Legal Definitions - call

In a legal context, the term "call" generally refers to the act of exercising a right, demanding performance or payment, or formally summoning someone or something. It signifies initiating an action based on a pre-existing agreement, obligation, or authority.

• Exercising a Contractual Right: A company might have a specific clause in an agreement that allows them to "call" for a particular action or benefit. This means they are choosing to activate that right.

  Example: A software development company has a licensing agreement with a client that includes a provision allowing the client to call for an upgrade to the premium version of the software at a fixed, pre-negotiated price within the first year of the contract.

  Explanation: Here, "call" means the client is exercising their contractual right to obtain the software upgrade under the terms previously agreed upon, initiating the process to receive that benefit.

• Demanding Payment or Performance: "Call" can also mean to formally demand that a debt be paid or that a specific obligation be fulfilled, often when certain conditions are met or breached.

  Example: A venture capital firm provided a startup with a convertible note, which allows the firm to call for repayment of the loan if the startup fails to meet specific performance milestones by a certain date.

  Explanation: In this scenario, "call" signifies the venture capital firm's right to demand the immediate repayment of the loan, triggered by the startup's failure to achieve the agreed-upon milestones.

• Redeeming a Financial Instrument: Corporations or governments may "call" certain financial instruments, such as bonds, meaning they choose to repurchase them from investors before their scheduled maturity date.

  Example: A large corporation issued bonds with a 10-year maturity, but due to a significant drop in market interest rates, the company decided to call the bonds after five years to refinance its debt at a lower cost.

  Explanation: Here, "call" refers to the corporation's action of exercising its right, as stipulated in the bond agreement, to redeem (buy back) the outstanding bonds from investors before their original maturity date, typically to reduce future interest payments.