Royal lives clause

A royal lives clause is a contract clause which provides that a certain right must be exercised within a certain period related to the lifetime of a currently living member of a royal family. Specifically, the clause usually specifies that the contract is in effect until 21 years after someone's death; the person indicated is whoever dies last out of all of the currently living descendants of a specified monarch.

Form
A sample clause might read:

The option must be exercised before the end of the period ending 21 years after the death of the last survivor of all the lineal descendants of his Majesty King Charles III who have been born before the date of this agreement.

Rationale
The clause became part of contractual drafting in response to common law rule developed by the courts known as the rule against perpetuities. That rule provided that any future disposition of property must vest within "a life in being plus 21 years". The rule generally affects two types of transactions: trusts and options to acquire property. Generally speaking, such transfers must vest before the end of the maximum period, or the grant will be void. Under the old common law, a transaction would be void even if the property might possibly vest after the end of the maximum period, but now most jurisdictions have, by statute, adopted "wait and see" laws.

In an attempt to mitigate the perceived harshness of the common law rule, and to maximise the possible length of time for which trusts in particular could subsist, lawyers began to draft so-called royal lives clauses. Royal lives were chosen because (a) it was assumed that being affluent, at least one or two members of the family could be assumed to live a reasonably long period of time, and (b) being royalty, the descendants would have reasonably ascertainable lives. In practice, a dead monarch was usually chosen so as to maximise the possibility of a grandchild or great-grandchild who would be outside of the immediate royal family having recently been born.

Application
The royal lives clause is a common legal practice in several Commonwealth countries. In the Canadian province of Alberta, royal lives clauses are routinely used in commercial oil and gas operating agreements.

However, in the United Kingdom, the significance of the royal lives clause may have diminished as a result of the Perpetuities and Accumulations Act 1964, a legal act that reformed the rules against perpetuities in the country. Similar reforms were also made in several Australian states and the Canadian province of British Columbia.

Outside the Commonwealth
The royal lives clause has also been used outside the Commonwealth. An agreement between the Reedy Creek Improvement District and Walt Disney Parks and Resorts in Florida, United States, includes a royal lives clause, with "King Charles III, king of England [sic]" and his descendants being the referenced royal lives in the agreement.

Equivalent practices
In the United States, president's lives clauses are used as well as royal lives clauses, and for similar reasons; well-documented political and industrial families (such as the Kennedys and Rockefellers) are also used. In Ireland, the descendants of Éamon de Valera are sometimes used.