Contract Glossary
Pro Rata
Definition
A Latin term meaning 'in proportion.' In contracts, it describes how something, money, rights, obligations, is divided proportionally among parties based on their share, ownership percentage, or time period.
In Practice
If you cancel a $1,200 annual subscription after 6 months, a pro rata refund gives you $600 back, half the year unused, half the money returned. In startup funding, pro rata rights let existing investors maintain their ownership percentage in future rounds. The term shows up in everything from refund policies to insurance premiums to shareholder agreements.
Common in these contract types
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