Indenture Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Indenture, written in plain English, along with examples of how it is used.

What is Indenture?

Binding two parties together by a contract in writing which states the benefits and agreement between the two parties. Normally indentures refer to the financial contracts

History and Meaning of Indenture

Indenture is a legal term used to refer to a type of contract that binds two parties together. This contract is usually in writing and outlines the terms and benefits of the agreement between the two parties. In many cases, indentures refer to financial contracts, such as bonds or loans. The term "indenture" originally referred to an agreement in which a copy of the contract was written on one sheet of paper, which was then divided into two parts with a jagged edge (or "indent"). Each party would keep one part, and the jagged edge would serve as proof that the two parts came from the same original document.

Indenture contracts have been in use for centuries and were popular during the colonial period in America. In the 18th and 19th centuries, they were commonly used for contracts between employers and employees, especially in industries like mining and transportation. Today, indenture contracts are still used in certain legal and financial contexts, though the term is not as widely used as it once was.

Examples of Indenture

  1. A company issues bonds with an indenture agreement outlining the terms and conditions of the bond offering.
  2. An apprentice signs an indenture agreement with a master craftsman outlining the terms of their apprenticeship, including the length of the apprenticeship and the skills the apprentice will learn.
  3. A landlord and tenant sign an indenture agreement for a long-term lease, outlining the rent amount, payment schedule, and maintenance responsibilities.

Legal Terms Similar to Indenture

  1. Contract: A legally binding agreement between two or more parties that creates an obligation to do or not do something.
  2. Bond: A financial instrument in which an investor loans money to an entity (such as a company or government) in exchange for regular interest payments and the return of the principal at the end of the bond's term.
  3. Covenant: A promise or agreement within a contract, usually referring to a specific obligation that one or more parties must fulfill.