States and Territories Law and Legal Definition

The term "states" refers to the states formally admitted into the union of the United States. "Territories" refers to the possessions of the United States acquired by treaty, purchase, or otherwise that have not been admitted into the union.

A state or territory has power to make contracts with other public bodies or with private individuals and corporations except when prohibited by statute or constitution. The basic authority of a state to enter into contracts rests with its legislature. However, state legislatures may delegate this authority to officers, commissions, boards, or other state agencies. Claims against a state or territory may be audited to insure the validity of those claims as well as their prompt settlement. Statutes often require a state officer or board to be presented with and consider all claims against the state.