diff --git a/channeldb/invoice_test.go b/channeldb/invoice_test.go
index 014f8230..68512607 100644
--- a/channeldb/invoice_test.go
+++ b/channeldb/invoice_test.go
@@ -106,7 +106,7 @@ func TestInvoiceWorkflow(t *testing.T) {
 	if err != nil {
 		t.Fatalf("unable to fetch invoice: %v", err)
 	}
-	if !dbInvoice2.Terms.Settled {
+	if dbInvoice2.Terms.State != ContractSettled {
 		t.Fatalf("invoice should now be settled but isn't")
 	}
 	if dbInvoice2.SettleDate.IsZero() {
@@ -348,7 +348,7 @@ func TestDuplicateSettleInvoice(t *testing.T) {
 	// We'll update what we expect the settle invoice to be so that our
 	// comparison below has the correct assumption.
 	invoice.SettleIndex = 1
-	invoice.Terms.Settled = true
+	invoice.Terms.State = ContractSettled
 	invoice.AmtPaid = amt
 	invoice.SettleDate = dbInvoice.SettleDate
 
diff --git a/channeldb/invoices.go b/channeldb/invoices.go
index 428b6c11..5915cb4c 100644
--- a/channeldb/invoices.go
+++ b/channeldb/invoices.go
@@ -74,6 +74,30 @@ const (
 	MaxPaymentRequestSize = 4096
 )
 
+// ContractState describes the state the invoice is in.
+type ContractState uint8
+
+const (
+	// ContractOpen means the invoice has only been created.
+	ContractOpen ContractState = 0
+
+	// ContractSettled means the htlc is settled and the invoice has been
+	// paid.
+	ContractSettled ContractState = 1
+)
+
+// String returns a human readable identifier for the ContractState type.
+func (c ContractState) String() string {
+	switch c {
+	case ContractOpen:
+		return "Open"
+	case ContractSettled:
+		return "Settled"
+	}
+
+	return "Unknown"
+}
+
 // ContractTerm is a companion struct to the Invoice struct. This struct houses
 // the necessary conditions required before the invoice can be considered fully
 // settled by the payee.
@@ -87,9 +111,8 @@ type ContractTerm struct {
 	// which can be satisfied by the above preimage.
 	Value lnwire.MilliSatoshi
 
-	// Settled indicates if this particular contract term has been fully
-	// settled by the payer.
-	Settled bool
+	// State describes the state the invoice is in.
+	State ContractState
 }
 
 // Invoice is a payment invoice generated by a payee in order to request
@@ -380,7 +403,9 @@ func (d *DB) FetchAllInvoices(pendingOnly bool) ([]Invoice, error) {
 				return err
 			}
 
-			if pendingOnly && invoice.Terms.Settled {
+			if pendingOnly &&
+				invoice.Terms.State == ContractSettled {
+
 				return nil
 			}
 
@@ -528,7 +553,9 @@ func (d *DB) QueryInvoices(q InvoiceQuery) (InvoiceSlice, error) {
 
 			// Skip any settled invoices if the caller is only
 			// interested in unsettled.
-			if q.PendingOnly && invoice.Terms.Settled {
+			if q.PendingOnly &&
+				invoice.Terms.State == ContractSettled {
+
 				continue
 			}
 
@@ -773,7 +800,7 @@ func serializeInvoice(w io.Writer, i *Invoice) error {
 		return err
 	}
 
-	if err := binary.Write(w, byteOrder, i.Terms.Settled); err != nil {
+	if err := binary.Write(w, byteOrder, i.Terms.State); err != nil {
 		return err
 	}
 
@@ -845,7 +872,7 @@ func deserializeInvoice(r io.Reader) (Invoice, error) {
 	}
 	invoice.Terms.Value = lnwire.MilliSatoshi(byteOrder.Uint64(scratch[:]))
 
-	if err := binary.Read(r, byteOrder, &invoice.Terms.Settled); err != nil {
+	if err := binary.Read(r, byteOrder, &invoice.Terms.State); err != nil {
 		return invoice, err
 	}
 
@@ -872,7 +899,7 @@ func settleInvoice(invoices, settleIndex *bbolt.Bucket, invoiceNum []byte,
 
 	// Add idempotency to duplicate settles, return here to avoid
 	// overwriting the previous info.
-	if invoice.Terms.Settled {
+	if invoice.Terms.State == ContractSettled {
 		return &invoice, nil
 	}
 
@@ -891,7 +918,7 @@ func settleInvoice(invoices, settleIndex *bbolt.Bucket, invoiceNum []byte,
 	}
 
 	invoice.AmtPaid = amtPaid
-	invoice.Terms.Settled = true
+	invoice.Terms.State = ContractSettled
 	invoice.SettleDate = time.Now()
 	invoice.SettleIndex = nextSettleSeqNo
 
diff --git a/channeldb/migrations.go b/channeldb/migrations.go
index ffac8a51..647502c1 100644
--- a/channeldb/migrations.go
+++ b/channeldb/migrations.go
@@ -189,7 +189,7 @@ func migrateInvoiceTimeSeries(tx *bbolt.Tx) error {
 		// Next, we'll check if the invoice has been settled or not. If
 		// so, then we'll also add it to the settle index.
 		var nextSettleSeqNo uint64
-		if invoice.Terms.Settled {
+		if invoice.Terms.State == ContractSettled {
 			nextSettleSeqNo, err = settleIndex.NextSequence()
 			if err != nil {
 				return err
diff --git a/htlcswitch/link.go b/htlcswitch/link.go
index fe2e71a5..3f59b89b 100644
--- a/htlcswitch/link.go
+++ b/htlcswitch/link.go
@@ -2334,7 +2334,7 @@ func (l *channelLink) processRemoteAdds(fwdPkg *channeldb.FwdPkg,
 			// TODO(conner): track ownership of settlements to
 			// properly recover from failures? or add batch invoice
 			// settlement
-			if invoice.Terms.Settled {
+			if invoice.Terms.State != channeldb.ContractOpen {
 				log.Warnf("Accepting duplicate payment for "+
 					"hash=%x", pd.RHash[:])
 			}
diff --git a/htlcswitch/link_test.go b/htlcswitch/link_test.go
index 5fbaa765..d4fe2a30 100644
--- a/htlcswitch/link_test.go
+++ b/htlcswitch/link_test.go
@@ -236,7 +236,7 @@ func TestChannelLinkSingleHopPayment(t *testing.T) {
 	if err != nil {
 		t.Fatalf("unable to get invoice: %v", err)
 	}
-	if !invoice.Terms.Settled {
+	if invoice.Terms.State != channeldb.ContractSettled {
 		t.Fatal("alice invoice wasn't settled")
 	}
 
@@ -467,7 +467,7 @@ func TestChannelLinkMultiHopPayment(t *testing.T) {
 	if err != nil {
 		t.Fatalf("unable to get invoice: %v", err)
 	}
-	if !invoice.Terms.Settled {
+	if invoice.Terms.State != channeldb.ContractSettled {
 		t.Fatal("carol invoice haven't been settled")
 	}
 
@@ -818,7 +818,7 @@ func TestUpdateForwardingPolicy(t *testing.T) {
 	if err != nil {
 		t.Fatalf("unable to get invoice: %v", err)
 	}
-	if !invoice.Terms.Settled {
+	if invoice.Terms.State != channeldb.ContractSettled {
 		t.Fatal("carol invoice haven't been settled")
 	}
 
@@ -937,7 +937,7 @@ func TestChannelLinkMultiHopInsufficientPayment(t *testing.T) {
 	if err != nil {
 		t.Fatalf("unable to get invoice: %v", err)
 	}
-	if invoice.Terms.Settled {
+	if invoice.Terms.State == channeldb.ContractSettled {
 		t.Fatal("carol invoice have been settled")
 	}
 
@@ -1026,7 +1026,7 @@ func TestChannelLinkMultiHopUnknownPaymentHash(t *testing.T) {
 
 	// Check that alice invoice wasn't settled and bandwidth of htlc
 	// links hasn't been changed.
-	if invoice.Terms.Settled {
+	if invoice.Terms.State == channeldb.ContractSettled {
 		t.Fatal("alice invoice was settled")
 	}
 
@@ -1112,7 +1112,7 @@ func TestChannelLinkMultiHopUnknownNextHop(t *testing.T) {
 	if err != nil {
 		t.Fatalf("unable to get invoice: %v", err)
 	}
-	if invoice.Terms.Settled {
+	if invoice.Terms.State == channeldb.ContractSettled {
 		t.Fatal("carol invoice have been settled")
 	}
 
@@ -1227,7 +1227,7 @@ func TestChannelLinkMultiHopDecodeError(t *testing.T) {
 	if err != nil {
 		t.Fatalf("unable to get invoice: %v", err)
 	}
-	if invoice.Terms.Settled {
+	if invoice.Terms.State == channeldb.ContractSettled {
 		t.Fatal("carol invoice have been settled")
 	}
 
@@ -3332,7 +3332,7 @@ func TestChannelRetransmission(t *testing.T) {
 				err = errors.Errorf("unable to get invoice: %v", err)
 				continue
 			}
-			if !invoice.Terms.Settled {
+			if invoice.Terms.State != channeldb.ContractSettled {
 				err = errors.Errorf("alice invoice haven't been settled")
 				continue
 			}
@@ -3828,7 +3828,7 @@ func TestChannelLinkAcceptOverpay(t *testing.T) {
 	if err != nil {
 		t.Fatalf("unable to get invoice: %v", err)
 	}
-	if !invoice.Terms.Settled {
+	if invoice.Terms.State != channeldb.ContractSettled {
 		t.Fatal("carol invoice haven't been settled")
 	}
 
diff --git a/htlcswitch/mock.go b/htlcswitch/mock.go
index bb260156..d6c1d820 100644
--- a/htlcswitch/mock.go
+++ b/htlcswitch/mock.go
@@ -720,11 +720,11 @@ func (i *mockInvoiceRegistry) SettleInvoice(rhash chainhash.Hash,
 		return fmt.Errorf("can't find mock invoice: %x", rhash[:])
 	}
 
-	if invoice.Terms.Settled {
+	if invoice.Terms.State == channeldb.ContractSettled {
 		return nil
 	}
 
-	invoice.Terms.Settled = true
+	invoice.Terms.State = channeldb.ContractSettled
 	invoice.AmtPaid = amt
 	i.invoices[rhash] = invoice
 
diff --git a/invoiceregistry.go b/invoiceregistry.go
index 235460f3..d8a0fd5f 100644
--- a/invoiceregistry.go
+++ b/invoiceregistry.go
@@ -89,8 +89,7 @@ func (i *invoiceRegistry) Stop() {
 // Only two event types are currently supported: newly created invoices, and
 // instance where invoices are settled.
 type invoiceEvent struct {
-	isSettle bool
-
+	state   channeldb.ContractState
 	invoice *channeldb.Invoice
 }
 
@@ -143,27 +142,27 @@ func (i *invoiceRegistry) invoiceEventNotifier() {
 				switch {
 				// If we've already sent this settle event to
 				// the client, then we can skip this.
-				case event.isSettle &&
+				case event.state == channeldb.ContractSettled &&
 					client.settleIndex >= invoice.SettleIndex:
 					continue
 
 				// Similarly, if we've already sent this add to
 				// the client then we can skip this one.
-				case !event.isSettle &&
+				case event.state == channeldb.ContractOpen &&
 					client.addIndex >= invoice.AddIndex:
 					continue
 
 				// These two states should never happen, but we
 				// log them just in case so we can detect this
 				// instance.
-				case !event.isSettle &&
+				case event.state == channeldb.ContractOpen &&
 					client.addIndex+1 != invoice.AddIndex:
 					ltndLog.Warnf("client=%v for invoice "+
 						"notifications missed an update, "+
 						"add_index=%v, new add event index=%v",
 						clientID, client.addIndex,
 						invoice.AddIndex)
-				case event.isSettle &&
+				case event.state == channeldb.ContractSettled &&
 					client.settleIndex+1 != invoice.SettleIndex:
 					ltndLog.Warnf("client=%v for invoice "+
 						"notifications missed an update, "+
@@ -174,8 +173,8 @@ func (i *invoiceRegistry) invoiceEventNotifier() {
 
 				select {
 				case client.ntfnQueue.ChanIn() <- &invoiceEvent{
-					isSettle: event.isSettle,
-					invoice:  invoice,
+					state:   event.state,
+					invoice: invoice,
 				}:
 				case <-i.quit:
 					return
@@ -187,10 +186,14 @@ func (i *invoiceRegistry) invoiceEventNotifier() {
 				// don't send a notification twice, which can
 				// happen if a new event is added while we're
 				// catching up a new client.
-				if event.isSettle {
+				switch event.state {
+				case channeldb.ContractSettled:
 					client.settleIndex = invoice.SettleIndex
-				} else {
+				case channeldb.ContractOpen:
 					client.addIndex = invoice.AddIndex
+				default:
+					ltndLog.Errorf("unknown invoice "+
+						"state: %v", event.state)
 				}
 			}
 
@@ -225,8 +228,8 @@ func (i *invoiceRegistry) deliverBacklogEvents(client *invoiceSubscription) erro
 
 		select {
 		case client.ntfnQueue.ChanIn() <- &invoiceEvent{
-			isSettle: false,
-			invoice:  &addEvent,
+			state:   channeldb.ContractOpen,
+			invoice: &addEvent,
 		}:
 		case <-i.quit:
 			return fmt.Errorf("registry shutting down")
@@ -239,8 +242,8 @@ func (i *invoiceRegistry) deliverBacklogEvents(client *invoiceSubscription) erro
 
 		select {
 		case client.ntfnQueue.ChanIn() <- &invoiceEvent{
-			isSettle: true,
-			invoice:  &settleEvent,
+			state:   channeldb.ContractSettled,
+			invoice: &settleEvent,
 		}:
 		case <-i.quit:
 			return fmt.Errorf("registry shutting down")
@@ -296,7 +299,7 @@ func (i *invoiceRegistry) AddInvoice(invoice *channeldb.Invoice) (uint64, error)
 
 	// Now that we've added the invoice, we'll send dispatch a message to
 	// notify the clients of this new invoice.
-	i.notifyClients(invoice, false)
+	i.notifyClients(invoice, channeldb.ContractOpen)
 
 	return addIndex, nil
 }
@@ -365,17 +368,19 @@ func (i *invoiceRegistry) SettleInvoice(rHash chainhash.Hash,
 
 	ltndLog.Infof("Payment received: %v", spew.Sdump(invoice))
 
-	i.notifyClients(invoice, true)
+	i.notifyClients(invoice, channeldb.ContractSettled)
 
 	return nil
 }
 
 // notifyClients notifies all currently registered invoice notification clients
 // of a newly added/settled invoice.
-func (i *invoiceRegistry) notifyClients(invoice *channeldb.Invoice, settle bool) {
+func (i *invoiceRegistry) notifyClients(invoice *channeldb.Invoice,
+	state channeldb.ContractState) {
+
 	event := &invoiceEvent{
-		isSettle: settle,
-		invoice:  invoice,
+		state:   state,
+		invoice: invoice,
 	}
 
 	select {
@@ -483,9 +488,17 @@ func (i *invoiceRegistry) SubscribeNotifications(addIndex, settleIndex uint64) *
 			case ntfn := <-client.ntfnQueue.ChanOut():
 				invoiceEvent := ntfn.(*invoiceEvent)
 
-				targetChan := client.NewInvoices
-				if invoiceEvent.isSettle {
+				var targetChan chan *channeldb.Invoice
+				switch invoiceEvent.state {
+				case channeldb.ContractOpen:
+					targetChan = client.NewInvoices
+				case channeldb.ContractSettled:
 					targetChan = client.SettledInvoices
+				default:
+					ltndLog.Errorf("unknown invoice "+
+						"state: %v", invoiceEvent.state)
+
+					continue
 				}
 
 				select {
diff --git a/rpcserver.go b/rpcserver.go
index ca22c939..1f1a2de6 100644
--- a/rpcserver.go
+++ b/rpcserver.go
@@ -3303,6 +3303,8 @@ func createRPCInvoice(invoice *channeldb.Invoice) (*lnrpc.Invoice, error) {
 	satAmt := invoice.Terms.Value.ToSatoshis()
 	satAmtPaid := invoice.AmtPaid.ToSatoshis()
 
+	isSettled := invoice.Terms.State == channeldb.ContractSettled
+
 	return &lnrpc.Invoice{
 		Memo:            string(invoice.Memo[:]),
 		Receipt:         invoice.Receipt[:],
@@ -3311,7 +3313,7 @@ func createRPCInvoice(invoice *channeldb.Invoice) (*lnrpc.Invoice, error) {
 		Value:           int64(satAmt),
 		CreationDate:    invoice.CreationDate.Unix(),
 		SettleDate:      settleDate,
-		Settled:         invoice.Terms.Settled,
+		Settled:         isSettled,
 		PaymentRequest:  paymentRequest,
 		DescriptionHash: descHash,
 		Expiry:          expiry,