Free Tool
Contract glossary
Plain-language definitions of the legal terms you'll find in contracts. Search by keyword or browse A-Z.
Showing 97-120 of 263 terms
Illusory Promise
A promise that sounds like a commitment but actually doesn't bind the promisor to anything. If one party can perform or not perform entirely at their own discretion, there's no real promise, and no enforceable contract.
Implied Contract
A contract created by the behavior of the parties rather than explicit words. Nobody signed anything, but the actions of both sides show they had an agreement. Courts recognize these when the circumstances make it obvious a deal existed.
Implied Warranty
A legally imposed guarantee that goods or services meet basic quality standards, even if the contract doesn't explicitly say so. The two most common types: implied warranty of merchantability (the product works for its intended purpose) and implied warranty of fitness for a particular purpose.
Indemnification
Indemnification is one party's promise to cover the other's losses if something specific goes wrong. It's the 'I'll pay for it if this blows up' clause.
Independent Contractor
An independent contractor does work for you but isn't your employee. They control how, when, and where they work. The distinction matters for taxes, benefits, IP ownership, and liability, and getting it wrong is expensive.
Independent Contractor vs Employee
The legal distinction between someone who works independently (sets their own hours, uses their own tools, serves multiple clients) and someone who works under your direction and control. Misclassifying an employee as a contractor can trigger back taxes, penalties, and lawsuits. The IRS, Department of Labor, and state agencies each have their own tests.
Injunctive Relief
A court order that requires someone to do something (mandatory injunction) or stop doing something (prohibitory injunction). Unlike damages, which compensate after the fact, an injunction prevents harm from happening, or continuing, in real time.
Intellectual Property (IP)
Intellectual property is the stuff you create with your brain that the law protects, inventions (patents), brand names (trademarks), creative works (copyright), and business secrets (trade secrets). In contracts, IP clauses determine who owns the work product.
Intellectual Property Assignment
A clause that permanently transfers ownership of intellectual property, copyrights, patents, trademarks, or trade secrets, from the creator to another party. Unlike a license (which grants permission to use), an assignment transfers the actual ownership rights. Once assigned, the original creator no longer owns or controls the IP.
Joint and Several Liability
When two or more parties are each individually responsible for the full amount of a debt or obligation, not just their share. A creditor can collect the entire amount from any one party, regardless of that party's actual share of fault.
Jurisdiction
Jurisdiction determines which court system gets to hear your case. It's where you'd have to show up if things go to trial. Different from governing law (which rules apply) and venue (which specific courthouse).
Laches
An equitable defense that bars a claim because the plaintiff waited too long to assert their rights, and the delay unfairly prejudiced the other party. Unlike a statute of limitations (which is a fixed deadline), laches is about fairness, did your delay cause harm?
Late Payment Clause
A contract provision that defines the consequences of not paying on time. It typically specifies a grace period, a late fee (flat or percentage-based), and interest that accrues on overdue amounts. The clause creates a financial incentive to pay on schedule and gives the payee clear remedies without needing to go to court.
Lease Assignment
The transfer of a tenant's entire remaining lease to a new tenant. Unlike subletting, an assignment transfers all rights and obligations, the original tenant typically drops out entirely. The new tenant (assignee) takes over the lease directly with the landlord, though the original tenant may remain liable as a guarantor.
Legal Capacity
The legal ability of a person or entity to enter into a binding contract. Minors (under 18 in most states), people who are mentally incapacitated, and intoxicated individuals generally lack capacity. A contract signed without capacity can be voided.
Letter of Intent
A document outlining the preliminary terms of a deal before a formal contract is drafted. Letters of intent (LOIs) are mostly non-binding, they signal serious interest and set the framework for negotiations. Some provisions, like confidentiality and exclusivity, are often made binding.
Liability
Liability is your legal responsibility when something goes wrong. In contracts, liability clauses determine who pays, how much, and for what. Limitation of liability clauses cap your exposure so a small project fee doesn't turn into a catastrophic payout.
License
A license is permission to use someone else's stuff, software, brand, patent, design, content, under specific rules. You don't own it. You're borrowing it, and the license terms define exactly how.
Lien
A legal claim on someone's property as security for a debt. If the debt isn't paid, the lienholder can force a sale of the property to recover what's owed. Common types include mortgage liens, mechanic's liens, and tax liens.
Limitation of Liability
A limitation of liability clause caps the most you can owe if something goes wrong. It's a ceiling on damages, protecting you from a $5,000 project turning into a $500,000 lawsuit.
Liquidated Damages
Liquidated damages are a pre-agreed penalty written into the contract, 'If you're late, you owe $500 per day.' Both parties agree to the amount upfront, so there's no argument about damages later. But the amount has to be reasonable, or courts will throw it out.
Material Breach
A failure to perform a contractual obligation so significant that it defeats the purpose of the contract. Unlike a minor breach (where the core deal still stands), a material breach gives the non-breaching party the right to terminate the contract and sue for damages.
Master Service Agreement (MSA)
A master service agreement is a contract that sets the overarching terms between two parties for all future work together. Instead of renegotiating payment terms, liability, IP ownership, and dispute resolution every time you start a new project, the MSA locks those in once. Individual projects are then governed by shorter statements of work (SOWs) that reference the MSA.
Mediation
Mediation is a structured negotiation with a referee. A neutral mediator helps both sides find a compromise, but unlike an arbitrator, they can't force a decision. You walk away if you don't like the outcome.
Need a contract with these terms?
Create a professional contract in minutes with all the essential clauses - no legal expertise needed.
Create your contract freeNo credit card required