Legal Definitions - sum certain

A sum certain refers to a specific, fixed, and unambiguous amount of money that is clearly stated or can be precisely determined from a legal document or agreement. It means there is no room for different interpretations or calculations to arrive at the amount; it is definite and known.

This concept is crucial in contracts and negotiable instruments (like checks or promissory notes) because it ensures all parties understand the exact financial obligation or entitlement without needing further negotiation or reference to external, fluctuating factors.

Examples:

• Fixed-Price Renovation Contract: Imagine a homeowner hires a contractor to remodel their kitchen. The contract specifies that the total cost for the entire project, including labor and materials, will be $25,000. This is a sum certain because the exact amount the homeowner must pay is explicitly stated and agreed upon, leaving no doubt about the final price.

• Promissory Note for a Loan: A small business owner borrows money from a bank and signs a promissory note agreeing to repay a principal amount of $50,000, plus a fixed interest rate of 5% per year. The $50,000 principal is a sum certain because it's a definite, unchangeable amount that forms the basis of the loan, clearly stated in the document.

• Settlement Agreement in a Lawsuit: After a car accident, two parties reach a settlement where the at-fault driver agrees to pay the injured party $15,000 for damages. This specific amount, $15,000, is a sum certain because it is the exact, agreed-upon compensation, precisely defined in the settlement document without any conditions that would alter its value.