What is it?
This term functions primarily as a contractual clause type that governs the transfer and acceptance of monetary obligations between involved entities.
remittance
UCC / CommercialLegal glossary term
Quick answer
Remittance usually means sending payment or funds from one party to another. In contracts, it matters because its nature—full, partial, or advance—determines if an obligation is met. Before signing, check for clear specifications regarding acceptable remittance methods.
Definitions
What is remittance?
Legal Definition
Remittance describes the act of sending money, payment, or funds from one party to another. It establishes a clear obligation fulfillment, often satisfying a contractual duty to pay for goods or services rendered. The legal significance hinges on whether the remittance constitutes full performance, partial payment, or merely an advance.
Plain-English Translation
Remittance is like handing in your allowance money when you borrow a toy from your friend. It proves you kept your promise to give them back what they let you use.
Contract relevance
Why remittance matters in contracts
Failing to provide timely remittance can trigger an immediate breach, exposing the debtor party to claims for damages or accelerating repayment terms under UCC § 2-701.
Document context
Where remittance appears in documents
| Document type | Section | Why it matters |
|---|---|---|
| Sales Agreement | Payment Schedule Section | Confirms when and how money moves from buyer to seller. |
| Lease Contract | Rent Commencement Clause | Establishes the initial payment transfer required to start tenancy. |
| Promissory Note | Disbursement Terms | Defines the scheduled outflow of funds owed by the maker. |
| Government Grant Application | Funding Transfer Details | Specifies the exact mechanism and timing of receiving allocated monies. |
Contract language
Common contract wording
| Contract wording | Plain-English meaning | What to check |
|---|---|---|
| Payment shall be made via wire remittance within 30 days. | Sending money electronically within thirty days. | Ensure 'wire' is defined, or specify ACH/check. |
| The final remittance constitutes full performance hereunder. | This payment settles all outstanding debts under this agreement. | Verify if it covers *everything* owed or just a portion. |
| Remittance upon receipt of goods delivered. | Payment happens as soon as the items arrive at your dock. | Check if 'receipt' means inspection acceptance or simple delivery confirmation. |
Red flags
Red flags to watch for
Wording examples
Clearer wording examples
Vague wording
Remittance as per our agreement
Clearer wording
Remittance via method specified in Section 3.2
Vague wording
Remittance in full satisfaction
Clearer wording
Remittance as payment in full with no reservations
Note: “clearer” means easier to read — not legally reviewed or guaranteed safe.
Pre-signature checklist
What to check before signing
1
Is the amount clearly specified?
2
What payment method is required (wire, check, ACH)?
3
Is there a specific deadline for the remittance?
4
Does the contract specify *what* the remittance covers (full/partial)?
5
Are there penalties for late remittance?
6
Who bears the cost of the transfer (sender or receiver)?
7
If partial, what triggers acceptance?
Party impact
How remittance affects each party
| Party | What this party should check |
|---|---|
| Buyer | Must ensure they have a clear obligation to send funds and that their payment method is acceptable. |
| Seller/Service Provider | Must confirm when they are entitled to receive payment and whether the remittance satisfies all contractual requirements. |
| Landlord | Should verify the tenant's timely remittance aligns with lease start dates and due dates. |
| Client (Receiving Party) | Needs clarity on the *trigger* event that mandates receiving the funds. |
Comparison
remittance vs similar terms
| Related term | Plain meaning | Main difference from remittance |
|---|---|---|
| Payment | Payment is the general act; remittance is the specific *act of sending* it. | Remittance focuses on the transfer mechanism. |
| Invoice | An invoice is a demand document; remittance is the physical or electronic fulfillment of that demand. | The invoice creates the debt; the remittance pays it down. |
| Advance Payment | This is a payment made before services/goods are delivered; remittance can be the delivery of this advance. | Advance defines *timing*; remittance defines *transfer*. |
Missing or vague
If remittance is missing or vague
If remittance lacks detail, disputes often center on timing—when exactly was it sent? Another common issue involves scope: does a $500 payment count as full performance if the total contract value is $10,000?
Ambiguity regarding method can cause delays; one party might send a check while the other insists only wire transfers are valid.
A vague term forces parties into costly litigation to establish what 'reasonable' or 'timely' actually means in their specific business context.
Document map
Document section map
| Contract section | What to inspect |
|---|---|
| Definitions | Look for precise definitions of "remittance" itself. |
| Payment Terms/Schedule | This section dictates the due dates and required methods for funds transfer. |
| Acceptance/Performance | Check if a remittance is explicitly stated as fulfilling or satisfying obligations under this clause. |
| Remedies/Default | See what happens when remittance fails to occur by the agreed-upon date. |
Visual model
Understand remittance fast
An explainer image has not been generated for this term yet.
01
Landlord sends monthly rent remittance to property management; this satisfies the lease requirement.
02
Borrower submits a lump-sum wire transfer remittance upon loan origination; this triggers disbursement.
03
Franchisor receives a quarterly royalty remittance from franchisee; this confirms revenue sharing.
Document context
How remittance shows up in legal documents
Why does it matter?
Failing to provide timely remittance can trigger an immediate breach, exposing the debtor party to claims for damages or accelerating repayment terms under UCC § 2-701.
When does it matter?
Remittance is required when a specific payment date arrives, such as within thirty days of receiving an invoice, or upon demand by the creditor.
Where is it usually seen?
You find this term frequently in Promissory Notes, purchase orders, and sophisticated financial instruments like ISDA agreements.
Who is affected?
The debtor (payer) fulfills their duty through remittance; the creditor (payee) gains the right to claim performance or avoid default judgment upon receipt of said funds.
How does it work?
First, a payment obligation arises from an agreement. Then, the payer initiates the transfer—the remittance itself. Finally, the recipient accepts and applies those funds toward the outstanding debt balance.
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Wikipedia
Remittance
A remittance is a non-commercial transfer of money by a foreign worker, a member of a diaspora community, or a citizen with familial ties abroad, for household income in their home country or homeland. Money sent home by migrants competes with international...
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Where remittance 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
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BGRisk context hubGlossary meaning, document paths, and adjacent risk pages connected around this clause.
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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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