Contract Glossary

Conflict of Interest

Definition

A situation where someone's personal interests or other obligations could interfere with their ability to act in your best interest. In contracts, a conflict of interest clause requires parties to disclose any relationships, financial interests, or competing obligations that could compromise the deal.

In Practice

You hire a consultant to evaluate three software vendors, and it turns out she owns stock in one of them. That's a conflict of interest. Without a disclosure clause, you might never know. Conflict of interest provisions require parties to disclose these situations and either resolve them or recuse themselves.