What is the purpose of recitals in a contract?

Recitals in a contract serve a crucial purpose by providing background information that contextualizes the agreement for the parties involved. They typically appear at the beginning of the contract and summarize the intent, motivations, or circumstances surrounding the formation of the contract. This context helps both parties understand the fundamental reasons for entering into the contract and can aid in the interpretation of its terms if disputes arise later.

By including recitals, the contract can be more clearly understood, particularly when terms are ambiguous or the parties’ intentions may be questioned. While other components of the contract, such as risk allocation, payment terms, and timelines, are important, they do not encompass the purpose of recitals, which is primarily to set the stage for the contractual obligations that follow.