A claim, that by virtue of a contract, gives a holder the right to receive an amount of money (cash or otherwise) or another financial asset from another party or to exchange financial assets/ financial liabilities with another party under favorable conditions. Securities, such as stocks and bonds, are a prime example of contractual claims.
A contractual claim requires an entity that has issued a security to make payments to its holder (the investor) in amounts and intervals set out under the purchase contract. For example, an investor who purchases a bond has a contractual claim on the bond’s coupon payments at times specified in the bond issue. A contractual claim for a bondholder is an amount that must be paid periodically to the holder, specifying the time at which the principal must be repaid and other relevant details. For a stockholder, a contractual claim gives the holder the right to receive dividends and an interest in the net assets of the issuer (residual interest).
A contractual claim may also arise in relation to insurance contracts and other performance based contracts. In the context of insurance (contractual claim), it refers to any claim (right to receive coverage) which relates to damages or injuries due to an insured event (e.g., illness, or hazard) as set out in the insurance policy.
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