Simple definition
A significant negative effect defined or interpreted within a transaction or agreement.
Corporate
What Does Material Adverse Effect Mean?
A significant negative effect defined or interpreted within a transaction or agreement.
Example in a contract
A contract may use “material adverse effect” when describing a significant negative effect defined or interpreted within a transaction or agreement.
What material adverse effect means in a contract
In a contract, this term should be read in the context of the surrounding clause, defined terms, cross-references, and governing law.
Why it may matter
Its practical effect depends on the exact wording and how it connects to the rights and obligations elsewhere in the agreement. Review the exact language rather than relying on the label alone.
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FAQ
Questions about material adverse effect.
What does material adverse effect mean in plain English?+
A significant negative effect defined or interpreted within a transaction or agreement.
Where might material adverse effect appear in a contract?+
In a contract, this term should be read in the context of the surrounding clause, defined terms, cross-references, and governing law.
Is this definition legal advice?+
No. ClauseInsight provides concise informational explanations. The legal effect of a term depends on the complete document, facts, and applicable law.