Commercial Law Jargon Buster

Acceptance

This is the unconditional agreement to an offer which creates the contract. An offer can be withdrawn up until the point of acceptances.

Agent

This is a person that is appointed to act on behalf of another person. There are conditions in relation to the authority that the agent holds. Arbitration This is when a independent third party is introduced in an attempt to settle matters without going to Court.

Breach of Contract

This is when one of the parties fail to uphold their part of the deal. It can make the whole contract void and damages to be awarded against the party in breach.

Conditions

These are major terms included in a contract. They are the basis of any contract. They are more serious than warranties and if a condition is broken, it can breach the contract.

Confidentiality Agreement 

This is an agreement created to protect confidential information if it has to be disclosed to another party. Consideration Within a contract, each party must give some consideration to the other. Usually it is the price paid by one side and good supplied by the other.

Consumer

This is an individual who purchases goods or services but not part of their business.

Due Diligence

This is the process of investigation the background of a business to ensure that there are no hidden details that could affect the deal.

Employment Contract

This is a contract made between employer and employee. It differs in the fact that it is governed by its own legislation.

Exclusion Clause

These are clauses in a contract that intend to exclude one party from liability if a stated circumstance happens.

Express Terms

These are the terms that are actually agreed for the deal in the contract.

Franchising

These are commercial agreements allowing one business to deal in a product or service controlled by another.

Implied Terms

These are terms and clauses that are implied in a contract by law or custom and practice without actually being included by any party. Joint and Several Liability This is when parties act together in a contract as partners. As well as being joint and severally liable, each individual is individually liable for the entire contract.

Liquidation

This is the formal breaking up of a company or partnership. The assets have to be sold to pay the debt. Misrepresentation This is when one party to a contract makes a false statement of fact to the other which that other person relies on. The party who relied on the false statement can get damages for their loss.

Offer

An offer to contract must be made with the intention to create a legal relationship. Partnership This is when two or more people join together to carry on a business.

Subject to Contract

These words are used on documents exchanged by parties during contract negotiations. They mean that the contract is not an offer and that negotiations are ongoing. Often the expression ‘without prejudice’ is used instead.

Trademark

This is a registered name or logo that is protected by law.

Warranties

These are promises made in a contract but less serious than a condition. If a warranty is breached, it results in damages being paid.

Financial Related Terms

Bankruptcy

This is formal recognition that a person cannot pay their debts as they are due.

Damages

This is money paid as the usual remedy as compensation for loss.

Guarantee

This is a secondary contract which one person promises to honour the debt of another if the original debtor fails to pay. The agreement must be in writing.

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