Survival of obligations

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A boilerplate term that nominates certain provisions of the agreement that are deemed to carry on notwithstanding the end of the Agreement itself.

In most cases survival of obligations clauses result from a misconception about how damages work in a contract and are, as such, a sort of category error.

The thing is: when you terminate a contract, or it comes to its natural end, it is not wiped from the horizon with a Nietzschean sponge — it is not as if the parties creep away with what gains they have to that point gotten upon some principle that possession is nine-tenths of the law; the contract existed, and continues to operate, on that period in the past during which it was live. It no longer operates for the present period, or any point in the future.

The plainest example of this is a lease terminated for non-payment of rent. Terminating the lease does not alter the tenant’s obligation to pay arrears for the period in which she occupied the premises; it just means she is no longer entitled to occupy the premises, and nor, correspondingly, is the landlord entitled, prospectively, to charge her rent.

One does not need a survival of obligations clause to attain that outcome. That is the whole point of the law of contract.

Security arrangements

For some reason the presence of a security arrangement — deep magic for certain strip of legal eagle — gives rise to survival clauses.

NDAs

An interesting conceptual question is what happens on an NDA when it terminates — often (but the JC has never quite understood why) expressed to have a one or two year term. It not really being possible to return electronic information, what happens? are you just allowed to publish it to the world?

Of course not — yet it is not that common to include a survival of obligations clause (there is not one in the OneNDA, for example)

ISDA

You see it in the ISDA Master Agreement thought there the vibe is slightly different, in that it clarifies that obligations survive a termination of a Transaction — at which point the master agreement itself is still in situ.

See also

• Survival of Obligations (ISDA)