I'm new to legal terminology used in contracts. I'm trying to understand the difference between terms of a contract and clauses of a contract. All the sites have referred so far provide no clear distinction between the two and sometimes use terms and clauses interchangeably. I'm wondering if there is any difference between the two or not.

I found a similar question asked before: What's the difference between a clause, provision, condition and term? but it doesn't answers the question in the context of purchase or legal contracts.

Also, from a conceptual point of view, does a contract contain anything other than terms, name of the signing parties and clauses?

Thanks in advance.

1 Answer 1


Terms and clauses are the apples and oranges of a contract.

First of all —

from a conceptual point of view, does a contract contain anything other than terms, name of the signing parties and clauses?

— most contracts do not even need to be in writing (and thus do not need to contain any "signing parties" or "clauses"). What makes up a contract is a separate question but, again, a writing is only necessary for certain types of contracts (e.g. real estate contracts).

Terms of a contract exist regardless of whether it is in writing or not: they are plainly specific information (or knowledge) about the contract that the parties have agreed on: who the parties are, what they do for each other and what they get in return, times, places, numbers and whatever the parties consider essential to the contract. This information/knowledge may just stay in the minds of the parties and never be rendered in a readable form. The contract will be perfectly valid and enforceable.

Clauses are what written contracts composed of. They are just blocks of text each addressing specific aspect or concern of the contract e.g. Parties, Payment, Delivery, Force majeure, Termination, Jurisdiction etc.

  • 2
    @user401445 Payment clause refers to a certain chunk of the contract text (e.g. a paragraph). This chunk will detail payment terms i.e. information on how/when/how much one party pays to the other. Written contracts will often contain all payment terms within the payment clause, but terms may also be spread across several clauses (not necessarily payment-focused) or further detailed in schedules. Payment terms can also be paraphrased and communicated using different words than written in the payment clause — they will remain the same terms. Clauses can only be communicated literally.
    – Greendrake
    Commented Feb 7, 2020 at 5:58
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    @user401445 Clauses are meant to contain/express terms at all times. Clauses without terms would make no sense but this doesn't mean they can't exist.
    – Greendrake
    Commented Feb 9, 2020 at 3:35
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    @user401445 An example of clause without a term would typically be a bunch of archaic preamble language at the beginning of a contract, and more pertinently, causes which contain various statements regarding the status quo situation or representations of the parties. A clause of the contract might say, for example, "The subject property is located in the County of Arapahoe, in the State of Colorado.", which is a statement of fact, rather than a "term" of the contract, i.e. part of the promise created by the contract.
    – ohwilleke
    Commented Feb 10, 2020 at 23:02
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    @user401445 A clause could also contain a required legal notice that is not a term. For example, real estate contracts in Colorado drafted by realtors without lawyers are required to contain text stating something along the lines of: "This property may be located in a special taxing district and if it does you are obligated to pay taxes to it." or "WARNING: It is possible for oil and gas rights and water rights to be severed from surface property ownership rights in Colorado." or "This is an important legal document and you should consider consulting legal and/or tax counsel before signing."
    – ohwilleke
    Commented Feb 10, 2020 at 23:05
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    @user401445 "terms always exist within a clause" No. Important terms of a contract are implied in law whether or not expressly stated in a contract. For example, in a contract for the sale of goods from a merchant, there is an implied warranty of merchantability (i.e. non-defectiveness) and a warranty of title (i.e. authority to sell the good since you own it or can deliver title to it without owing it) unless it is expressly disclaimed (e.g. in an "as is" sale of used goods, or a "quitclaim deed" type transfer of goods in litigation).
    – ohwilleke
    Commented Feb 10, 2020 at 23:12

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