HopefullyInLawSchool
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LSDefine
Simple English definitions for legal terms
contingent debt
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A quick definition of contingent debt:
Contingent debt is a type of debt that is not fixed yet, but it may become fixed in the future if a certain event happens. For example, if a company promises to pay a bonus to its employees if it reaches a certain profit level, that bonus is a contingent debt until the company actually achieves that profit level. It's like a "maybe debt" that depends on something happening first.A more thorough explanation:
Contingent debt is a type of debt that is not currently fixed, but may become fixed in the future if a certain event occurs. For example, if a company agrees to pay a bonus to an employee if they meet certain performance goals, that bonus would be considered a contingent debt until the goals are met.
Another example of contingent debt is a loan that is only repayable if a certain event occurs, such as the sale of a property. Until the property is sold, the loan is considered a contingent debt.
Contingent debt is different from other types of debt, such as fixed debt, which has a set repayment schedule and interest rate. With contingent debt, the terms of the debt are not yet determined, and may depend on future events.