In term extraction, a term candidate is a phrase or a word sequence that was extracted from the source text by an automatic term extraction program.
The automatic term extraction program uses mathematical properties (frequency, length etc.) and stop words to determine if the word sequence has a good enough chance to be a relevant term. If it does, it is added to the candidate list.
All word sequences or phrases returned by the term extractor start as candidates. A phrase on the list is a candidate until the user (a human) confirms it.
A candidate can either become an accepted term, or it can be dropped from the list because it is irrelevant. In memoQ, you can use the candidate list editor to do this.