Practice Area » Business & Commercial » Glossary of Business & Commercial Terminology
Business & Commercial Glossary
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Acceptance: One of three requirements for a valid contract under common law (the other two being offer and consideration). A contract does not become legally binding until one party has made an offer and the other party indicates his readiness to accept the terms of the offer. Acceptance must be unconditionally communicated to the offeror while the offer is still open. Acceptance of an offer can, in certain circumstances, be implied by conduct.
Accord and Satisfaction: A contract may be discharged if one party, who has complied with his part of the contract, accepts compensation from the other party instead of enforcing the contract. The accord is the agreement by which the obligation is discharged. The satisfaction is the consideration (usually money and of a lesser value) which makes the agreement operative.
Acquiescence: Action or inaction which legally binds someone, even unintentionally. For example, an action such as accepting goods from a supplier will be binding if it implies recognition of the terms of a contract.
Action: Proceedings in a civil court.
Affidavit: Sworn written statement signed by a deponent, who swears that its contents are true to the best of his knowledge and belief. It must be witnessed by a practising solicitor or commissioner for oaths.
Agent: Person with power to contract on behalf of others, binding them as if they were signing the contract themselves. The person represented by the agent is called the principal.
Antedate: To date retroactively, before a document was drawn up.
Appeal: Challenge to a court decision in a higher court.
Appellant: Person who makes an appeal.
Assign: To give or transfer responsibility to another person. The person who receives the right or property is the assignee; the assignor is the person giving.
Breach of Contract: Failure or refusal to fulfil a term of a contract. The injured party may bring an action for damages, for enforcement or for cancellation of the agreement.
Caveat: (Latin:let him beware.) A formal warning. Caveat emptor (let the buyer beware) is a warning to buyers to check for themselves things which they intend to buy, so they cannot later hold the vendor responsible for the faulty condition of the item. The Sale of Goods and Supply of Services Act 1980 extends the rights of consumers in this area.
Chattels: Moveable items of property which are neither land nor permanently attached to land or a building. (Land or buildings are described as "real property".) Chattels are also known as personal property (or personalty). A freehold property is not a chattel, but a leasehold is.
Cheque: Form of bill of exchange where the order to pay is given to a bank holding the payor's funds.
Child: Person under 18.
Collateral: Property committed to guarantee a loan.
Collusion: Illegal and usually secret agreement between two or more people to deceive a court or defraud another person.
Common law: Judge-made law which has developed over centuries, also referred to as "unwritten" law. Common law (as practised in Ireland, England and the USA) is often contrasted with civil law systems (such as in France or Germany) where laws are set down in a written code.
Company: Legal entity which permits a group of shareholders to create an organization to pursue set objectives. A company may have legal rights which are usually reserved for individuals, such as the power to sue and be sued, own property, hire employees or lend and borrow money. The main advantage of a company structure is that it gives shareholders a right to participate in profits (through dividends) without any personal liability.
Consideration: Consideration has been defined as "some right, interest, profit or benefit accruing to the one party, or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other". Under common law, any binding contract must have some consideration, no matter how small. The courts will not normally inquire into the sufficiency of the consideration; a "peppercorn rent" would be sufficient.
Consign: To leave property in the custody of another. An item can be consigned to a transport company, for example, to move it from one place to another. The consignee is the person who receives the property and the consignor is the person who ships the property to the consignee.
Construction: Legal process of interpreting a phrase or document. If a term is unclear or ambiguous, lawyers and judges must try and interpret (or construct) its probable intention and purpose. This may be done by referring to other parts of the document, by reference to the known intentions of those who drew up the document, or, in the case of statutes, by referring to an interpretation law which gives guidelines for construction.
Constructive trust: Trust imposed by a court in certain circumstances, regardless of the which obliges each party to do (or refrain from doing) a certain thing. A valid contract requires an offer, acceptance of that offer and consideration.
Contract law: Contract law is the basis of all commercial dealings. The terms of a contract may be express or implied. Express provisions may be varied by statute. Unfair contract terms are now excluded by legislation, and, in areas such as employment and the sale of goods, the law imports a wide range of implied terms into new and existing contracts.
Covenant: Written document in which signatories either commit themselves to do (or not to do) something, or in which they agree on a certain set of facts. Covenants are very common in leases where a landlord will usually covenant to give the tenant "quiet enjoyment" and the tenant covenants to pay the rent, keep the premises in good repair and deliver them up at the end of the tenancy.
Creditor: Person to whom money, goods or services are owed by a debtor.
De facto: (Latin:in fact) Something which exists in fact, though not necessarily approved by law (de jure). A common law spouse may be referred to as a de facto spouse, although not legally married.
De minimis non curat lex: (Latin:the law does not concern itself with trifles) A common law principle whereby very minor transgressions of the law are disregarded. Under the Consumer Information Act 1978, for example, a description must be false "to a material degree" to constitute an offence.
Debtor: Person who owes money, goods or services to a creditor. If a court judgment has been registered against the person owing the money, he is known as a judgment debtor.
Deed: Written and signed document which sets out the agreement of the signatories in relation to its contents. Under common law, a deed had to be sealed - marked with an impression in wax. A deed is delivered by handing it to the other person. Usually a deed (or some other written evidence) is required in relation to actions involving land.
Dividend: Proportionate distribution of profits made by a company in the form of a money payment to shareholders. Dividends are declared by the board of directors at the annual general meeting. The shareholders decide the dividend at the meeting, but it must not exceed the directors' recommendation.
Emolument: Wages, benefits or profits received as compensation for holding office or employment.
Endorsement: Writing on a document. With a bill of exchange, an endorsement is a signature on the back of the bill by which the person to whom the note is payable transfers the right of payment to the bearer or to a specific person. An endorsement may restrict payment to one person only, and prohibit any further endorsements.
Estoppel: Rule of evidence which prevents a person from relying on facts when, by deed, word or action, he has led another person to act to his detriment on those facts. Estoppel is a defence, not a cause of action. Anyone who wishes to rely on the defence of estoppel to defend an action must plead it.
ForeclosureForfeiture of a right of redemption on a property (generally when someone fails to pay a mortgage). Even if there has been no payment, the borrower normally retains a equitable right of redemption if he can raise the money to exercise the right. To clear the title of this potential right, a lender can apply to court for a date to be set, by which the entire amount becomes payable. If payment is not made, the property belongs entirely to the lender, who is then free to go into possession or to sell it.
Fraud: Dishonest conduct designed to persuade another person to give something of value by lying, repeating something that is or ought to have been known by the fraudulent party to be false or suspect, or by concealing a relevant fact from the other party. Fraud allows a court to void a contract or to set aside a judgment, and can result in criminal liability. A person who defrauds creditors of a company may be held personally liable.
Goodwill: Intangible business asset based on the good reputation of a business and resulting attraction and confidence of repeat customers and connections. Part of the sale price of a business may be for goodwill, in which case the seller may not solicit former customers for his new business.
Guarantor: Person who pledges collateral for another's contract.
In personam: (Latin:against the person) All legal rights are either in personam or in rem. An in personam right attaches to a particular person.
In rem: (Latin:against the thing) In rem rights relate to property and are not based on any personal relationship.
Incorporeal: Intangible legal rights, such as copyrights or patents.
Insolvent: Person not able to pay his debts as they become due. Insolvency is a prerequisite for bankruptcy.
Inter alia: (Latin:among other things) Used to precede a list of examples covered by a more general descriptive statement.
Interlineation: Addition to a document after it has been signed. Such additions are disregarded unless they are initialled by the signatories and, if necessary, witnessed.
Inter partes: Latin: between the parties.
Invitation to treat: An offer to receive an offer. Goods advertised by a shopkeeper are open to offers from customers. If goods are mistakenly marked with the wrong price, the retailer is not bound to accept that price because he has not offered the goods at that price: he has invited members of the public to make him an offer which he is entitled to accept or reject. A retailer who deliberately or consistently misprices goods, however, may be commiting an offence under the Consumer Information Act.
IOU: A written confirmation of a debt, signed by the debtor, which implies an undertaking to pay the sum owed at some future date. An IOU is not a negotiable instrument and may not be passed on to a third party.
Joint and several liability: Liability of more than one person, under which each may be sued for the entire amount of damages due by all. The obligation may arise by agreement or may be imposed by law.
Legal Aid: Government scheme providing advice or assistance from a solicitor or barrister free or at a reduced rate.
Liability: Any legal obligation or duty, now or in the future. A person who is liable for a debt or wrongful act is the person responsible for paying the debt or compensating for the wrongful act. If a court finds a person to be contributorily liable, he will bear part of the responsibility for the act or omission.
Liquidation: Sale of all the assets of a company or partnership by a liquidator and use of the proceeds to pay off creditors. Any money left over is distributed among shareholders or partners according to their interests or rights.
Lis pendens: (Latin:pending action) Registration of a pending action against the owner of land. It does not bind any subsequent purchaser of the land until a memorandum is registered in court.
MinorPerson under the age of 18 who is not married (or has not been married). A minor may only enter into certain contracts, such as those for necessaries or an apprenticeship. An Irish resident under the age of 18 may not legally marry without the permission of the Court, even if the ceremony takes place somewhere (such as Northern Ireland) where the minimum age for marriage is under 18.
Misfeasance: Improperly doing something which a person has a legal right to do. Contrast with nonfeasance.
Misrepresentation: False material statement which induces a party to enter into a contract; grounds for rescission of the contract.
Natural person: Human being with legal and Constitutional rights and duties, including the right to life, right to information, right to travel, right to a good name, right to earn a living, right to sue and be sued, to sign contracts, to receive gifts and to appear in court either by himself or through a lawyer. Individuals are persons in law unless they are minors or under some other type of incapacity, such as a court finding of mental incapacity. Contrast with a company, which is a legal person.
Non est factum: (Latin:not his deed) Defence in contract law which allows a person to avoid liability because he was mistaken about the nature of the contract. For example, a person who signs away the deed to a house, thinking that the document was only a guarantee for a debt, might be able to plead non est factum. Failure to read the terms of a contract will negate this defence.
Nonfeasance: Not doing something that one is bound to do by law. Compare with misfeasance.
Nudum pactum: (Latin:an empty agreement) An agreement without consideration, such as a unilateral undertaking, which may bind a person morally, but not under contract law, unless the agreement is under seal.
Offer: Definite proposal to contract which, if accepted, completes the contract and binds both the person that made the offer and the person accepting the offer to the terms of the contract. The offer may be express or implied. The person making the offer is called the offeror, and the person to whom the offer is made is the offeree.
Pari passu: (Latin:with equal step) Often used in bankruptcy proceedings where creditors are said to rank pari passu, which means the assets are distributed without preference between them.
Partnership: Two or more persons carrying on a business together. Partners are each fully liable for all the debts of the enterprise but they also share the profits exclusively. Their rights are regulated by their partnership agreement.
Patent: Exclusive privilege granted to an inventor to make, use or sell an invention for a period of years. A renewal fee must be paid every year.
Payee: Person to whom a bill of exchange is made payable. On an ordinary cheque, the name preceded by the words "pay to the order of" identifies the payee.
Payor: Person who makes a payment on a cheque or bill of exchange.
Pendente lite: (Latin:during litigation) If the validity of a will is challenged, a court may appoint an administrator pendente lite with limited powers to preserve the assets of the deceased until a hearing on the validity of the will.
Per quod servitium amisit: (Latin:by which he lost the service) Action for damages by an employer for the loss of services of an injured employee, against the person responsible for the injury.
Preference shares: Shares in a company that have some kind of special right or privilege over other shares. The most common special right is a preference over holders of ordinary shares when dividends are declared. Dividends on preference shares are presumed to be cumulative, in the absence of any agreement to the contrary, so unpaid dividends are payable before any ordinary dividends.
Principal: Person from whom an agent has received instructions and for whose benefit the agent acts and makes decisions. The principal has a duty to pay the agent any agreed sum or commission, and to indemnify him against any losses in the course of his agency.
Private law: Domestic law which regulates the relationships between individuals and in which the State is not directly concerned. Family, commercial and labour law are examples of private law because their focus is the relationships between individuals or between corporations or organisations and individuals.
Pro tempore (pro tem): (Latin:for the time) Temporary or for the time being.
Prohibition: Legal restriction on the use of something or on certain conduct.
Promissory note: Unconditional, written and signed promise to pay a certain amount of money on demand or at a certain defined date in the future. Unlike a bill of exchange, a promissory note is a promise - rather than an order - to pay.
Prospectus: Document or notice in which a company sets out details of a proposed share or bond issue, inviting the public to invest by purchasing the financial instruments. It must specify the nominal capital of the company, the names, addresses and descriptions of the directors, when the subscription lists open, the amount payable on application and on allotment of shares, and the rights in respect of different classes of share.
Quantum: Latin: amount or extent.
Quantum meruit: (Latin:as much as he has deserved) Principle stating that a person should not be obliged to pay (nor another allowed to receive) more than the value of the goods or services provided.
Quid pro quo: (Latin:something for something) Giving something in exchange for something else. As consideration, it is an essential ingredient of a valid contract.
Quorum: (Latin:of whom) Minimum number of people necessarily present at a meeting for business to be validly conducted. Without a quorum, decisions are invalid.
Redemption:Repayment of a mortgage, so the equitable estate of the lender and the legal estate of the borrower merge in the mortgagor.
Rent: Money or other consideration paid by a tenant to a landlord in exchange for the exclusive possession and use of land, buildings or part of a building. Under normal circumstances, rent is paid at regular agreed intervals, but it may be paid in kind or by the provision of services. A peppercorn rent is a nominal sum (perhaps a penny a year) as an acknowledgement of the tenancy.
Replevin: Legal action to recover goods which have been distrained. The applicant must give an undertaking to keep the goods safe, to continue with his court action and to return the goods if ordered to do so.
Rescission: Abrogation or cancellation of a contract, putting the parties in the same position they would have been in, had there been no contract. Rescission can occur because of some defect in the formation of the contract (such as misrepresentation, duress or undue influence) or by agreement of the parties - for example where they reach a new agreement.
Reserved costs: Apportionment of payment of legal fees to be decided at a later stage.
Reserved judgment: Decision to be given at a later date.
Respondent: Person against whom a summons is issued, or a petition or appeal brought.
Restitutio in integrum: (Latin:restoration to the original position) In a breach of contract case, the injured party may ask the court to restore the parties to the positions they were in before the contract was signed. But if the court finds that restitutio in integrum is not possible because of subsequent actions or events, it may order payment of damages instead.
Share: A portion of a company. A share certificate constitutes proof of share ownership. Those owning shares in a company are called members or shareholders. There are two basic kinds of shares: ordinary and preferred. A shareholder is not normally liable for the debts or other obligations of the company, except to the extent of any commitment made to buy shares. Two other benefits of shares include a right to participate in profits (through dividends) and a right to share the residue of assets of the company if it is dissolved, once liabilities have been paid off.
Silent partner: Person who invests in a company or partnership, shares in the profits or losses but takes no part in administering or directing the organisation.
Solicitor: General lawyer who may deal directly with the public.
Subrogation: Substitution of one person or thing for another by operation of law, without the agreement of the person from whom the rights are transferred.
Sui juris: (Latin:of his own right) Person who has full legal rights and is not under any incapacity, such as being bankrupt, a minor or mentally incapable.
Surety: Person who has pledged himself by deed to ensure that another person fulfils an obligation - such as appearing in court or paying back a loan.
Tender: Unconditional offer of a party to a contract to perform his side of the bargain. For example, with a loan contract, a tender would be the debtor's offer to repay the amount owing to the creditor. If the tender is refused, the contract comes to an end.
Tracing: Equitable right of a plaintiff to reclaim specific property, through the court, where the property has passed on to others. This procedure is frequently used by a trust beneficiary to recover misappropriated trust property. Property may not be recovered from a person who has bought it for value, without notice of the circumstances.
Ultra vires: (Latin:beyond the powers) An action which is invalid because it exceeds the authority of the person or organisation which performs it. A company cannot normally be bound by an act which it is not empowered to do by its memorandum of association.
Undue influence: Unfair pressure which may invalidate a contract.
Unjust enrichment: Profit unjustly obtain by a wrongdoer. To obtain reimbursement, the plaintiff must show an actual benefit to the defendant, a corresponding loss to the plaintiff and the absence of a legal reason for the defendant's enrichment.
Usury: Excessive or illegal interest rate.
Videlicet: (Latin:that is to say) The abbreviation of videlicet ( viz.) is commonly used in legal documents to advise that what follows provides more detail about a preceding general statement.
Void: Without legal effect. A document that is void is worthless. An anti-competitive agreement or contract in restraint of trade may be void. A "marriage" involving a person under the age of 18 would be void in Ireland.
Voidable: The law distinguishes between void and voidable contracts. Some contracts have such a fundamental defect that they are said to be void. Others have more minor defects and are voidable at the option of the innocent party.
Year: When used without any other qualification, a 12-month period beginning on January 1.
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