Oregon Construction Contractors (CCB) Practice Test

What is a term in a contract that can be expressly stated or implied by law?

1. Clause

2. Covenant

3. Condition

4. Term

The correct answer is: Covenant

In the context of contracts, a term refers to any provision or stipulation that details the agreement between parties. It can be explicitly stated in the documents (express terms) or inferred through law or conduct (implied terms). The term "covenant" specifically refers to a formal agreement within the contract, often promising that a party will do or refrain from doing something. While a covenant is indeed a component of a contract, it does not encompass the broader definition of what can be included as a term. Conditions, which are specific provisions in a contract that dictate the performance obligations, also do not capture the overall scope of the various types of terms that can exist. Similarly, although the word "clause" is often used to describe individual sections of a contract document, it does not apply universally to all terms, especially those that may be inherently understood or implied. Thus, while "covenant" is an accepted term within legal contexts, it is too narrow to fully encompass the concept of a term in a contract that can be either expressly stated or implied by law. Understanding the wide-ranging application of the term "term" allows for a clearer comprehension of contractual obligations and the flexibility inherent in contract law.