Phenomena and rule. Prevailing principles of contract drafting require that you are ‘simple and clear’ and that you avoid ambiguity (see paragraphs 1.1 and 1.3(b)). These principles demand that you do not rephrase a provision: a rephrased sentence introduces a considerable risk that the two sentences partly contradict each other. A somewhat cerebral phrase often used to introduce such a rephrase, is for the avoidance of doubt (or, equally, for the sake of clarity). It attempts to make something explicit that should already be covered by the preceding wording but could (reasonably or arguably) be interpreted otherwise.
A sentence starting with in other words should tempt a contracting party to rephrase the two sentences into one clear provision. If possible, avoid it. Exceptionally, however, a clarification ‘for the avoidance of doubt’ might be useful.
When to use. In short, the message addressed ‘for the avoidance of doubt’ is already within the contractual wording even though you don’t immediately see it, but because it is important it is made more explicit. More elaborately, for the avoidance of doubt should be used only if:
the subject matter followed by the phrase is already covered by the preceding contract clause, but an informed, objective reader of the contract might not clearly interpret such subject matter to be included in (or excluded from) that contract clause; or
there may be a contradiction or an overlap between the preceding contract clause and another provision in the agreement; and
considering the agreement as a whole, the subject matter is important enough to be addressed (i.e. not being aware of the to-be-avoided doubt may be a source of disputes or disappointment for the parties).
For example, a clarification for the avoidance of doubt is desirable when the preceding sentence is relatively broad, or unspecific, and conceivably not of key importance, whereas the subject matter that is addressed for the avoidance of doubt is both specific and (relatively) important.
A clarification may also be desirable in the opposite case, if the preceding sentence contains restrictions of scope, which do exclude certain subject matters that may be considered to be included under the preceding sentence upon aprima facie reading of that sentence. An example is the grant of a software licence, where for any required underlying software applications (for the avoidance of doubt) the licensee should still obtain a licence from a third party in order to be free to enjoy the full benefit of the software.