Sanctions & Export Control Clause
Also called: Trade Compliance Clause · Sanctions Warranty
A sanctions and export control clause warrants that neither party is subject to trade sanctions and that the contract doesn't involve exporting controlled goods, software, or technology to restricted countries or parties without proper authorisation. Breach typically triggers immediate termination rights, reflecting the regulatory severity involved.
In more detail
Sanctions lists and export control regimes change regularly and can apply based on a counterparty's ownership structure, not just its stated location — a company can become a sanctioned party without either side realising it immediately.
For software and technology contracts specifically, export control rules can restrict which countries a product can lawfully be sold or licensed into — this clause is what makes that restriction contractually enforceable rather than just a regulatory backdrop the contract ignores.
This clause commonly includes an ongoing warranty, not just a one-time promise at signing — meaning a party can be in breach if it later becomes sanctioned, even if it wasn't at the time of signing.
A software company's product uses encryption technology subject to export controls. The sanctions clause requires both parties to confirm the software isn't being resold or sublicensed into countries where its export is restricted, without the necessary government authorisation.
Sanctions regimes and export control lists are maintained by individual countries and blocs, and can conflict with each other — a transaction lawful under one regime may be restricted under another applicable to a different party in the same deal.
What our lawyers check
- Whether the warranty is ongoing, not just a one-time promise at signing
- Coverage of both sanctions lists and export control regimes relevant to the deal
- Whether breach is excluded from cure periods, given its regulatory severity
- Whether the clause addresses subcontractors and downstream resale
Contracts where this clause matters
Related terms
This definition is general information about commercial contracting practice, not legal advice. How a clause operates depends on the specific wording of your agreement and the law that governs it. For advice on your contract, have it reviewed by a lawyer.
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