What is it?
This term functions as a classification within Property Law, specifically governing assets that are not tangible real or personal property.
intangible
UCC / CommercialLegal glossary term
Quick answer
Intangible usually means property without physical substance, like patents or customer lists. In contracts, it matters because its value is harder to quantify than a piece of equipment. Before signing, check if the specific intangible asset is clearly listed and valued.
Definitions
What is intangible?
Legal Definition
Intangible refers to property lacking physical substance, such as intellectual rights or goodwill on a business.
Plain-English Translation
An intangible is like your allowance—it has no physical shape, but you can use it to trade for toys. It represents ownership of something invisible, like the right to read a book.
Contract relevance
Why intangible matters in contracts
Ignoring this designation risks misapplying security interest requirements under Article 9 UCC, potentially leading to a creditor losing priority over collateral.
Document context
Where intangible appears in documents
| Document type | Section | Why it matters |
|---|---|---|
| Asset Purchase Agreement | Schedule A (Assets) | To ensure all non-physical rights are transferred. |
| Licensing Agreement | Recitals/Definitions Section | To define what intellectual property is being granted usage rights over. |
| Promissory Note | Description of Collateral | To specify if the debt is secured by a business's goodwill or brand name. |
| Employment Contract | Compensation Section | When bonuses are tied to non-physical performance metrics, like client acquisition. |
| Statute/Regulation | Property Classification Clause | Dictates how the asset will be taxed or regulated under state law. |
Contract language
Common contract wording
| Contract wording | Plain-English meaning | What to check |
|---|---|---|
| Intellectual Property Rights (IPR) | Ideas, brands, and data that aren't tangible objects | Confirm exactly which IP is being bought or licensed. |
| Goodwill of the Business | The reputation and customer loyalty attached to a company | Verify this value isn't just assumed; it must be quantified. |
| Customer Data Set | Lists, records, and relationships with clients | Ensure ownership transfers *with* the underlying contract rights. |
| Trade Secrets | Confidential processes or formulas (like recipes) | Make sure confidentiality obligations survive the end of the agreement. |
Red flags
Red flags to watch for
Wording examples
Clearer wording examples
Vague wording
All intangible assets
Clearer wording
"All intangible assets listed in Schedule A including, but not limited to: [specific list]"
Vague wording
Related intangible rights
Clearer wording
"All intellectual property rights, including copyrights, trademarks, patents, and trade secrets"
Note: “clearer” means easier to read — not legally reviewed or guaranteed safe.
Pre-signature checklist
What to check before signing
1
Is the specific asset named (e.g., Patent #1234) or generally defined?
2
Does the contract clearly state *who* owns the intangible before the agreement?
3
If licensed, is the scope of use limited (exclusive/non-exclusive)?
4
Are there stipulations about how long the ownership rights last post-termination?
5
Is there a mechanism to value the intangible if it's not explicitly priced in the main body?
6
Does the contract survive termination regarding these assets?
Party impact
How intangible affects each party
| Party | What this party should check |
|---|---|
| Buyer | Must confirm they receive full, unencumbered title to every listed intangible. |
| Seller | Must ensure all necessary documentation proving ownership of intangibles is provided. |
| Licensor | Needs to define precisely what rights are being granted (e.g., 'Right to use' vs. 'Full Ownership'). |
| Employee | Should confirm that any IP created during employment automatically vests in the company. |
Comparison
intangible vs similar terms
| Related term | Plain meaning | Main difference from intangible |
|---|---|---|
| Tangible Asset | Something you can touch, like machinery or real estate | The main difference is physical substance versus non-physical rights. |
| Goodwill | The reputation/brand value of a business | Goodwill is an *intangible* asset; it's the value derived from how people perceive the company. |
| Intellectual Property (IP) | A broad category covering patents, copyrights, etc. | IP is the umbrella term; intangibles are the specific assets under that umbrella. |
Missing or vague
If intangible is missing or vague
If you leave 'intangible' undefined, disputes will flare over what exactly was transferred or licensed. For instance, does 'goodwill' include social media followers? Does it cover future product ideas? Ambiguity forces litigation to interpret intent. You risk losing valuable business value because no one agreed on the scope of that abstract right.
Document map
Document section map
| Contract section | What to inspect |
|---|---|
| Definitions | Look here for a formal definition; if absent, assume common law meaning applies. |
| Assignment/Transfer Section | Check how ownership of intangibles moves from Seller to Buyer (or Licensor to Licensee). |
| Covenants Section | Inspect promises regarding the maintenance or protection of existing intangible assets. |
| Indemnification Clause | See who pays if a third party claims an intangible asset (like a patent) was stolen. |
Visual model
Understand intangible fast
An explainer image has not been generated for this term yet.
01
A software developer secures a loan using source code as collateral; the intangible asset allows the lender to control the programming rights.
02
A restaurant owner sells their established reputation (goodwill); the sale documents must specifically define this non-physical value.
03
A patent holder licenses their invention; the contract confirms the right to use that purely intellectual, intangible creation.
Document context
How intangible shows up in legal documents
Why does it matter?
Ignoring this designation risks misapplying security interest requirements under Article 9 UCC, potentially leading to a creditor losing priority over collateral.
When does it matter?
The classification becomes critical when a lender files a financing statement on behalf of the borrower, establishing their claim against the asset.
Where is it usually seen?
You frequently encounter this concept in commercial loan agreements, equipment leases, and security agreement filings under Article 9 UCC.
Who is affected?
A franchisor holds intangible assets like brand trademarks; they gain rights to enforce them while risking infringement lawsuits from competitors.
How does it work?
First, the asset must be identified (e.g., a patent or customer list). Then, its lack of physical form dictates how it is valued and insured. Finally, this classification governs which legal framework applies when disputes arise over that ownership right.
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Wikipedia
Intangibles
Intangibles or intangible may refer to: Intangible asset, an asset class used in accounting Intellectual capital, the difference in value between tangible assets (physical and financial) and market value Intellectual property, a legal concept Social capital,...
Open on Wikipedia →Knowledge graph
Where intangible 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.
9nodes
Glossaryintellectual propertyintellectual property often shapes similar contract language wording, negotiation leverage, and the plain-English meaning of the cl...Glossarypersonal propertypersonal property often shapes similar contract language wording, negotiation leverage, and the plain-English meaning of the clause...Glossaryfinancing statementfinancing statement often shapes similar contract language wording, negotiation leverage, and the plain-English meaning of the clau...
BGRisk context hubGlossary meaning, document paths, and adjacent risk pages connected around this clause.
Use caseSOW (Statement of Work)Project Management: Vague scope = cost overruns. BrieflyGo finds the gaps before they find you.Use caseReview a Pilot Customer Agreement Before LaunchingBusiness & Commercial Contracts: Upload a Pilot Customer Agreement to spot risky clauses, payment traps, ownership issues, and nego...Use caseAnalyze an Equipment Rental Agreement Before You SignBusiness & Commercial Contracts: Upload a Equipment Rental Agreement to spot risky clauses, payment traps, ownership issues, and ne...RiskGoverning law clausePlain-English risk guide for governing law clause.RiskIntellectual property clausePlain-English risk guide for intellectual property clause.RiskIntellectual property risk contractPlain-English risk guide for intellectual property risk contract.
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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