Provision
In legal terms, a provision is a specific requirement or rule within a legal document or law, also known as a contract clause. In accounting, it refers to profits set aside for particular expenses.
Legal provisions are usually included in a contract or other type of legal agreement to protect the interests of the parties involved. Read on below to learn how provisions work in the context of the law and to see relevant examples.
How Do Provisions Work?
Provisions typically mandate actions by involved parties within a certain timeframe or by a specified date. They appear in loan documents, laws, and contracts, often noted in the fine print of financial securities' documents.
For instance:
- Bonds often include a call provision that sets a date when the bond can be retired
- The sunset provision, automatically repeals certain laws by a set date unless reenacted by legislators.
If a party fails to follow a provision in a legal agreement, it's called a breach of contract. The party at fault usually must compensate to resolve the breach.
Examples of Provisions
Observing real examples of provisions is one of the best ways to grasp a better understanding of how they are formulated. Below is an example of a provision included within Montana state law:
Mont. Code Anno., § 17-1-502: "Dedicated revenue provision" means an administrative or legislative action that allocates the revenue from a tax, fee, assessment, or other source to an account in the state special revenue fund, as described in 17-2-102, or to a local government.
In legal terms, a provision is a specific requirement or rule within a legal document or law, also known as a contract clause. In accounting, it refers to profits set aside for particular expenses.
Legal provisions are usually included in a contract or other type of legal agreement to protect the interests of the parties involved. Read on below to learn how provisions work in the context of the law and to see relevant examples.
How Do Provisions Work?
Provisions typically mandate actions by involved parties within a certain timeframe or by a specified date. They appear in loan documents, laws, and contracts, often noted in the fine print of financial securities' documents.
For instance:
- Bonds often include a call provision that sets a date when the bond can be retired
- The sunset provision, automatically repeals certain laws by a set date unless reenacted by legislators.
If a party fails to follow a provision in a legal agreement, it's called a breach of contract. The party at fault usually must compensate to resolve the breach.
Examples of Provisions
Observing real examples of provisions is one of the best ways to grasp a better understanding of how they are formulated. Below is an example of a provision included within Montana state law:
Mont. Code Anno., § 17-1-502: "Dedicated revenue provision" means an administrative or legislative action that allocates the revenue from a tax, fee, assessment, or other source to an account in the state special revenue fund, as described in 17-2-102, or to a local government.