Legal Definitions - articles of agreement

An articles of agreement is a written document that formally records specific understandings, conditions, or foundational agreements reached by parties involved in a particular undertaking. Unlike a standard contract, which typically focuses on promises of performance and enforceable obligations, articles of agreement primarily document what the parties have mutually acknowledged, accepted, or agreed upon as a basis for their relationship or transaction. They often serve to clarify shared understandings or set the stage for more detailed contracts, particularly in situations like forming a business, undertaking a complex project, or transferring property.

• Example 1: Forming a New Business Partnership

  Imagine two entrepreneurs, Maria and David, decide to launch a new software startup. Before drafting a comprehensive legal partnership agreement that details specific duties, profit-sharing percentages, and dissolution clauses, they create an articles of agreement. This document outlines their shared vision for the company's mission, their mutual understanding that initial profits will be reinvested for the first three years, and their agreement on the core values that will guide their business decisions. It also acknowledges that Maria will contribute more initial capital, while David will contribute more "sweat equity" in the early stages, with future equity adjustments to be determined later.

  How it illustrates the term: This document records their fundamental understandings and conditions for the partnership, setting the groundwork for their collaboration without yet detailing specific promises of performance or enforceable obligations. It captures their mutual agreement on foundational principles.

• Example 2: Transferring Unique Real Property

  A buyer is interested in purchasing a historic farm property that includes an old barn with structural issues and a natural spring that supplies water to a neighboring property via an informal arrangement. Before signing a formal purchase and sale agreement, the buyer and seller draft articles of agreement. This document explicitly states that the buyer acknowledges and accepts the barn's current condition "as-is" and understands the existing informal water-sharing arrangement with the neighbor. It also notes that these conditions have been factored into the agreed-upon purchase price. The document does not obligate the seller to fix the barn or formalize the water agreement, but rather records the buyer's understanding and acceptance of these existing circumstances.

  How it illustrates the term: Here, the articles of agreement document the parties' mutual acknowledgment and acceptance of specific, pre-existing conditions related to the property transfer. It clarifies shared understandings about the property's status rather than creating new promises of performance.

• Example 3: Collaborative Research Project

  Three universities decide to collaborate on a groundbreaking but highly experimental research project to develop a new vaccine. Given the uncertain nature of the research, they sign articles of agreement. This document outlines their shared understanding that the project involves significant scientific risk, acknowledges that there is no guarantee of a successful vaccine outcome within a specific timeframe, and agrees on the general principles for sharing any intellectual property that might arise from the research. It also details their mutual understanding regarding the ethical guidelines and data privacy protocols they will all adhere to throughout the project.

  How it illustrates the term: This example demonstrates articles of agreement being used to record the parties' shared understanding of the project's inherent risks and limitations, as well as their agreement on foundational principles for collaboration, rather than specific deliverables or performance guarantees.