“Definitions” are capitalized words or phrases that have specific, defined meanings in an agreement or another document. Typical drafting conventions provide that Definitions be defined as capitalized terms within a particular agreement or document or by reference to another agreement or document. Larger agreements often contain a Definitions section or exhibit that serves as a glossary of various Definitions for ease of reference. For legal clarity and certainty, a Definition typically will have the same meaning throughout each section of an agreement.
Definitions are important and require careful review and analysis as they often contain important details about the rights, duties, and obligations of the parties to an agreement. In our experience, it is important to avoid “definition fatigue” when reviewing lengthy M&A, Financing and other commercial agreements, as it can be somewhat cumbersome and unnatural to begin reviewing an agreement by starting with several pages of Definitions.