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.The clause became part of contractual drafting in response to common law rule developed by the courts known as the rule against perpetuities.
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.
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.
[1] In the Canadian province of Alberta, royal lives clauses are routinely used in commercial oil and gas operating agreements.
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.