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That means the event or condition can take place or be satisfied within three years, but must not, or will not continue beyond three years.

For instance, you are required by a court to make total restitution for damage to your neighbors property within "a period not to exceed three years". This means you will have to pay the entire judgment within a three year term, or suffer other legal remedies...perhaps a jail term.

Another example is that you might be sentenced to prison for a crime that allows a judge to decide the length of the sentence...for instance "a term of not less than six months, but not to exceed three years", which means the judge, on conviction, must sentence you to at least six months, but cannot sentence you to more than three years.

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