Clause guide
Sanctions Clause clause: meaning, risks, and what to negotiate
Requires parties not to violate economic sanctions laws or deal with restricted persons or territories in prohibited ways.
What it means
Sanctions clauses can affect where services can be provided, who can receive them, and whether the agreement can continue at all.
Common risks
- • The clause may be broad and operationally restrictive.
- • A sanctions issue may trigger suspension or termination.
- • You may need to screen customers, vendors, or destinations.
What to check before signing
- • Which sanctions regimes are covered?
- • Does the clause require warranties about counterparties or territories?
- • What happens if sanctions rules change during the term?
Negotiation ideas
- • Limit the clause to applicable sanctions laws.
- • Avoid overly broad warranties about unknown third parties.
- • Include practical suspension rights where required by law.
Example clause
“Each party represents that it is not a sanctioned person and shall comply with all applicable economic sanctions laws in connection with this Agreement.”
Frequently asked questions
What is a sanctions clause?
It is a clause requiring compliance with laws that restrict dealings with certain countries, entities, or individuals.
Related clauses
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