Legal agreement between two parties: Binding and enforceable?

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1963

At the heart of a legal opinion lies the “enforceability opinion”. The most common way in which this opinion is worded is as follows: The Agreement constitutes the legal, valid, binding and enforceable obligations of the (relevant party).

Lexicon_cover_pic-CMYKIn some jurisdictions, particularly the US, this is referred to as the “remedies opinion”, as it confirms that a remedy will be available in the event that the agreement is breached and the beneficiary of the legal opinion wishes to enforce the agreement against the other party.

Given the importance of this opinion, it is surprising how much uncertainty has arisen in relation to the words used. Does each word that describes the obligations – namely, “legal”, “valid”, “binding” and “enforceable” – have a meaning that is separate and distinct from the other words, or are they interchangeable? If you ask any lawyer, including experienced lawyers, you may discover that there is a broad range of views about this.

This article looks at the use and meaning of each of these words, and points out that although there is a degree of overlap between some of these words, there are some important differences that lawyers should be aware of. In addition, the practice in relation to the use of these words in combination varies between certain jurisdictions.

This article starts by looking at the meaning of each word. It then considers how these words are used together, noting differences between the practice in the UK and the practice in the US. Finally, it considers a recent Australian High Court decision in which the court was required to decide whether there was a difference between the words “binding” and “enforceable” in the context of a public statement by a listed mining company in Australia.

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Andrew Godwin葛安德曾是年利达律师事务所上海代表处合伙人,现在墨尔本法学院教授法律,担任该法学院亚洲法研究中心的副主任。

A former partner of Linklaters Shanghai, Andrew Godwin teaches law at Melbourne Law School in Australia, where he is an associate director of its Asian Law Centre.