It Is Understood

Contracts, decoded

Know what you’re agreeing to.

The clauses buried in terms of service, subscriptions, leases and job offers, translated into plain English, with why each one matters and where every definition comes from.

It is understood and agreed that…

Here’s what comes next, in plain English.

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What are you signing?

Heard about these?

Two FTC rules you may have read about aren’t in effect

  • Click-to-cancel. Announced in October 2024, struck down by a federal appeals court in July 2025. The FTC restarted the process in March 2026. Where it stands
  • The noncompete ban. Set aside by a federal court in August 2024 and removed from federal regulations in February 2026. Where it stands

Four clauses worth a second read

Arbitration clause

Also called: mandatory arbitration clause

In plain English

You agree that any future dispute goes to a private arbitrator instead of a court. Under federal law, the arbitrator's decision is binding, much like a court's.

Why it matters

Once you take a claim to arbitration, you generally can't also bring it in the regular courts, and the Supreme Court has upheld these clauses many times.

Where you’ll see it

Take-it-or-leave-it contracts, including ones you have to sign to get a job

Source: Cornell LII Wex: arbitration

Class action waiver

Also called: class waiver

In plain English

You agree not to bring or join a group case with other customers, so a dispute gets handled on its own instead of as part of a class. In the AT&T phone contract the Supreme Court reviewed in 2011, this waiver was built into the arbitration clause.

Why it matters

In 2011 the Supreme Court held that federal arbitration law overrides a California rule that had treated many of these waivers in consumer arbitration agreements as unconscionable.

Where you’ll see it

Phone contracts and other consumer agreements with arbitration clauses

Source: Cornell LII: AT&T Mobility LLC v. Concepcion (U.S. Supreme Court, 2011), syllabus

Automatic renewal

Also called: auto-renewal, negative option

In plain English

The company keeps billing you on a schedule unless you act to cancel. It treats your silence as permission to charge you.

Why it matters

A renewal can cost more than you paid last time, especially if you started on a promotional rate.

Where you’ll see it

Free trials and subscriptions, like monthly product boxes and magazines

Source: FTC Consumer Advice: Getting In and Out of Free Trials, Auto-Renewals, and Negative Option Subscriptions

Noncompete

Also called: noncompetition agreement, covenant not to compete

In plain English

You promise not to compete with the other side for a set period of time, for example by going to work for a direct competitor.

Why it matters

Most states allow noncompetes only when their limits are reasonable, and some, like California, treat nearly all of them as void.

Where you’ll see it

Employment contracts and sale-of-business contracts

Source: Cornell LII Wex: noncompete

See all 23 clauses