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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 73-96 of 263 terms
Electronic Signature
Any electronic sound, symbol, or process attached to a contract that a person uses with the intent to sign. In the U.S., the ESIGN Act (2000) and UETA make e-signatures just as legally binding as ink-on-paper signatures for most contracts.
Encumbrance
A claim, lien, or restriction on property that limits the owner's ability to transfer it or use it freely. In plain English: it's baggage attached to an asset that a new buyer would inherit.
Entire Agreement
An entire agreement clause (also called a merger or integration clause) says: this document is the whole deal. Any promises, emails, or verbal agreements made before signing? They don't count. If it's not in the written contract, it doesn't exist.
Equitable Relief
A court-ordered remedy that isn't about money, it's about making someone do something (or stop doing something). Common forms include injunctions, specific performance orders, and rescission of a contract.
Escrow
Escrow is when a neutral third party holds your money, documents, or assets until everyone does what they promised. Nobody gets the goods until the conditions are met. It's the trust layer between two parties who don't fully trust each other.
Estoppel
A legal principle that prevents someone from going back on their word when another person reasonably relied on that word and would be harmed by the reversal. In plain English: if you said it, acted on it, and someone trusted you, you can't take it back.
Exclusive Dealing
A contract provision where one party agrees to buy from, sell to, or work with only the other party, excluding competitors. These arrangements can be mutual or one-sided.
Exclusivity Clause
A contract provision that restricts one or both parties from entering similar agreements with competitors. It guarantees that you're the only game in town, at least for the scope and duration the clause covers.
Exculpatory Clause
A contract provision that releases one party from liability for harm or damages, even if that party was at fault. You've signed these at gyms, ski resorts, and adventure parks, the 'we're not responsible if you get hurt' language.
Execution
Execution is the act of signing a contract. Once all parties have signed, or 'executed', the document, it's a binding agreement. The execution date is when the last required party signs.
Express Contract
A contract where the terms are explicitly stated, either in writing or verbally. Unlike an implied contract (where obligations arise from behavior), an express contract spells out exactly what each party agreed to.
Fair Market Value
The price an asset would sell for in an open market where both buyer and seller are informed, willing, and under no pressure. It's the 'what would a reasonable person pay?' benchmark that contracts, tax authorities, and courts use.
Fiduciary Duty
The highest standard of care in law. A fiduciary must act in the best interest of another party, putting that party's interests above their own. Applies to relationships like attorney-client, trustee-beneficiary, and certain business partnerships.
Fixed-Price Contract
A contract where the total price is set upfront and doesn't change regardless of actual costs incurred. The contractor takes on the risk of cost overruns; the client gets price certainty.
Forbearance
An agreement where a creditor temporarily holds off on enforcing a right, typically the right to demand payment or take legal action. It's a pause button, not a forgiveness button. The underlying obligation usually remains.
Force Majeure
Force majeure, French for 'superior force', is a clause that lets you off the hook when something extraordinary and unforeseeable prevents you from performing. Think hurricanes, pandemics, wars, government shutdowns. It's the 'stuff happens' clause.
Franchise Agreement
A contract granting someone (the franchisee) the right to operate a business using another company's (the franchisor's) brand, systems, and intellectual property. In exchange, the franchisee pays fees and follows the franchisor's rules.
Fraudulent Misrepresentation
A false statement of fact made knowingly (or recklessly) to trick someone into entering a contract. If you relied on the lie and suffered harm because of it, you can void the contract and sue for damages.
Good Faith
An implied obligation to deal honestly and fairly with the other party. Most contracts include a duty of good faith whether it's written in or not, meaning you can't use the contract's terms to cheat the other side out of the deal's benefit.
Governing Law
The governing law clause tells you which state or country's laws apply to the contract. This matters more than you think, the same contract can have completely different outcomes depending on whether it's governed by California law or Texas law.
Gross Negligence
A severe level of carelessness that goes beyond ordinary negligence, it's a conscious, reckless disregard for the safety or rights of others. Think of it as the gap between 'oops' and 'what were you thinking.'
Guarantor
A guarantor is someone who promises to pay if the other person doesn't. You're the backup plan. If your friend defaults on their lease, the landlord comes to you for the money.
Hold Harmless
A contractual promise where one party agrees not to hold the other responsible for certain losses, damages, or legal claims. It's closely related to indemnification, many contracts use both terms together in the same clause.
Holdover Tenant
A tenant who stays in a rental property after their lease expires without signing a new agreement. The landlord can either accept rent and create a month-to-month tenancy, or begin eviction proceedings. The tenant's legal status depends on whether the landlord consents to their continued occupancy.
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