# Private Parties > Private Parties means any individual or entities established under any law, not working for a government entity. **Term:** Private Parties **Last updated:** 2026-07-29 ## Definition ## What Private Parties Means in a Contract Private Parties is a defined term used to separate contracting counterparties who act in a personal or commercial capacity from those who act as government entities. When a contract states that it is between Private Parties, it signals that neither side is a public authority, government department, municipality, or state-owned enterprise. This distinction matters because government counterparties are often subject to special legal regimes, including sovereign immunity, public procurement rules, and administrative law obligations that do not apply to purely private transactions. The clause is commonly found in commercial agreements across many sectors, from [construction](https://www.genieai.co/industry/construction) contracts to technology licensing deals, wherever the drafters want to make clear that the arrangement is a private commercial bargain rather than a public contract subject to government oversight or special statutory protections. By confirming that both sides are Private Parties, the agreement can rely on ordinary contract law principles, standard dispute resolution mechanisms, and commercial remedies without needing to address issues unique to public sector contracting, such as freedom of information requests or state aid rules. ## How Private Parties Is Defined or Measured Private Parties is typically defined broadly to include any individual, or any entity established under the law governing the contract, that is not a government or public body. This can include sole traders, partnerships, limited companies, trusts, charities, and other organizations formed under private law rather than public statute. The definition is measured by exclusion rather than by a positive checklist. A party qualifies as private simply by not falling into the category of government entity, meaning it is not owned, controlled, or operated by a state, municipality, or other public authority for public functions. Some contracts add clarifying language to address edge cases, such as: - State-owned enterprises that operate on a commercial basis - Public-private partnerships where a private entity performs a public function - Non-profit organizations that receive government funding but remain independently governed Because these edge cases can create ambiguity, careful drafters sometimes attach specific criteria, such as ownership percentage thresholds or references to how the entity was incorporated, to reduce disputes about whether a counterparty truly qualifies as a Private Party. ## Where Private Parties Appears in Agreements The term frequently appears in recitals, definitions sections, and representations and warranties clauses, where each party confirms its status as a Private Party at the time of signing. It is also common in dispute resolution clauses, since some arbitration or jurisdiction rules apply differently depending on whether a government entity is involved. Private Parties language shows up across many industries, including [finance](https://www.genieai.co/industry/finance), [real estate](https://www.genieai.co/industry/real-estate), and [energy](https://www.genieai.co/industry/energy), particularly in transactions where a public body might otherwise be a natural counterparty, such as infrastructure projects or regulated utilities. In these cases, distinguishing private commercial arrangements from public contracts helps clarify which rules and remedies apply. The concept also surfaces in policy documents and internal governance materials, where organizations classify counterparties for compliance or risk purposes, ensuring that contracts with government bodies are routed through additional review processes not required for agreements between Private Parties. ## Why the Exact Wording Matters Precise wording matters because misclassifying a counterparty can lead to significant legal consequences. If a contract assumes both sides are Private Parties but one is later found to be a government entity, protections such as sovereign immunity or statutory notice requirements may unexpectedly apply, potentially disrupting enforcement or dispute resolution strategies. Ambiguous definitions can also create disputes about which procurement or transparency rules apply. For example, a joint venture that is partly state-owned might argue it should be treated as a government entity to invoke certain protections, while the other party may prefer the Private Parties classification to keep the relationship under standard commercial law. Clear wording reduces the risk of these disputes and ensures that both sides have accurately assessed their regulatory obligations before signing, particularly in regulated industries like [healthcare](https://www.genieai.co/industry/healthcare) or [insurance](https://www.genieai.co/industry/insurance) where public and private actors frequently interact. ## Drafting Considerations Drafters should define Private Parties clearly and consider whether any exceptions or clarifications are needed for entities with mixed public and private characteristics. It is often useful to include a representation in which each party confirms its status as a Private Party, along with an obligation to disclose any change in that status during the life of the agreement. Contracts should also consider how the classification interacts with other clauses, such as governing law, dispute resolution, and confidentiality provisions, since these may operate differently if a government entity becomes involved later, for example through acquisition or restructuring. Finally, drafters working across multiple jurisdictions should avoid assuming that the definition of a government entity is uniform everywhere. Building in flexible language that references the law governing the contract, rather than a specific statutory definition, helps the clause remain accurate and enforceable across different legal systems. ## Context ### Relevant circumstances - When initiating a business agreement between non-government entities. - When entering into a transaction for the sale or purchase of goods and/or services. - In the case of a dispute or legal proceedings between non-government entities. ### Relevant sectors - Construction - Finance ## Relevant contract types - [Sales Contract](https://www.genieai.co/en-us/template-type/sales-contract) - [Partnership Agreement](https://www.genieai.co/en-us/template-type/partnership-agreement) - [Non-Disclosure Agreement](https://www.genieai.co/en-us/template-type/non-disclosure-agreement) --- This is the Markdown representation of [https://www.genieai.co/en-us/define/private-parties](https://www.genieai.co/en-us/define/private-parties), provided for AI agents and crawlers. 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