What Does ” Reserved ” Mean in a Contract?

In this post I will explain why one sometimes sees ” Reserved ” in a section of a contract. I first presented this information in a Quora answer. Please see What is a “Reserved” clause in a contract?

Sometimes Sections are Deleted from Contracts

Sometimes (especially in olden days), when one no longer needed a Section in a contract, the lawyer drafting or revising the contract didn’t want to remove that Section entirely. The reason for this reluctance? Removal would require changing the numbering of the following Sections.

Even worse, one would need to fix broken Section-number cross-references. For example, one needs to change a cross-reference elsewhere in the contract from “Section 15” to “Section 14”. If there were dozens of cross-references, clean-up would be a laborious, time-consuming mess.

” Reserved ” Maintains Section Numbering

Accordingly, common practice was (and, to quite an extent, still is) to leave the Section number in place. Where there used to be content, the word “ Reserved ” now appears. This indicates that the Section number still is available (reserved) for use if the need ever arises.

Of course, nowadays, with MS Word numbering and cross-references, this problem largely disappears.

• After a Section is removed, all following Sections automatically renumber. Furthermore, cross-references can be reset automatically.
• If there remains a cross-reference to the now-deleted Section, a bold “Error” message appears. One then can remove the dead cross-reference.

Check out all posts about contracts.

Dana H. Shultz, Attorney at Law +1 510-547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.