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Simple English definitions for legal terms
recapture clause
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A quick definition of recapture clause:
A recapture clause is a part of a contract or lease agreement that allows one party to recover goods or property if certain conditions are not met. For example, if a contract sets a price for goods but market conditions change drastically, the recapture clause may allow the seller to recover the goods or adjust the price. In a commercial lease, the recapture clause may give the landlord the right to terminate the lease and take back the property if the tenant's profits are too low.
A more thorough explanation:
A recapture clause is a provision in a contract or lease that allows for the recovery of goods or property if certain conditions are not met. This clause is typically used in situations where market conditions greatly differ from what was anticipated in the contract or lease.
One example of a recapture clause is in a commercial lease. The landlord may include a provision that grants them a percentage of the tenant's profits above a fixed amount of rent. If the tenant's profits are too low, the landlord may have the right to terminate the lease and recapture the property.
Another example of a recapture clause is in a sales contract. If the price of a product significantly drops after the contract is signed, the seller may include a provision that allows them to recapture the product and sell it at a higher price.
These examples illustrate how a recapture clause can protect the interests of the parties involved in a contract or lease. It allows for adjustments to be made if market conditions change, ensuring that both parties are treated fairly.