Legal Definitions - receipt clause

A receipt clause is a specific section within a legal document that formally acknowledges the payment or transfer of value (known as "consideration") from one party to another. Its primary purpose is to serve as official proof that the agreed-upon payment or consideration has been received, thereby eliminating the need for a separate, standalone receipt document.

Here are some examples to illustrate how a receipt clause works:

• Real Estate Purchase: Imagine Sarah is selling her house to John for $400,000. In the deed of sale, which is the legal document transferring ownership, there will be a clause stating something like, "The Seller hereby acknowledges receipt of the full purchase price of Four Hundred Thousand Dollars ($400,000.00) from the Buyer." This statement acts as Sarah's formal confirmation within the deed itself that she has received the money from John, making a separate paper receipt unnecessary.

• Sale of a Small Business: Consider a scenario where a baker, Maria, sells her bakery business, including all equipment and customer lists, to a new owner, David, for $75,000. The Asset Purchase Agreement, which outlines the terms of the sale, would contain a clause such as, "Seller hereby acknowledges receipt of the sum of Seventy-Five Thousand Dollars ($75,000.00) from Buyer as full consideration for the assets described herein." By signing this agreement, Maria legally confirms she has received the payment from David, and this clause serves as the official receipt within the transaction document.

• Legal Settlement Agreement: Suppose a company, Tech Solutions Inc., agrees to pay a former employee, Alex, $25,000 to settle a workplace dispute. The formal settlement agreement signed by both parties would include a clause stating, "Alex hereby acknowledges receipt of the sum of Twenty-Five Thousand Dollars ($25,000.00) from Tech Solutions Inc. in full and final settlement of all claims related to his employment." This clause legally confirms Alex has received the settlement funds, and his signature on the agreement provides official proof of that receipt, closing the matter without needing a separate payment acknowledgment.