The "chilling effect," also referred to as the "in terrorem effect," describes the fear of potential prosecution resulting from a law. While this effect is inherent in all penal statutes, as the state would be powerless to address harmful conduct if such fear prevented legislation, its significance is particularly noted in the context of free speech.

Vague or overbroad statutes can create a "possible 'chilling effect' on protected speech," causing individuals to hesitate or refrain from exercising their right to expression. This hesitation stems from uncertainty about how the law might apply or the potential penalties involved. This potential chilling effect is a primary justification for allowing facial challenges to statutes that may improperly restrict protected speech, even if the challenger's own actions might fall within regulable conduct.

For instance, in the context of cyberlibel, including individuals who merely shared a statement, in addition to the original author, was found to create a "chilling effect" on them. This effect was linked to the law being overbroad and, consequently, violating the freedom of expression.