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| What is a Term?
Term has two different usage in finance world. First it can mean the lifetime of a loan or contract, in other words how many days or years does the term have until it reaches maturity age. Second meaning is a condition written in a contract which could mean a breach and the party who breaks it then the other party can take legal action against it.
Whenever you take out a loan or make a contract there’s an expiration date and this date is called a term. Now this term can be very short like a broker trades his stocks in matter of minutes or a long one which can take many generations and it can change hands from investor to investor. When we’re talking about the other meaning then in the contract you can set the terms for example: you sign a contract with a lumber company and in it you specify that they have to deliver 50t of wood by the end of the week and if they miss out on it then they will have to pay a penalty. And there you have that’s a term. Also terms can be express terms like in the example above that is clearly stated or implied terms which are forced by courts. | | | | |
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