In legal drafting, a word or phrase given a specific meaning for purposes of the document in which it appears; a definiendum.
This is a phrase heard more often in conversation about a legal document than in a document itself. Defined terms are the terms throughout contracts that are capitalized (sometimes bolded or underlined). Defined terms are used to make a legal document easier to read. Sometimes it is as simple as choosing a word to use every time “The Really Super Awesome Widget Company” is used in a sentence. Sometimes an entire list of items can be shortened into a simple word or phrase. This can help to substantially shorten a document’s length by avoiding the repetition of lengthy terms or lists.
Defined terms are very important in contracts. They should be used when necessary, but not so much as to make the document more difficult to read because there are capitalized nouns used throughout the document or there are so many defined terms it is difficult to remember what they all mean. A good rule for contract drafting is that you should not define a term unless the term to be defined is used more than twice in the document or is a list of items that can be summed up with a simple word or phrase. This will keep the defined terms to a minimum and will help the reader keep track of all of the defined terms.
In longer documents it is common to have a definitions section to list all of the defined terms so the reader can reference the terms easily. This is unnecessary in documents with only a few defined terms or in short documents where the definitions section would only increase the length of the document and not help the reader in any significant way.