Glossary of Common Contract Terms

Every contract contains an offer, acceptance, and consideration. Find out what these and other contractual terms mean by browsing through this list of key contract definitions:

Acceptance: When you accept an offer, it must be an unconditional and unequivocal acceptance to the exact terms of the offer. If not, it becomes a counteroffer.

Arbitration: Arbitration clauses set up provisions whereby independent and binding arbitrators settle contractual disputes.

Boilerplate: Standard contract clauses use universal language as a type of template. Usually found at the end of a contract, boilerplate clauses include arbitration clauses, entire agreement clauses, and force majeure clauses.

Breach: When one party of the contract accuses the other party of not following the terms of the contract. The statute of limitations for breach of contract is four years if written, but only two years if oral.

Conditions: Provisions of a contract that specify a particular occurrence. In the event these conditions happen, this is what the contract does in response.

Consideration: Something of value that is bargained for and given in exchange for the promise contained in the offer.

Damages: Something, such as monetary compensation, that is awarded for a breach of contract.

Entire Agreement: A clause that protects the contracting parties by declaring that the contract represents the complete and final agreement between the parties.

Force Majeure: A clause in contracts that excuses a party from not performing their contractual obligations due to unforeseen events beyond their control.

Guaranty: Guaranty of loan is an agreement where one party guarantees a second party’s loan obligation to a third party.

Offer: The offer is a promise to carry out the terms of the proposed transaction, in exchange for the consideration.

Recitals: Introductory paragraphs of a contract that describe the nature of the contract and why each party has elected to enter into the agreement.