Sum certain

Sum certain,

Definition of Sum certain:

  1. A sum certain refers to a legal description of the predetermined settlement price for a contract or negotiable instrument. It is a fixed or specific amount of money, without any room for ambiguity. A negotiable instrument cannot be negotiated unless it stipulates a sum certain. For example, if a borrower enters into a mortgage contract with a lender for a loan in the amount of $400,000, and that amount is clearly stated in the mortgage note, then that is the sum certain. Because a sum certain is known in advance, actors can better hedge or insure against the value stated in the contract than if the sum were open to flexibility or one which varies based on some contingency (for example the price of a call option as it varies with the price of the underlying security).

  2. Fixed or settled amount, or that is specified in or can be ascertained from a negotiable instrument as the sum payable.

  3. It may also go by the name sum payable.

Meaning of Sum certain & Sum certain Definition