Vertalis Business Law Glossary
Contracts
Incorporation by Reference & Order of Precedence
By Tim Nichols
Modern Counsel for Growing Companies
In plain English
Two drafting tools that help multiple contract documents work together. Incorporation by reference makes an identified document part of the agreement. An order-of-precedence clause establishes which terms control if the documents conflict. Both require clear language suited to the particular transaction.
Types and key distinctions
Incorporation by Reference
A drafting technique making another identified document part of an agreement without reproducing its full text. Effective incorporation requires sufficient clarity and depends on applicable law and the transaction. An order form should identify the applicable MSA or terms, rather than leave the governing version uncertain.
Order of Precedence
A clause establishing which document or provision controls when parts of a contractual arrangement conflict. It is particularly useful when an MSA, order form, SOW, and exhibits operate together. Without a clear hierarchy, an apparent customization can create uncertainty about which obligation the parties accepted.