Definition
In commercial and corporate law, par means equality between the nominal or face value of a financial instrument and its actual market value. The term functions both as a noun (the par value itself) and as a benchmark against which market prices are measured.
Three standard relationships:
1. AT PAR: The instrument or share sells for exactly its stated face value. A bond with a face value of $1,000 trading at $1,000 is at par.
2. ABOVE PAR: The instrument sells for more than its nominal value — also described as selling at a premium.
3. BELOW PAR: The instrument sells for less than its nominal value — also described as selling at a discount.
In corporate law specifically, par value is the minimum issuance price assigned to a share of stock in the articles or certificate of incorporation. It is a legal floor, not a market prediction. A share with a $1.00 par value may trade at $50; what matters legally is that it was not issued for less than $1.00. Many modern corporations issue no-par stock entirely, detaching issuance from any nominal floor.
The same concept applies to bonds and bills of exchange: the face amount printed on the instrument is par, and trading above or below that amount reflects prevailing interest rates, creditworthiness, or time to maturity.
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Common Language
Modern common usage (Wiktionary): The Wiktionary entry for "par" as a geographic placename (a village in Cornwall) is not relevant. In ordinary modern English, "par" most commonly means a standard or expected level of performance, drawn from golf, where par is the number of strokes an expert player should take to complete a hole or course. "Up to par" means meeting the expected standard; "below par" means falling short.
Historical common usage (Webster's 1913): Webster's 1913 refers the reader to "Parr," indicating the term was not independently defined in that edition's main entries, suggesting the legal/commercial sense dominated its technical usage.
Editorial note: The legal meaning of par is narrower and more precise than everyday usage. In law, par is not merely a benchmark of quality or adequacy — it is a specific numerical equivalence between a stated face value and a market price. A researcher encountering "below par" in a legal instrument should not read it as simply "substandard"; it carries the specific commercial meaning of trading at a discount to face value.
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Common Confusion
Par value and market value are distinct concepts that historical sources sometimes treat as closer than they are. Par value is a legal artifact set at incorporation or issuance; market value is determined by buyers and sellers independent of any nominal designation. In older corporate law, par value carried more practical weight because states prohibited issuance below par and linked stated capital calculations to it. In modern practice, par value is frequently set at a nominal figure ($0.001 or $0.01) precisely to minimize its legal constraints. A researcher reading early 20th-century sources on stock issuance must not assume that par and market value tracked each other closely — the whole structure of premium accounts and surplus analysis developed to manage the gap between them.
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Why It Matters in Research
The term par does real doctrinal work in two distinct research contexts that should not be conflated.
In securities and debt instruments, par governs interpretation of bond indentures, redemption provisions, and payment obligations. A bond redeemable "at par" is redeemable at face value, regardless of where it trades in the secondary market. This is a frequent trigger in covenant analysis and workout litigation.
In corporate law, par value's significance has shifted dramatically over the 20th century. Early corporate codes (and the cases and treatises interpreting them) treated par as a serious floor on capital adequacy — a protection for creditors that shares were not being issued for phantom consideration. The earned surplus, capital surplus, and stated capital framework built around par value is extensively documented in older sources and in pre-Model Business Corporation Act state statutes. Researchers working in pre-1950 corporate law will encounter par value as a live issue. Researchers working in modern Delaware or MBCA jurisdictions will find it nearly vestigial.
The Anderson's Dictionary of Law entry is idiosyncratic — it conflates "par" the commercial term with unrelated Latin compounds (pari delicto, pari materia, par oneri) under one heading. These are separate legal terms that happen to share a Latin root meaning "equal." Do not treat them as subcategories of par; they are independent entries requiring their own analysis.
Burrill's entry under "par" leads to Pandects, which is an artifact of the dictionary's page organization rather than any connection between the terms. Disregard it.
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Historical Dictionary Support
Black's Law Dictionary (both the first and second editions) offer the same concise definition and agree on the three-position framework (at par, above par, below par). The second edition adds a case citation (Ft. Edward v. Fish, 156 N.Y. 368) grounding the definition in judicial usage. Bouvier's Law Dictionary confirms the same framework and adds case support from multiple jurisdictions (Georgia, New York, Pennsylvania), indicating consistent application across state courts.
Rapalje & Lawrence's entry at page 920 is not substantively transcribed in available sources and adds nothing to this record.
Anderson's entry mixes the commercial definition with Latin phrases sharing the root "par," which is useful as a reminder that researchers in older sources will encounter par as a prefix in legal maxims — but those maxims (pari delicto, pari materia) are wholly separate from the commercial doctrine.
The historical dictionaries uniformly define par in its commercial sense and do not address the corporate law par value doctrine in depth. That doctrine developed primarily through statute and equity jurisprudence in the late 19th and early 20th centuries and is better tracked through corporate law treatises and state corporation acts than through general law dictionaries.
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Jurisdictional Note
Delaware sets par value at whatever amount the certificate of incorporation specifies and permits no-par stock; most Delaware corporations set par at $0.001 or lower precisely to minimize stated capital obligations. States following the older Model Business Corporation Act framework may still attach more consequence to par value in capital account analysis. Researchers should identify the governing state corporate statute and the year of incorporation before assuming any particular par value regime applies.
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Encyclopedia Cross-Reference
Corporate Finance -- Capitalization, Par Value, and Stated Capital (The Law Mind Business Organizations & Corporate Law Encyclopedia)
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