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Binding: Definition, Example and Related Terms

What is Binding ?

Binding is a term that you often hear when talking about contracts. It means something that is legally or contractually required. This might sound complex, but let's think of it like this: Imagine you're playing a game where the rule is 'You must not step on the lines of the paint on the floor'. Once you agree to play the game, that rule becomes 'binding' to you. You have to follow it because you agreed to it. It is kind of similar in contracts. When two parties agree to certain terms and conditions, those terms become binding meaning they are expected to obey, or they might face consequences.

Here's an interesting fact - binding does not necessarily mean you can never get out of it. There could be situations where the binding agreement can be altered or ended, for instance when both parties mutually agree to change the terms or end the contract.


  • Scenario Explanation
    Signing up for online streaming service Once you pay and agree to the terms, the agreement is binding. You get to stream, and they get to keep your money. If you don’t stream, they still keep your money because it was a binding agreement.
    A Contract with a supplier Once signed, the supplier must provide the goods and you must pay for them. If you decide you don’t want them anymore, you still have to pay because it's a binding agreement.
    An Employment contract Once signed, you agree to the terms laid out by your employer. You can’t decide to just not show up to work because it was a binding agreement that you would.