for consistency, clarity, and completeness, and to ensure that all relevant details are included. The paramount objective of this review should be to ensure that the recitals aligns with the intentions of the contracting parties.

The author, Waltson Tan, is a corporate lawyer based in Singapore. He is qualified as an advocate and solicitor in Singapore and has more than eight years of post-qualification experience.
Waltson focuses his practice on mergers and acquisitions, private equity, joint ventures, investment funds and other general corporate and commercial transactions. He has also represented and advised numerous leading multinational organisations on a broad spectrum of corporate, regulatory, cross-border restructuring and employment matters.

Prior to joining the firm, Waltson practised at some of the top law firms in Singapore and thereafter, at a leading international law firm, which was the second largest law firm in the United States and one of the ten largest in the world.

Waltson also advises clients on a monthly and yearly retainer basis, where he provides dedicated services to each client in relation to the issues which clients face, including general corporate and employment related matters.

Waltson Tan Director +65 8079 0028 waltson.tan@28falconlaw.com

Office address: 101A Upper Cross Street #13-11, People’s Park Centre Singapore 058358