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Sum Certain: A Comprehensive Guide to Its Legal Meaning and Application
Definition & Meaning
A sum certain is a specific amount of money that is clearly stated in a legal agreement. This amount is fixed and will not change, regardless of any events that may occur after the agreement is made. The term is commonly used in the context of negotiable instruments, which are financial documents that promise payment of a sum certain. For an instrument to be considered negotiable, it must include an unconditional promise or order to pay a specified amount in money.
Table of content
Legal Use & context
The term "sum certain" is primarily used in contract law and the law of negotiable instruments. It is crucial in various legal practices, including:
Contracts: Ensures clarity in financial obligations.
Negotiable instruments: Essential for checks, promissory notes, and other financial documents.
Debt collection: Helps define the exact amount owed.
Users can manage some of these agreements themselves using legal templates provided by services like US Legal Forms.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A business contract specifies that Company A will pay Company B $10,000 for services rendered. This amount is a sum certain.
Example 2: A promissory note states that a borrower will repay $5,000 to a lender by a specific date. This is also a sum certain. (hypothetical example)
Comparison with related terms
Term
Definition
Difference
Sum Certain
A specific, unchanging amount of money in a contract.
Fixed amount; does not change.
Liquidated Damages
A predetermined amount of money to be paid in case of a breach of contract.
May change based on the contract terms; not always a fixed sum.
Unliquidated Damages
Compensation that is not predetermined and must be assessed based on the circumstances.
Not a fixed amount; varies based on the situation.
Common misunderstandings
What to do if this term applies to you
If you are entering into an agreement that involves a sum certain, ensure that the amount is clearly stated in the contract. If you need assistance, consider using legal templates from US Legal Forms to create or review your agreement. For complex situations, it may be beneficial to consult a legal professional.
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