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Basket Clause Explained: A Comprehensive Guide to Its Legal Definition
Definition & Meaning
A basket clause is a provision that can be found in contracts and legal documents. In a general sense, it allows for a broad range of actions or inclusions without being overly specific. This term is also used in the context of the U.S. Constitution, particularly in Article One, Section Eight, Clause 18, known as the Necessary and Proper Clause. This clause gives Congress the authority to create laws that help execute its constitutional powers. In investment and insurance contexts, a basket clause permits companies to invest a limited percentage of their assets without adhering strictly to statutory restrictions.
Table of content
Legal Use & context
The basket clause is utilized in various legal practices, particularly in contract law and constitutional law. It is relevant in fields such as:
Investment law, where it allows for flexibility in asset management.
Insurance law, permitting insurers to hold certain nonauthorized assets.
Constitutional law, where it supports Congress in executing its powers.
Users can find templates for contracts containing basket clauses on platforms like US Legal Forms, which can be helpful for drafting agreements that require such provisions.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Here are a couple of examples illustrating the use of a basket clause:
Investment Example: An insurance company may include a basket clause in its investment policy, allowing it to invest up to five percent of its total assets in high-risk ventures without needing to follow all statutory restrictions.
Contractual Example: A business contract might contain a basket clause that allows for the inclusion of various services under a single agreement, instead of listing each service separately.
Comparison with related terms
Term
Definition
Difference
Necessary and Proper Clause
A constitutional provision granting Congress the power to enact laws to execute its enumerated powers.
Specifically relates to congressional powers, while a basket clause generally applies to contracts.
Elastic Clause
Another name for the Necessary and Proper Clause.
Similar in meaning to the Necessary and Proper Clause, but not used in contract contexts.
Common misunderstandings
What to do if this term applies to you
If you encounter a basket clause in a contract or legal document, consider the following steps:
Review the clause carefully to understand its implications for your rights and obligations.
Consult a legal professional if you have questions about its impact on your situation.
Explore US Legal Forms for templates that can help you draft or modify contracts containing basket clauses.
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