What's the difference between a clause, provision, condition and term?

In a contract, what's the difference between a clause, provision, condition and term? They seem to all refer to the same thing to me - which is basically any self contained point or requirement.

3 Answers 3

They have subtle differences. Starting with the Oxford Dictionary definitions (using the one most appropriate for a legal context):

clause.

2.a particular and separate article, stipulation, or proviso in a treaty, bill, or contract.

A clause is a self-contained concept within the written contract; it may have a number of subclauses. It may reference other clauses but ideally it can be read and acted on on its own. Typical contracts will contain clauses on payment, time, termination, scope etc. It is a feature of the drafting of the contract document.

provision

3.a condition or requirement in a legal document: "the first private prosecution under the provisions of the 1989 Water Act"

A provision is any condition (q.v.) or stipulation of things to be done or not be done within the contract. A provision may correspond with a clause, may span several clauses or be contained wholly within a subclause. It is a feature of the contract itself: verbal contracts will have provisions but they will not have clauses.

condition

3.a state of affairs that must exist or be brought about before something else is possible or permitted: "for a member to borrow money, three conditions have to be met"

A condition is a set of circumstances that must arise before another action can occur. There can be a "condition precedent" which means the condition must be satisfied before there is a contract. There can (will) also be conditions within the contract, for example, there will be conditions that must be satisfied before payment is made (like issuing an invoice). Conditions are a creature of the contract not the drafting.

term

4.(terms) conditions under which an action may be undertaken or agreement reached; stipulated or agreed requirements: "their solicitors had agreed terms"

(I don't like this definition much but it is the best they had.)

A term is a provision (q.v.) in the contract for which one of the possible remedies for breach is termination of the contract by the innocent party . A provision where termination is not an available remedy is a warranty.

@Pacerier "proviso" is not an abbreviation of "provision." It is a shortened form of the Latin phrase "proviso quod," meaning "provided that." So it does mean the same thing as "provision," but the word itself is not derived from the word "provision."

The terminology regrettably suffers from some equivocation, in large part due to relaxed, lay usage. The words "provision" and "clause" are often used interchangeably even by legal professionals when referring to a particular item or matter expressly and directly stipulated in a written law or legal instrument and intended to have legal effect. "Term" and "condition" are utilized in this broader sense as well but generally when pertaining to contracts. There are, nevertheless, distinct nuances in the terminology worth highlighting.

"Provision" is the proper "umbrella" word that denotes the broader meaning described above (i.e. a particular item or matter expressly and directly stipulated in a written law or legal instrument and intended to have legal effect). A provision can be a clause, term, condition, article, section, sub-section, and so forth. It can be a short sentence or in theory consist of volumes of pages filling an entire room. Note, however, that this definition excludes expressed statements that do not directly stipulate a matter intended to have legal effect (e.g. some sort of an aside not intended to have legal effect or other items in a document that indirectly have legal significance perhaps by reference, incorporation, or other law such as a list of named parties, an address, a signature, exhibits, etc.). A document, of course, may specifically label items as provisions, in which case that designation will control.

A clause is a provision or set of provisions that stipulate specific rights or duties. They are also oftentimes labeled so in legal documents or through conventional usage (for example the "Commerce Clause" and "Supremacy Clause" of the U.S. Constitution).

A term meanwhile is a provision or set of provisions that stipulate a meaning, generally with the intent to avoid ambiguities. The prototypical example is the definitions section (provision) in a legal document, but they can appear within any other type of provision (which adds to the overall confusion). Alternatively, "term" can refer to a specific period of time designated in a provision.

A condition (which is of primary concern in contracts law and is thus defined accordingly) is an event the occurrence of which suspends or excuses a party's contractual duty to perform. Conditions are usually expressed in a provision/clause (aka "expressed condition") but may also be implied in law (aka "construction condition"; see for example the ever-important "constructive condition of exchange"). They are also categorized in temporal terms as a condition precedent (one that, if not satisfied, discharges a contractual obligation), condition subsequent (one that, once satisfied, discharges a contractual obligation), or concurrent condition (one that, if not satisfied simultaneously with the other, discharges a contractual obligation). Conditions have legal effect only once a contract is formed, including the condition precedent. The main issue here is performance of the contract. The condition is the real meat of what one negotiates in a contract, viz. the tradeoff of obligations/duties for their respective benefits/rights. Terms simply add clarity to those conditions. Nevertheless, this distinction is lost on many to the point that the phrase "terms & conditions" is likely to appear redundant. Consider also the case when one is asked to state their terms. What they are really asking for is one's conditions. so correct them ;)