Provision
In the legal context, a provision is a stipulation within a legal document or in a specific law. This can also be known as a clause, contract clause, or contract provision. However, in accounting, provisions refer to any profits allocated for a specific purpose or expense.
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 generally require action by one or all of the parties involved within a defined timeframe or before a particular date. They can be found in most loan documents, in a state or country’s laws, and within contracts. It is also common to observe provisions in the fine print that is provided after the purchase of certain financial securities.
For example, bond’s often have a call provision, which establishes the date after which the company may retire the bond. Another type of provision is the sunset provision. This is usually included in specific laws, and it leads to an automatic repeal process after a specific date if the law has not been reenacted by a legislator
In the event that one of the parties that are involved in a legal agreement doesn’t comply with a provision, this is known as a breach of contract. Once this occurs, the guilty party must remedy the situation, which often happens by offering compensation.
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 the legal context, a provision is a stipulation within a legal document or in a specific law. This can also be known as a clause, contract clause, or contract provision. However, in accounting, provisions refer to any profits allocated for a specific purpose or expense.
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 generally require action by one or all of the parties involved within a defined timeframe or before a particular date. They can be found in most loan documents, in a state or country’s laws, and within contracts. It is also common to observe provisions in the fine print that is provided after the purchase of certain financial securities.
For example, bond’s often have a call provision, which establishes the date after which the company may retire the bond. Another type of provision is the sunset provision. This is usually included in specific laws, and it leads to an automatic repeal process after a specific date if the law has not been reenacted by a legislator
In the event that one of the parties that are involved in a legal agreement doesn’t comply with a provision, this is known as a breach of contract. Once this occurs, the guilty party must remedy the situation, which often happens by offering compensation.
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.