Glossary - Unfair Contracts And Scams.

Comfort letter:letters used to back up an agreement. Often used by an associate company backing the position of a small company to improve its trading position. Comfort letters are not intended to be legally binding.

Conditions:major terms. If a condition is breached, the contract is broken and becomes void. Damages may then be sought by the other party.

Confidentiality agreement:agreement to protect proprietary or confidential information. May also be called a non disclosure document.

Consensus ad idem:agreement in principle. All parties to the contract must be in agreement on the idea behind the contract. The contract may become void if it turns out that the parties were of a different understanding.

Consideration:The item or money paid under the terms of the contract to the other party. The item, price, right or anything that each party to the contract gives up to the other party.

Consumer:private purchaser of goods or services. Charities are also considered to be consumers, but businesses are not. A business can be treated as a consumer if it is purchasing goods not directly relating to the business such as goods for it's employees.

De facto:in fact. Having the same effect as if the situation was recognised in law.

De jure:according to law. Recognised in law.

De minimis (de minimis non curat lex): the law does not concern itself with trifles. Too small an issue to involve the law.

De novo:start anew. To begin a fresh contract.

Due diligence:the process of investigating a business before purchase. Due diligence should ensure there are no unforeseen circumstances that could adversely affect the contract.

Ex gratia:out of grace. The making of a payment without obligation from either the giver or the receiver.

Ex parte:on behalf of. Legal action taken on behalf of another party.

Ex post facto:due to a later event. In the event that something unforeseen interferes with an agreement.

Exclusion clause:a clause that excludes one party from liability if a stated circumstance occurs. An exclusion clause is a form of >b>exemption clause.

Exempli gratia (eg):for example. Followed by examples relating to the previous statement. Compare id est (ie).

Exemption clause:a clause that limits the liability of the contract writer.

Express terms:the terms stated in the contract. See also implied terms.

Id est (ie):that is. Followed by a definition of the previous statement to more fully explain the meaning. Compare exempli gratia (eg).

Implied terms:terms that are not mentioned in the contract but are generally accepted as legally applying. Implied terms can be negated by express terms so long as it is legal to do so. Some implied terms can not be revoked or changed by express terms.

Incorporate:included in the contract.

Injunction:a court order to stop an action being taken.

Inter alia:amongst other things. Indicates that what is being referred to is part of a larger group of items without mentioning all of them.

Joint and several liability:parties acting together in a contract as partners. All partners are responsible together and each partner is also individually liable for the entire contract. A creditor could recover an entire debt from any one partner.

Jurisdiction:the country or state whose laws are deemed to govern the contract. This is where any legal action will take place. Beware of signing any major contracts with a jurisdiction clause that is not close to your location. It would be costly to dispute the contract. What happens if the contract writer imposes penalties on you "per the contract terms" and you don't agree with them? Do you fully understand the law in the country of jurisdiction?

Liability:legally obliged, responsible.

Liquidation:the formal winding up of a business entity.

Mala fides:bad faith. A party is acting mala fides if they have a hidden agenda.

Mediation:use of an independent third party to settle a dispute. Both sides must agree to the third party acting as mediator.

Misrepresentation:making a false statement in a contract. A misrepresentation can result in damages awarded to the other party.

Nemo dat quod non habet:no one can give what they don't have. A buyer of stolen goods has no right to ownership even if they were not aware the goods were stolen because the seller had no right to sell the property.

Non compos mentis:not of sound mind. A person can not enter into a contract if they are not sound of mind.

Non est factum:not my act. A denial by a person that they were involved in some action. It can occur in a contract if a party denies that they signed the contract and that their signature was forged.

Parent company:A company owning more than half the voting rights in another company. The other company is a subsidiary.

Pari passu:equal and even. New share issues having the same rights and restrictions as those of the same class already existing are pari passu.

Partnership:people or organisations joining together to operate a business.

Prima facie:at first sight. Something that appears correct, but may be determined to be incorrect after further investigation.

Pro rata:for the rate. Divided proportionally according to some other criteria.

Pro tanto:for so much. Not more than to the extent specified.

Pro tempore:for the time being.

Proxy:a person who acts on behalf of another.

Quid pro quo:something for something. The basis that each party should offer something to the other.

Quorum:the minimum number of people required for a meeting to take place and votes to be cast.

Ratification:giving authority to an act that has already been done. The acceptance of an act of one party by another party after the fact even though the act may have been beyond the authority of the first party.

Repudiation:where a party refuses to comply with a contract and this amounts to a breach of contract. Also, where a contract is signed by a minor (under 18 years old) the minor can repudiate the contract upon turning 18 and thereby void the contract.

Restrictive covenant:a clause to restrict a person working with a competitor or starting a new business along similar lines. Often used upon a buyout of a business or company. Care must be taken that the courts do not interpret such a covenant as restraint of trade and thereby render it unenforceable.

Subject to contract:denotes that the document is not an offer or acceptance and that negotiations are continuing.

Trademark:a registered name or logo or design. Trademarks must be granted through the Patent Office and offer protection against others using the same name, logo or design.

Uberrima fides:utmost good faith. A party to certain types of contract must declare all relevant facts to the other side even if they do not ask. Usually applies to insurance contracts. The party requesting insurance must declare all known risks.

Underwriter:a person who signs as a party to a contract.

Unfair terms:legislation deems certain types of contract terms "unfair". Courts may often decide against the party who included the unfair terms in the contract. Most legislation on unfair contract terms is concerned with consumer contracts but some also focuses on business-to-business contracts where one party is much larger than the other. Other terms in contracts may be "unfair" to one of the parties, but in the absence of legislation these terms will still be enforceable providing all other aspects of the contract are in order.

Unilateral Variation Clause:A clause that allows the writer of the contract to vary terms at their discretion.

Void:unable to be completed. A contract may become void if either party is unable to meet the conditions or if it is found to be illegal.

Warranties:promises. Warranties or promises made in a contract may result in liability for damages if they are broken but they will not result in a breach of contract.

Without prejudice:a term used in negotiating a dispute where an offer is made in an attempt to avoid court action. If the case does go to court no offer stated to be without prejudice can be disclosed as evidence.

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