Sum Certain

Categories: Accounting

A sum certain is a sum of money that you’re really, really certain about. Because it was definitely in the contract that both parties signed. No ambiguity about it.

For a mortgage, the sum certain is the principal loan amount in the contract. For a call option, it’s the specific price and quantity that the buyer has the right to buy the underlying security for, within the specified timeframe. It’s alllll in the contract.

If you hear “sum certain,” it implies that there’s no room for ambiguity, and everyone who signed the contract with the sum certain should know this. Judge Judy won’t be having your “But he said he would forgive some of it…” Nope.

What’s not a sum certain? Hourly wages when you’re not sure how many hours a project will take.



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