What is it?
A contractual clause type that governs the allocation of risk based on uncertain future events.
likely
Contract LawLegal glossary term
Quick answer
LIKELY usually means performance depends on an uncertain future event. In contracts, it matters because the party tied to that event may lose the right to enforce obligations. Before signing, verify the event’s likelihood and the fallback provisions.
Definitions
What is likely?
Legal Definition
A clause that something will happen unless a specified condition occurs creates a likely outcome in a contract. It shifts risk to the party whose performance is contingent, making that party liable if the condition fails to materialize. Courts focus on whether the condition was truly uncertain at signing.
Plain-English Translation
Imagine a hall pass that works only if the bell rings; if the bell never sounds, you’re stuck in class.
Contract relevance
Why likely matters in contracts
Misapplying a likely clause can leave the obligated party footing the bill for a failed condition, exposing them to breach liability.
Document context
Where likely appears in documents
| Document type | Section | Why it matters |
|---|---|---|
| Loan agreement | Section 4.2 | Defines financing condition as likely |
| Construction contract | Clause 12.1 | Ties payment to permit approval |
| Merger agreement | Article III | Makes closing likely upon regulatory consent |
Contract language
Common contract wording
| Contract wording | Plain-English meaning | What to check |
|---|---|---|
| "This obligation is likely to occur only if..." | Obligation hinges on a future event | Confirm the event’s certainty |
| "Payments shall be made unless the condition is unlikely to happen" | Payments depend on condition | Check definition of "unlikely" |
| "The parties agree that the sale is likely contingent upon financing" | Sale depends on financing approval | Verify financing source |
Red flags
Red flags to watch for
Wording examples
Clearer wording examples
Vague wording
"Likely"
Clearer wording
"Only if the borrower obtains written loan approval by June 30"
Vague wording
"Likely"
Clearer wording
"Provided the regulator issues a permit within 45 days"
Note: “clearer” means easier to read — not legally reviewed or guaranteed safe.
Pre-signature checklist
What to check before signing
1
Identify the exact event that triggers the clause
2
Determine who bears the burden of proof for occurrence
3
Confirm the deadline for the event to happen
4
Ensure a clear remedy if the event does not occur
5
Assess the probability of the event with expert input
6
Check for any statutory or regulatory constraints
Party impact
How likely affects each party
| Party | What this party should check |
|---|---|
| Lender | Verify that the condition is within the borrower's control |
| Borrower | Evaluate the realistic chance of obtaining the permit |
| Seller | Ensure fallback price is acceptable if condition fails |
Comparison
likely vs similar terms
| Related term | Plain meaning | Main difference from likely |
|---|---|---|
| Condition precedent | Must occur before duty arises | Likely is uncertain, not required for duty to exist |
| Condition subsequent | Ends duty after occurrence | Likely creates duty only while condition exists |
| Force majeure | Excuses performance due to unforeseeable events | Likely allocates risk rather than excuses |
Missing or vague
If likely is missing or vague
Without a clear definition, parties may argue over whether the event actually happened. The dispute often forces litigation to interpret "likely" versus "unlikely," draining resources. Ambiguity can also trigger unintended terminations, leaving one side without expected performance.
If the fallback remedy is absent, the non‑performing party may still be forced to pay, creating unexpected liability.
Document map
Document section map
| Contract section | What to inspect |
|---|---|
| Definitions | Look for the definition of the uncertain event |
| Conditions | Verify how the likely clause is drafted |
| Termination | Ensure termination rights are tied to the condition |
| Remedies | Check for price adjustment or damages provisions |
Visual model
Understand likely fast
An explainer image has not been generated for this term yet.
01
Landlord requires tenant to obtain city occupancy permit before paying rent, and if the permit is denied, rent is reduced to zero.
02
Borrower agrees to repay a loan only if a government grant is awarded; when the grant is not awarded, the loan is voided.
Document context
How likely shows up in legal documents
Why does it matter?
Misapplying a likely clause can leave the obligated party footing the bill for a failed condition, exposing them to breach liability.
When does it matter?
When a contract includes a condition that may or may not occur, such as obtaining financing or regulatory approval, the likely clause activates.
Where is it usually seen?
Standard in UCC § 2-207 amendment clauses, commercial loan agreements, and construction contracts under the AIA form.
Who is affected?
Lender gains protection that the loan proceeds only if the borrower secures a permit; borrower risks loss of funding if the permit is denied.
How does it work?
First, the parties identify the uncertain event and label it as a likely condition. Then they tie performance obligations to the occurrence of that event. Finally, they specify the remedy if the event does not happen, often a right to terminate or adjust price.
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Wikipedia
External reference for likely
Open Wikipedia for broader background on likely.
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Where likely connects to real contract work
This layer links the term to nearby glossary entries, document use cases, and contract-risk guides so readers can move from definition to context without dead ends.
Glossary
Use Cases
Bill of Lading (BoL)
Finance & Sales: Your cargo, your risk — unless the BoL says otherwise.
Project Roadmap
Project Management: A roadmap without accountability is just a wish list.
Termination Notice
HR & Recruitment: When you receive a termination notice, every word matters — especially what isn’t in it.
Contract Risks
Financial liability in contracts
Plain-English risk guide for financial liability in contracts.
Financial obligations clause risk
Plain-English risk guide for financial obligations clause risk.
Late payment clause in freelance contracts
Plain-English risk guide for late payment clause in freelance contracts.
Source & disclosure
This page is an AI-assisted plain-English explanation based on LexPredict Legal Dictionary context and contract-review patterns. It is not legal advice. Meaning may vary by jurisdiction, industry, and exact clause wording.
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