Legal Definitions - subscription

The term "subscription" in a legal context refers to a formal commitment or agreement, often in writing, to undertake a specific action, contribute funds, or purchase something. It can also refer to the act of signing a document itself.

• The Act of Signing a Document:

  In its most straightforward sense, a subscription is the act of signing one's name to a document, thereby formally agreeing to its contents or terms. The signature itself is also sometimes referred to as the subscription, signifying acceptance and commitment.

  Example 1: When an individual applies for a mortgage, they must sign numerous legal documents, including the loan agreement and promissory note. The act of placing their signature on these papers constitutes their subscription, formally binding them to the terms and conditions of the mortgage.

  Explanation: This example illustrates "subscription" as the physical act of signing a document to show agreement and commitment to its legal obligations.

• Agreement to Purchase Securities:

  In the financial world, "subscription" specifically refers to a written contract where an investor formally commits to purchasing newly issued shares of stock or bonds from a company. This is a common practice when companies are raising capital by offering new securities to the public or to specific investors.

  Example 2: A rapidly growing tech startup announces an initial public offering (IPO) to raise capital. Institutional investors interested in buying shares submit a subscription agreement, outlining their commitment to purchase a specific number of shares at the offering price. This agreement legally obligates them to complete the purchase once the shares are officially issued.

  Explanation: Here, "subscription" denotes a formal, legally binding contract to buy newly issued financial instruments, demonstrating a commitment to invest.

• Pledge or Agreement to Contribute:

  A subscription can also be an oral or written promise or agreement to contribute money or property for a specific purpose, often to a charity, organization, or project. This commitment can be made with or without an expectation of something in return.

  Example 3: A university launches a fundraising campaign to build a new research facility. An alumnus signs a subscription pledge, promising to donate $1 million over the next five years to support the project. This written pledge serves as a formal agreement to contribute the specified sum for the university's specific purpose.

  Explanation: In this context, "subscription" represents a formal commitment or pledge to provide financial or other resources for a particular cause or project.