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Common Interest: Definition, Example and Related Terms

What is Common Interest ?

A common interest is a shared, mutual interest between two or more parties in a commercial agreement. It's like a shared goal, something that both parties want to achieve from their partnership. It is a crucial part of any commercial contract as it ensures that all parties involved have something to gain from the agreement, which can help to prevent disputes and misunderstandings down the line.

For example, in a commercial contract between a manufacturer and a distributor, the common interest could be to increase sales of a particular product. The manufacturer wants to sell more units, and the distributor wants to earn more commissions. Both parties have a common interest in selling as many units as possible.

Understanding and defining common interests is a critical skill for a contracts manager. It can help to identify potential risks and opportunities in a contract, and can be used to negotiate better terms. It's also important for managing relationships with other parties, as a shared goal can help to build trust and cooperation.

It's worth noting that common interests are not always obvious or straightforward. They can be complex and multi-faceted, and may change over time as circumstances evolve. Therefore, it's important to regularly review and update the common interests in a contract to ensure they remain relevant and beneficial for all parties involved.'


  • Scenario Description
    A software development company enters into a contract with a business to develop a custom software solution. The common interest here is the successful development and implementation of the software. The software company wants to deliver a high-quality product to maintain its reputation and earn its fee, while the business wants a software solution that meets its needs and helps it to operate more efficiently.
    A restaurant chain signs a contract with a food supplier to provide ingredients for its menu. In this case, the common interest is the reliable delivery of high-quality ingredients. The restaurant chain needs consistent, high-quality ingredients to maintain its menu and satisfy its customers, while the food supplier needs a steady customer to keep its business running.