Compulsory: Definition, Example and Related Terms
What is a Compulsory ?
The term 'compulsory' refers to something that is required or mandatory, something that must be done. In the context of commercial contracts, 'compulsory' might refer to certain obligations that a party to the contract is required to fulfill, or certain conditions that must be met for the contract to be valid. The term can also be used to describe a clause in a contract that stipulates a particular action that must be taken under certain circumstances.
Scenario Description A software company signs a contract with a client to develop a new application. The contract includes a 'compulsory delivery date' clause. In this example, the 'compulsory delivery date' clause requires the software company to deliver the new application by a specific date. If the company fails to meet this compulsory requirement, they may be in breach of contract, which could result in penalties or other consequences. A manufacturing company enters into a supply contract with a raw materials provider. The contract includes a 'compulsory minimum order quantity' clause. In this case, the 'compulsory minimum order quantity' clause means that the manufacturing company is required to order at least a certain amount of raw materials from the provider each time they place an order. If the company does not meet this compulsory requirement, they could be in violation of the contract.