Collateral Exposure of Non-Signatory Affiliates in Commercial Contracts

Well-drafted commercial agreements identify the “Parties” clearly, define “Affiliates” separately, and specify any rights or obligations of party-affiliates in performance or enforcement provisions that apply only to them. Too often, however, commercial agreements use collective language—such as “ABC Company and its affiliates” or “ABC Company, collectively with its subsidiaries and other affiliates”—within the definition of …