What Does “Term” Mean in a Contract?
The duration or period during which a contract is in effect.
Detailed Explanation
The "term" is the contract's lifespan - from effective date to expiration or termination. It defines when obligations begin and end, though some provisions (like confidentiality or indemnification) often survive beyond the term.
Terms can be fixed ("one year from the Effective Date"), renewable ("automatically renews for successive one-year periods"), or indefinite ("continues until terminated by either party").
Example in a Contract
“The initial term of this Agreement shall be one (1) year commencing on the Effective Date. This Agreement shall automatically renew for successive one-year terms unless either party provides written notice of non-renewal at least thirty (30) days prior to the end of the then-current term.”
Why It Matters
Understanding the term affects your commitment length and exit options. Auto-renewal terms can trap you if you miss cancellation windows. Know when the term ends and what happens then.
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