Jargon remains an unfortunate obstacle to understanding the legalese of contracts. One word frequently misunderstood by business professionals is “shall.” Far from a suggestion or an invitation to act, “shall” means something quite precise, yet open to interpretation given the context of a certain clause. Understanding what it implies can be instrumental towards the success of any given business venture. This blog post will unpack exactly what it implies in the legal world.
What Does ‘Shall’ Mean in Legal Terminology?
In its most basic form, “shall” is a decisively strong word, implying an expectation that requires a given party to act upon another’s wishes, usually in a contractual setting. For example, consider a business partnership contract that states, “Each partner shall pay for their share of the investment.” Here, the use of “shall” implies that each partner is legally obligated to make their investment, or otherwise face a breach of contract.
What Is the Difference Between ‘Must’ and ‘Shall’ in Legal Context?
It is easy to mistake “shall” for “must,” as both words imply a certain expectation for action. However, there is a subtle difference between the two. “Must” creates a binding obligation, indicating that the action described must necessarily happen in order for the contract to be maintained. “Shall,” on the other hand, happens to be a lot more flexible in that it allows a certain amount of discretion on the side of the obligated party.
For instance, if the contractual clause reads “shall pay for their share,” it does not necessarily dictate how the parties must proceed with payment, i.e., a lump sum, installments, or other options. This can be beneficial for certain types of contracts when the expectations of the parties are more nuanced and open to change.
Know Your Legal Terms: Understanding ‘Shall’ Is Important
From this blog post, it should be apparent that understanding the definition of “shall” is of utmost importance when it comes to crafting a contract. It provides a powerful advantage to the parties involved, allowing them to be flexible and precise when considering each other’s expectations. Business professionals need to have a crystal clear understanding of this powerful word if they are to safeguard their interests in contractual agreements.