Legal Definitions - Basket Clause

A Basket Clause is a broad, catch-all provision included in a legal document, such as a contract, will, or statute. Its primary purpose is to encompass a wide range of items, categories, or powers that are not specifically detailed or enumerated elsewhere in the document. This ensures that the document is comprehensive, prevents unintended omissions, and provides flexibility to cover unforeseen circumstances or future developments. It acts as a general inclusion mechanism, gathering up anything that doesn't fit into more specific categories.

• Example 1: Business Acquisition Agreement

  In a contract for the sale of a business, the agreement might meticulously list specific assets being transferred, such as real estate, patents, and customer databases. To ensure that absolutely nothing is overlooked, the contract could include a basket clause stating: "All other assets, tangible or intangible, owned by Seller and used in the operation of the business, whether or not specifically enumerated herein, shall be transferred to Buyer."

  This clause acts as a "basket" to catch any remaining assets—perhaps minor office equipment, obscure software licenses, or even goodwill—that might have been inadvertently omitted from the detailed lists, thereby ensuring a complete and comprehensive transfer of the entire business operation.

• Example 2: Last Will and Testament

  A person's last will and testament might specifically bequeath a family heirloom to one child and a specific investment portfolio to another. To avoid leaving any property unaddressed, a basket clause (often referred to as a "residuary clause" in wills) might state: "All the rest, residue, and remainder of my estate, both real and personal, wherever situated, not otherwise effectively disposed of by this Will, I give, devise, and bequeath to my spouse."

  This provision ensures that any property not specifically mentioned in the will, or any property acquired after the will was written, is still distributed according to the testator's wishes. It prevents such assets from being treated as if the person died without a will (intestacy), which could lead to unintended beneficiaries or lengthy legal processes.

• Example 3: Regulatory Statute

  A new environmental protection law might specifically prohibit the discharge of certain named chemical pollutants into public waterways. To address future threats or substances not yet identified, the statute could include a basket clause granting the relevant regulatory agency the power to "prohibit the discharge of any other substance determined by the agency to be harmful to aquatic ecosystems or human health."

  This provision acts as a basket, allowing the agency to regulate new or previously unknown harmful substances without requiring an amendment to the original statute every time a new environmental threat is identified. This flexibility ensures ongoing and adaptive environmental protection in the face of evolving scientific understanding and industrial practices.