perfect
Definition
In legal terms, to 'perfect' something means to complete all the required steps to make a legal right officially valid and enforceable against other people or businesses. For example, you can perfect a security interest in collateral, which means you have done everything the law requires to ensure your claim on that property is legally protected and recognized above other creditors.
Example
If you lend money to another business and take their equipment as collateral, you perfect your security interest by filing a financing statement with the state, which publicly announces your legal claim on that equipment.
Watch Out
Failing to perfect a legal interest in time can cause you to lose your priority position to other creditors, even if your underlying agreement was signed first.
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This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.