What Does Per Mean On A Contract

What Does "Per" Mean on a Contract? A Comprehensive Guide

The seemingly simple word "per" can hold significant weight within the context of a legal contract. Understanding its precise meaning is crucial for both parties involved, ensuring clarity and avoiding potential disputes. This comprehensive guide delves into the various ways "per" is used in contracts, offering practical examples and highlighting its legal implications.

Understanding the Core Meaning of "Per"

In its most basic sense, "per" signifies "for each," "for every," or "in accordance with." However, its application in contracts demands a more nuanced understanding. The context within the contract dictates the precise meaning and how it affects the agreement's terms. Misinterpreting "per" can lead to disagreements about pricing, timelines, deliverables, and other vital aspects of the contract.

Common Usages of "Per" in Contracts

"Per" is frequently used in several key areas of a contract, often impacting the financial or operational aspects:

1. Per Unit Pricing

This is perhaps the most common usage. "Per" specifies the price for each individual unit of a good or service. For example:

• "The price for widgets is $10 per unit." This clearly states that each widget costs $10.
• "The contractor will be paid $50 per hour of work." This sets an hourly rate for the contractor's services.
• "The monthly rent is $1,500 per month." While seemingly redundant, this clarifies the rental fee applies to each individual month.

Ambiguity can arise if the "unit" isn't clearly defined. Specificity is key. Instead of stating "cost per item," it's better to specify "cost per widget," "cost per box," or "cost per kilogram" to eliminate any room for misinterpretation.

2. Per Period/Timeframe

"Per" often defines a timeframe for payment, delivery, or performance. This helps establish clear expectations and avoids potential delays or payment disputes. For instance:

• "Deliveries will be made twice per week." This outlines the frequency of deliveries.
• "Payments are due on the 15th of each month, per the agreed-upon payment schedule." This sets a recurring payment schedule.
• "The project must be completed within 6 months per the project timeline outlined in Appendix A." This specifies the timeframe for completing the entire project.

Careful consideration should be given to the specific period. Using "per annum" (per year) avoids confusion compared to simply using "per year," which is still clear but offers a slightly more formal and professional tone.

3. Per Person/Employee

In contracts involving multiple individuals, "per" can denote a specific allocation per person. Examples include:

• "Each employee will receive a $500 bonus per employee upon successful completion of the project." This clearly indicates each employee is entitled to a separate bonus.
• "Travel expenses will be reimbursed at $50 per person, per day." This delineates reimbursement amounts for each individual's daily expenses.
• "The company will provide two training sessions per employee, annually." This sets the training frequency for each employee.

Again, clarity is crucial. If there are different levels of employees, the contract must differentiate how the “per person” clause applies to each.

4. Per Specification/Requirement

"Per" can refer to adherence to specific standards or requirements defined elsewhere in the contract or in a separate document. This highlights the importance of referencing those documents:

• "All work must be performed per the specifications outlined in Exhibit B." This directs the reader to a detailed specification document.
• "The materials must meet all applicable building codes per the local municipality's regulations." This emphasizes compliance with external regulations.
• "The contractor shall complete the work per the industry best practices." This refers to generally accepted standards within a specific industry.

Potential Ambiguities and How to Avoid Them

While "per" generally provides clarity, potential ambiguities can arise if the contract is poorly written or lacks sufficient detail. To mitigate such risks:

• Clearly define the unit: Avoid vague terms like "item" or "piece." Instead, use specific and measurable units such as "kilograms," "square feet," "hours," or "units."
• Specify the timeframe: If "per" relates to a time period, clearly define it (e.g., per month, per year, per quarter).
• Cross-reference documents: If the "per" clause refers to specifications or requirements found elsewhere, explicitly reference the relevant document(s).
• Use precise language: Avoid ambiguous language and use clear, concise wording.
• Seek legal counsel: If dealing with complex contracts or significant financial implications, seeking advice from a legal professional is highly recommended.

Examples of "Per" in Different Contract Types

The use of "per" varies depending on the type of contract. Here are some specific examples across different industries:

1. Employment Contracts: "The employee will be paid a salary of $X per year, payable in equal installments per month."

2. Real Estate Contracts: "The property taxes are estimated at $Y per year." or "The lease agreement is for a term of Z years, with rent payable at $W per month."

3. Service Contracts: "The service provider will conduct routine maintenance inspections twice per year, with a fee of $P per inspection." or "The consultant will charge a rate of $Q per hour for services rendered."

4. Sales Contracts: "The seller will deliver X units of product at a price of $R per unit." or "The goods will be shipped in batches of Y units per shipment."

5. Construction Contracts: "The contractor will be paid $S per square foot of completed work." or "Materials will be supplied at a cost of $T per cubic meter."

Legal Implications of Misinterpreting "Per"

Misinterpreting "per" in a contract can have serious legal ramifications. Disputes can arise over payments, deliverables, performance deadlines, and other critical aspects of the agreement. Such disputes can lead to costly litigation, potentially resulting in significant financial losses and reputational damage for both parties.

Conclusion: The Importance of Precise Contractual Language

The word "per" may seem insignificant at first glance, but its precise use in contracts is crucial. Ambiguity surrounding this seemingly simple word can lead to costly and time-consuming disputes. By ensuring clear, concise, and unambiguous language, and by using precise units and timeframes, parties can significantly reduce the risk of misunderstandings and maintain the integrity of their contractual agreements. When in doubt, always seek legal counsel to ensure that the contract is drafted accurately and protects the interests of all parties involved. Careful attention to detail in drafting contracts will ultimately lead to a smoother and more successful business relationship.