Contract Glossary
Good Standing
Definition
A legal status confirming that a business entity (corporation, LLC, partnership) has met all state requirements, filed annual reports, paid franchise taxes, maintained a registered agent, and is authorized to conduct business. A certificate of good standing (also called a certificate of existence or certificate of status) is the official proof.
In Practice
You're about to sign a $300,000 services contract with a vendor. Your legal team requests a certificate of good standing from the vendor's state of incorporation. The certificate confirms the vendor is a real, active entity that hasn't been dissolved, suspended, or revoked. Without it, you risk contracting with a company that legally doesn't exist, making the contract potentially unenforceable and any disputes nearly impossible to litigate.
Example Clause
Each Party represents and warrants that it is a duly organized, validly existing entity in good standing under the laws of its state of formation, and is qualified to do business in each jurisdiction where such qualification is required. Upon request, each Party shall provide a certificate of good standing issued within thirty (30) days of the request date.
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