incentives
Definition
Incentives are benefits, rewards, or perks that one party offers to encourage another party to take a specific action or enter into an agreement. In business contracts, these often take the form of discounts, free rent periods, cash bonuses, tax breaks, or other financial sweeteners. Governments and landlords use them frequently to attract businesses, while businesses use them to attract customers or employees.
Example
A landlord might offer your new retail shop three months of free rent as a lease incentive to get you to sign a five-year lease. A city government might offer your manufacturing company a tax incentive to build your new facility within city limits rather than in a neighboring town.
Watch Out
Incentives often come with strings attached, so always read the fine print to understand exactly what conditions you must meet to keep the benefit, because failing to meet those conditions can sometimes require you to pay the incentive back.
See which terms appear in your contract?
This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.