Accrued Rights Clause

An Accrued Rights Clause in contracts preserves the rights and obligations of parties that have already arisen before the contract's termination or expiration. It ensures that rights accrued under the agreement remain enforceable, offering legal clarity and protection even after the contract concludes.

The key elements of accrued rights clause in a commercial contract include:

  • Preservation of Rights: This clause clearly states that rights accrued before termination or expiration remain valid.
  • Enforceability: This clause specifies that parties can enforce those accrued rights despite the contract's conclusion.
  • Limitations: This clause may include limitations on the timeframe or conditions for enforcing accrued rights.
  • Survival Clause: This clause is often incorporated as part of a survival clause, ensuring the preservation of specific provisions beyond contract termination.

Examples of accrued rights clause in a commercial contract include:

  • In an employment contract, an accrued rights clause may ensure that benefits earned by an employee, such as vested stock options, remain enforceable post-employment.
  • A license agreement may include an accrued rights clause, allowing the licensee to continue using licensed intellectual property even after the agreement concludes.
  • In a loan agreement, an accrued rights clause may preserve the lender's right to collect outstanding payments and interest even after the loan term expires.

The Accrued Rights Clause is pivotal in maintaining legal continuity by ensuring that rights already accrued under a contract persist beyond its termination. With a focus on preservation, enforceability, limitations, and incorporation into survival clauses, it safeguards the parties' interests post-contractual conclusion.

How to manage clauses like these effectively?

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