order of precedence
Definition
Order of precedence is the rule that determines which document, clause, or agreement wins when two or more of them conflict with each other. Think of it as a ranking system that tells everyone involved which set of terms takes priority over the others. Courts and businesses use this ranking to resolve disputes without having to guess which rules were meant to govern the situation.
Example
You sign a master services agreement with a client, and later you both sign a separate project-specific addendum that contradicts one of the original terms. The order of precedence clause would spell out that the addendum controls over the master agreement for that project.
Watch Out
If your contract does not include a clear order of precedence clause, a conflict between two documents could end up being decided by a judge rather than by your original intentions.
See which terms appear in your contract?
This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.