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Contract glossary
Plain-language definitions of the legal terms you'll find in contracts. Search by keyword or browse A-Z.
Showing 49-72 of 263 terms
Cooling-Off Period
A legally mandated window of time after signing a contract during which you can cancel without penalty. It's a 'take-back' period designed to protect consumers from high-pressure sales tactics.
Copyright Assignment
A legal transfer of copyright ownership from the creator to another person or entity. Once assigned, the new owner controls the work, they can reproduce it, modify it, license it, or sell it. The original creator gives up all rights.
Cost-Plus Contract
A contract where the buyer pays the actual cost of materials and labor, plus a markup (either a fixed fee or a percentage). The contractor doesn't profit from inflating costs because the fee is separate from expenses. Also called a 'cost-reimbursement' contract.
Counterpart
A counterpart clause lets each party sign a separate copy of the contract, and together, those copies count as one agreement. You sign your copy in Berlin, they sign theirs in São Paulo, and you've got a deal.
Covenant
A covenant is a binding promise in a contract to do something or not do something. Non-compete covenants stop you from working for a competitor. Non-solicitation covenants stop you from poaching clients. They're the promises with teeth.
Covenant Not to Sue
A promise by one party not to sue the other for existing or potential claims. Unlike a release (which wipes out the claim entirely), a covenant not to sue leaves the claim alive, you just promise not to act on it.
Cross-Default
A clause that says defaulting on one agreement automatically counts as a default on a different agreement with the same party. One domino falls, and the rest go with it.
Cure Period
A window of time after a breach or default during which the breaching party can fix the problem before the other party can terminate the contract or take legal action. It's a second chance built into the contract.
Damages
Damages are the money a court awards you when someone breaches a contract. There are four main types: compensatory (your actual losses), consequential (the ripple effects), liquidated (pre-agreed amount), and punitive (punishment, rare in contract law).
De Minimis
Latin for 'about minimal things', it refers to amounts or matters so small that the law doesn't bother with them. A de minimis clause sets a threshold below which violations or obligations are treated as too minor to act on.
Deed
A legal document that transfers ownership of property from one person or entity to another. Unlike a regular contract, a deed must be signed, witnessed, and delivered to be effective. Most people encounter deeds when buying or selling real estate.
Default
Failure to fulfill a contractual obligation, whether it's missing a payment, not delivering work on time, or violating a specific term. Default triggers the other party's right to enforce remedies outlined in the contract.
Deficiency
The difference between what you owe and what the creditor recovered after seizing and selling your collateral. If you defaulted on a $100,000 loan and the collateral sold for $70,000, the $30,000 gap is the deficiency, and you still owe it.
Deliverables
Deliverables are the specific things you're supposed to produce or hand over under a contract. Not 'help with the website', more like '10-page responsive website with contact form, blog section, and admin dashboard, delivered as production-ready code by April 15.'
Demand Letter
A formal written notice sent to someone who owes you money or has breached a contract, demanding they fix the problem within a specific timeframe. It's the 'pay up or I'm taking legal action' letter, usually the last step before a lawsuit.
Derivative Work
A new work based on or adapted from an existing copyrighted work. Translations, movie adaptations, remixes, and sequel novels are all derivative works. Creating one without the copyright holder's permission is infringement.
Disclaimer
A statement that limits or denies responsibility for something. In contracts, disclaimers typically exclude warranties, limit what you can sue for, or clarify that information isn't professional advice. They're the 'don't blame us if...' language.
Disclosure
The act of sharing information that the other party has a right to know, whether it's a conflict of interest, a known defect, or financial details. Some disclosures are legally required; others are contractually required. Hiding material information can be fraud.
Dispute Resolution
Dispute resolution is how you settle disagreements when the contract goes sideways. Most contracts spell out a process: negotiate first, then mediate, then arbitrate or go to court. The clause you agree to now determines your options later.
Due Diligence
Due diligence is doing your homework before signing. It's the investigation you conduct, reviewing financials, checking legal history, verifying claims, to make sure the deal is what it claims to be.
Duress
When someone is forced or threatened into signing a contract against their will. A contract signed under duress isn't valid because genuine consent doesn't exist. Duress can be physical threats, economic pressure, or even blackmail.
Duty of Care
A legal obligation to act with reasonable care to avoid causing harm to others. In contracts, a duty of care clause defines the standard of care one party must exercise when performing their obligations. Fall below that standard, and you're liable.
Earnest Money
A deposit made by a buyer to show they're serious about a purchase, most often in real estate. If the deal goes through, the earnest money gets applied to the purchase price. If the buyer backs out without a valid reason, the seller usually keeps it.
Effective Date
The effective date is when a contract's terms actually kick in. It's not always the same day you sign. You might sign on March 15, but the contract could take effect on April 1, or even retroactively on January 1.
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