Mutuality of Obligation


Also found in: Legal, Acronyms.

Mutuality of Obligation

The state in which both parties to a contract are required to perform some service. For example, one party may make a widget and the other may pay for it. Mutuality of obligation is one of the conditions that must exist for a contract to be legal and enforceable.
Mentioned in ?
References in periodicals archive ?
[section]673.3011, do not suffer from mutuality of obligation problems.
Ryan's Family Steak Houses, Inc., refusing to enforce a contract between an employee and an arbitration service because the agreement contained an illusory promise and no mutuality of obligation. (29)
Roosevelt thereby rejects the assumption, which informs the mutuality of obligation approach, that constitutional rights form part of a framework for legitimating the exercise of governing power over individuals.
The tribunal accepted that the agency had a considerable degree of control over her and that there was a mutuality of obligation: the agency was obliged to pay Dacas for her work and she was obliged to attend work or notify the agency if she was sick or to arrange leave.
The tribunal considered that mutuality of obligation was lacking between Franks and either company, so it decided that he was employed by neither.
The concepts of good faith and mutuality of obligations, which are of such importance in the codified legal structure in the region, frequently provide a contractor with an avenue of recovery that in other legal systems might be denied.
But New Delhi would be mistaken if it thought that there was an identity of interests and mutuality of obligations between us right now.
The result: the mutuality of obligations applied by the court in the Ticknor case may be deemed unconscionable if applied to franchisees' duty to mutually share arbitration costs.
The problem with XYZ enforcing its triangular setoff rights is that one of the prerequisites for setoff, a mutuality of obligations between the parties to the setoff, is lacking between XYZ and ABC'S affiliate because the claim XYZ is seeking to setoff against its obligation to ABC'S affiliate is against ABC.
The trustee did not challenge this asserted setoff right because of the mutuality of obligations between LBI and UBS.
The problem with the creditor's enforcing its triangular setoff rights is that one of the prerequisites for setoff, a mutuality of obligations between the parties to the setoff, is lacking between the creditor and debtor's affiliate.