What is a Stipulation?

The term “stipulation” can be used in several different legal senses. In one sense, it refers to a restriction or condition which is attached to an agreement, with the understanding that failure to meet the condition could be grounds for terminating or refusing to enter the agreement. In another sense, it refers to a mutually agreed-upon decision on the part of rival attorneys in a case, in which the attorneys agree to settle a point of order or fact out of court to save time.

In the first sense, stipulations appear in many contracts. Stipulations may do things like spelling out terms which must be fulfilled, and describing situations in which the contract would become void. For example, a real estate contract can stipulate that in the event that fraud on the part of the seller is uncovered, the buyer has the right to cancel the contract without penalties and with a full refund of any earnest money. Likewise, a contract might also stipulate that one or both parties must abide by certain terms for the contract to be valid.

When examining a contract, it is important to look at any conditions or restrictions which will affect the contract, and to make sure that they are fully understood. If a stipulation seems unreasonable, an attorney should be consulted to address the matter before the contract is signed. Likewise, when people structure contracts, they should confirm that the stipulations they want are included, or work out other terms if the original terms they want are rejected. While people are often pressured to complete contract negotiations quickly, people should remember that they can repent at leisure for contracts entered into in haste.

In the second sense, a stipulation is a point of agreement. A classic example is one in which rival attorneys both agree on a fact out of court. Their stipulation means that the fact does not need to be argued in court, because they have accepted it. In some regions, people must indicate in writing that they have reached the agreement, so that there is no confusion later; an oral stipulation can sometimes backfire as it may be claimed that the terms of agreement were not clear.

Stipulation of this type has been a presence in law for thousands of years. Lawyers are often encouraged to try and work out points of agreement out of court so that they will have to spend less time in court. Sometimes, in the course of reaching agreement on minor points, lawyers may be able to stipulate a settlement, allowing them to skip court altogether.