Legal Dictionary of Contract Terms & Types 

A 

Abatement 
A reduction, suspension, decrease, or temporary relief from an obligation or payment owed. In contracts, abatement often refers to a reduction in rent (for example, during periods when leased premises are unusable), a decrease in taxes, or a reduction of damages awarded.  

Acceleration Clause
A contract provision that is commonly found in loan or credit agreements that allows a lender to demand immediate payment of the entire loan balance if the borrower defaults on specific obligations (such as missing a payment or breaching covenants). 

Acceptance (contract law)
The complete agreement by one party to the terms of an offer made by another, creating a binding contract once communicated to the offeror. Acceptance may be expressed by signing a contract or implied by conduct.  

Accord and Satisfaction
A legal method of resolving a contract dispute where the parties agree to accept different performance (the “accord”) in place of the original obligation, and once that performance is completed (the “satisfaction”), the dispute is settled. Often used when a debtor offers a lesser payment that the creditor agrees to accept as full settlement of a larger debt. 

Act of God 
An unforeseeable natural disaster (like earthquakes, floods, or storms) that prevents or makes it impossible for someone to fulfill their part of the contract or contractual obligations. 

Addendum 
An addition or supplement to a contract that modifies, clarifies, or expands the original terms without replacing the entire agreement. An addendum is typically attached to the original contract and signed by the parties to confirm agreement to the new or amended provisions. Common examples include addendums for scope of work, pricing adjustments, or extended timelines. 

Adhesion Contract (Standard Form Contract)
A “take it or leave it” contract that is written by one side (like cell phone terms or insurance policies) where the other side has little or no power to negotiate the terms. Courts in many countries may strike out unfair clauses. 

Agency Agreement
A contract where one person (the agent) is given authority to act on behalf of another (the principal) in business or legal matters. The agreement sets out the scope of the agent’s authority, duties, responsibilities, and any limitations. Common examples include real estate agency agreements, sales agency contracts, and commercial representation arrangements. 

Agent
A person or entity who is authorised to represent another (the principal) in creating, negotiating, or performing obligations under a contract. The agent’s authority may be general or limited, depending on the terms of the agency arrangement. Actions of the agent, when within the scope of authority, legally bind the principal. 

Aleatory Contract
A contract where the performance or outcome depends on an uncertain future event where one or both parties will only have to fulfil their obligations if a specific event happens. If the specified event happens (or fails to happen), the parties are then required to fulfil their obligations. Contingent contracts are commonly used in insurance agreements, indemnity contracts, and risk-based transactions. 

Alternative Dispute Resolution (ADR)
Processes like mediation and arbitration that resolve disputes outside court. Contracts often include mediation and arbitration clauses that require parties to try these methods before starting litigation. 

Amendment
A written change, modification, or addition to an existing agreement. An amendment alters the original terms without replacing the entire contract and must be agreed to and signed by all parties. Amendments are often used to update timelines, adjust prices, expand scope of work, or correct errors in the original contract.  

Annuity Contract
A financial agreement where one party (often an insurance company) promises to make fixed payments to another party for life or a set period. Examples include a retirement annuity contract where a retiree receives monthly payments until death.  

Arbitration Agreement
A standalone contract) in which the parties agree that any disputes arising from the agreement will be resolved through arbitration instead of court litigation. The agreement usually sets out the rules of arbitration, the appointing authority, and whether the decision will be binding. Arbitration agreements are common in commercial, employment, and consumer contracts because they provide a private and often faster alternative to court proceedings.  

Assignment
The transfer of contractual rights and benefits from one party (the assignor) to another party (the assignee). After the transfer, the assignee can enforce those rights as if they were an original party to the agreement. In many jurisdictions, the other party’s consent is required. 

Asset Purchase Agreement
A type of business sale contract where a buyer purchases specific assets of a company rather than its shares. These assets can include property, equipment, or intellectual property.  

B 

Beneficiary  

A person or entity receives benefits, payments, or assets from a contract, trust, or insurance policy, even if they are not one of the parties who signed the agreement. For example, in an insurance contract, the insured pays the premiums, but the beneficiary is the person who receives the payout. 

Bilateral Contract
The most common type of contract where both parties make mutual promises to each other. Each party makes a promise and receives a promise. 

Boilerplate  

Standard language or clauses that may appear in many different contracts that are standardized or repeated with little to no change. Boilerplate provisions are usually found at the end of agreements and cover general matters such as governing law, dispute resolution, notices, assignment, and entire agreement clauses. While they may seem routine, boilerplate clauses can have significant legal consequences if not carefully reviewed. 

Bond Agreement
A contract that sets out the terms for the issuance, repayment, and management of debt securities (bonds). It defines the rights of the investors (bondholders) and the obligations of the issuer (a company, municipality, or government).  

Breach of Contract
A Breach of contract is when a party in a legally binding agreement fails to fulfill their obligations, either by doing something they were obliged not to do or by not doing something they were obliged to do. This failure to honor a contract can occur in several ways, from failure can be partial, late, or complete non-performance. Remedies may include damages, specific performance, or termination.  

Brokerage Agreement
A contract where a broker is hired to facilitate a transaction between parties, often areas such as real estate, investments, or insurance. The broker acts as an intermediary and is usually paid a commission if the transaction is complete.  

Build-Operate-Transfer (BOT) Agreement
Is a contract commonly used in infrastructure projects, where a private company agrees to finance, build, and operates a facility for a set period before transferring ownership to a government or public authority. A toll road contract is an example where a private company builds and operates the highway for 25 years before transferring it to the government.  

Business-to-Business (B2B) Contract
Contracts between two or more companies, rather than between a business and an individual consumer. These agreements often cover supply, distribution, services, or partnerships.  

C 

Capacity
A person’s legal ability to enter into a binding contract. A valid contract requires that both parties have the capacity to understand and accept their obligations. Minors, intoxicated persons, and people lacking mental capacity often have limited or no contractual capacity. If a person without capacity enters into a contract, it may be invalid.  

Caveat Emptor (Buyer Beware)
Is a Latin phrase meaning “let the buyer beware.” In contracts, it is the principal that the buyer takes the risk of defects unless the seller makes specific promises (warranties) or misrepresents the goods. The buyer must inspect the goods and ask questions before agreeing. If the buyer fails to do so, they usually cannot later claim that they were misled, unless the seller actively concealed the problems.  

Cease and Desist  

A formal legal demand to stop an activity  that may be unlawful or infringe on another person’s rights. It warns the other party that legal action will follow if the conduct does not stop.  

Civil Action / Civil Claim 

A civil action (or civil claim) is a legal case brought in a civil court to claim money or another remedy from a person or business that caused harm or breached a duty. Unlike criminal cases, civil actions are between private parties. In contract law, a civil claim is usually made when one party breaches a contract, and the other seeks compensation (damages), enforcement of the contract, or cancellation. A business would, for example, file a civil claim for damages when a supplier fails to deliver goods or a contractor would institute a civil action for breach of contract when not paid for completed work. 

Collateral  

Property or assets pledged as security for a loan or debt. Collateral is used in loan agreements, credit facilities, and security contracts to reduce the lender’s risk. The borrower keeps possession of the asset unless they fail to repay, in which case the lender may enforce their rights. A business would offer equipment as collateral for a bank loan.  

Collective Bargaining Agreement (CBA)
The CBA is the result of collective bargaining negotiations between employers and employee representatives and once agreed, the contract governs workplace rights and obligations and is enforceable like any other contract. It sets out binding terms on wages, working hours, benefits, and employment conditions for unionized workers.  

Commercial Lease Agreement
A commercial lease agreement is a contract where a landlord rents business property to a tenant for commercial use, such as offices, retail stores, or warehouses. The agreements usually set out rent, lease term, renewal rights, maintenance duties, and use of the premises. Unlike residential leases, commercial lease agreements are business-focused and often highly negotiable. 

Common Law  

A legal system and body of law that is based on court decisions and judicial precedents rather than written statutes. Common law matters because many rules of contract formation, interpretation, and remedies come from judge-made law. Courts apply past decisions (precedent) to resolve disputes unless a statute overrides them. 

Common Cause 

Common Cause refers to facts or points that are agreed upon by all parties to a dispute or contract. These are not in contention and do not need to be proved in court. In a lease dispute, it may be common cause that the lease was signed, but the parties argue over the interpretation of a renewal clause. 

Compensation 

Compensation is money awarded to a person for losses, damages, or injury caused by another party’s breach of contract or wrongful act. It is meant to restore the injured party to the position they would have been in if the contract had been properly performed. Compensation is usually ordered by a court or tribunal after proving a breach of contract or other legal harm. In some cases, statutes also provide compensation, such as workplace injury funds. 

Comprehensive Insurance 

Comprehensive insurance is a type of general insurance contract that provides broad protection against multiple risks, such as personal injuries, fire, theft, natural disasters, and accidental damage to property. 

Condition Precedent  

A requirement that must be fulfilled before a contractual obligation becomes effective. Until the condition precedent happens, the parties do not have to perform. These conditions are common in financing, insurance, and property contracts. Coverage for an insurance contract will only start after the first payment is paid.  

Condition Subsequent  

An event that if it occurs, ends, or terminates an existing contractual obligation. A condition subsequent cuts off duties that are already in effect. If the specified event happens, the obligation is discharged automatically. This differs from a condition precedent, which must be satisfied before obligations begin. 

Confidentiality Agreement / Non-Disclosure Agreement (CANDA)
A contract where parties agree to keep certain information such as trade secrets, client data, financial details, or intellectual property private and not disclose it to others. NDAs are common in business, employment, and commercial transactions. An NDA can be one-way (only one-party shares information) or mutual (both parties share and protect information). Confidentiality agreements also protect valuable business information and build trust between parties. 

Consensus (Meeting of the minds) 

An agreement where all parties understand and accept the terms. It reflects true mutual agreement and is essential for a valid contract. Consensus is more than simply signing a contract as it means all parties are satisfied with the deal and agree freely, without mistakes, misrepresentation, duress, or undue influence. If there is no real consensus, the contract may be invalid. 

Consent 

Freely giving permission or agreement to enter into a contract or to a specific term within a contract. Consent must be voluntary and informed as it cannot be obtained through fraud, misrepresentation, duress, undue influence, or mistake. If consent is defective, the contract may be void or voidable.  

Consideration in Contract Law
Something of value exchanged between the parties such as money, goods, services, or promises. This is required for most enforceable contracts and is seen as what each party “bargains for.” For example, one party pays money, and the other provides goods or services. 

Contractual Agreement 

This is a legally binding understanding between two or more parties that sets out their rights, duties, and obligations. It represents a meeting of the minds which means that all parties have agreed to the same terms with the intention of creating enforceable legal relations. A contractual agreement can be written, verbal, or implied by conduct, as long as it meets the essential elements of a valid contract being offer, acceptance, consideration (something of value exchanged), and intention to be legally bound. 

Construction Contract
An agreement setting the terms, rights and responsibilities for a building or infrastructure project. It defines the scope of work, timelines, payment terms, risk allocation, and procedures for dealing with delays or defects. To create certainty, the industry often uses standard form contracts such as FIDIC (international), JCT (UK), or NEC (UK/SA).  

Consumer Contract
Agreement between a business (trader) and an individual consumer for goods, services, or digital content. Unlike business-to-business contracts, consumer contracts are heavily regulated by consumer protection laws in many jurisdictions. These laws ensure fairness by restricting unfair terms, requiring transparency, and giving consumers rights such as cancellation or refunds.  

Contingent Contract
A contract where the performance of obligations depends on the occurrence or non-occurrence of a future uncertain event. Contingent contracts are enforceable only if the specified event happens (or does not happen). These contracts are common in insurance or investment contracts. 

Contract Definition (Contract Law / Legal Contract)
A legally binding agreement enforceable by law. For an agreement to qualify as a contract, it normally requires:  

• Offer and acceptance where one party offers, the other accepts.  

• Consideration is where something of value is exchanged (money, goods, or services).  

• Intention where both parties intend to create legal obligations.  

Once formed, a contract creates legal rights and duties. If a party fails to perform, the other may seek remedies such as damages or specific performance.  

Credit Agreement
Credit Agreement is a legal contract between a lender and a borrower that sets out the terms for borrowing and repayment of credit. Credit agreements cover loan amounts, interest rates, repayment schedules, fees, collateral, and default consequences. They range from consumer credit contracts to large corporate facilities. Searchers often ask for “credit agreement meaning” or “credit contract template.” 

Custody Agreement (family law contract)
A family law contract made between parents (often in divorce or separation) cases, that outlines custody and visitation rights of children. The agreement usually covers who the child lives with, visitation schedules, decision-making authority, and financial responsibilities. Courts may review custody agreements to ensure they serve the best interests of the child.  

Covenant 

A covenant is a formal promise or obligation in a contract that can be positive (requiring action) or restrictive/negative (prohibiting certain actions). Covenants are widely used in real estate, finance, and commercial contracts. A partnership agreement includes a covenant not to compete with the business. 

D 

Damages in Contract Law
Damages are money awarded to a party who suffers loss because another party breached a contract. The purpose is to put the injured party in the position they would have been in if the contract had been properly performed. A buyer would claim damages when a supplier fails to deliver goods on time.  

Data Processing Agreement (DPA)
A Data Processing Agreement (DPA) is a legally binding contract between a data controller (who determines the why and how of processing personal data) and a data processor (who handles the data on their behalf), ensuring the processor protects the data according to specific instructions and privacy laws like GDPR and POPIA. The DPA sets out how personal data will be collected, stored, processed, and protected. It is mandatory for compliance under GDPR, POPIA and similar privacy laws.  

Delivery  

The transfer of possession or control of goods or property from one party to another. Delivery can be physical (handing over goods) or constructive (transferring control without physical handover, such as electronic delivery). 

Deed (Contract Law)
A formal written document signed and delivered to show serious commitment. Unlike ordinary contracts, a deed is enforceable even without consideration. Deeds are common in UK, Australia, and South Africa. They must usually be signed in writing, witnessed, and delivered. They are used when parties want the highest level of legal certainty. Search volume: “what is a deed in contract law.” 

Default Clause / Event of Default 

A default clause (or event of default) is a term in a contract that defines circumstances such as missed payments or insolvency that allow the other party to take action. Once an event of default occurs, the injured party may trigger remedies such as accelerating repayment, charging penalties, or terminating the contract. 

Delict / Tort  

A civil wrong committed by one person against another, which may give rise to a civil action for damages or another remedy. Delict is the term used mainly in South African and Roman-Dutch law systems (similar to “tort” in English common law). Unlike breach of contract, which arises from failing to perform an agreement, a delict arises from unlawful conduct that causes harm, even if there is no contract between the parties. 

De facto 

A Latin term meaning “in fact” or “in reality.” It describes a situation that exists in practice, even if it is not formally recognised by law. De facto is often used when something functions as though it is legally valid, even if not officially documented or registered.  

Deregulation 

The removal or reduction of laws, rules, or restrictions in a particular industry or sector, often encourages competition, investment, or business activity. Deregulation can change the legal environment in which agreements are made and enforced. When regulations are removed, businesses may have greater freedom in contract terms, but workers and consumers may lose certain protections. 

Desist 

Desist means to stop or cease a certain action, usually after being instructed or ordered to do so. The term is often used in legal notices, injunctions, or cease and desist letters, where one party demands that another party immediately stop unlawful, harmful, or contract-breaching conduct. A company issues a cease and desist letter to stop a former employee from using confidential information. 

Disclaimer  

A disclaimer is a statement in a contract that denies responsibility or limits liability for certain risks. Disclaimers protect businesses by making it clear what they will and will not be held responsible for. A website can include a disclaimer stating it is not liable for errors in content. 

Distribution Agreement
A contract where a manufacturer or supplier grants a distributor the right to sell its products. Distribution agreements regulate territory, pricing, exclusivity, and obligations of both parties and are vital in trade and supply chains. Search terms: “distribution agreement meaning,” “distribution contract template.” 

Documents / Documentary Evidence 

Documents (or Documentary Evidence) are written, electronic, or recorded papers and records that can be used as evidence in court. Documents are often the most important evidence in contract disputes because they prove what the parties agreed to, how they performed their obligations, and whether a breach occurred. Documentary evidence may include contracts themselves, supporting papers, or related records. 

Domiciled 

A person or juristic entity’s permanent legal residence being the place they live with the intention of staying indefinitely. A domicile is important in contracts because it often determines which country’s or region’s laws apply, especially in jurisdiction, service of legal documents, and taxation. Domicile is not the same as temporary residence; it reflects a person’s long-term, legal home. In South African law, physical address is considered legally valid for the service of summonses and other legal processes, meaning delivery there is sufficient, 

Down Payment Agreement
Contract that records an initial payment toward the purchase of goods, property, or services. It confirms how much was paid upfront, and sets out the balance due, timelines, and consequences of non-payment.  

Due Diligence 

Careful investigation and verification of facts before entering into a contract or business transaction. making a business decision or agreement. It ensures that decisions are informed, risks are understood, and hidden problems are discovered. Due diligence is common in mergers, acquisitions, property sales, and investments. 

E 

Easement  

The legal right to use another person’s land for a specific purpose without owning it. Easements are common in property and land-use contracts. They allow access or use of land for things like driveways, water pipes, or utility lines. Easements can be permanent or temporary and are usually registered against the property title.  

Effective Date  

The date when a contract or legal document becomes active and enforceable. Contracts often state an effective date, which may differ from the date of signing. This determines when obligations start.  

Employment Agreement 

A legal agreement between an employer and employee that sets out duties, pay, working hours, and conditions of employment. Employment contracts protect both the employer and the employee by making expectations clear. They may be written, oral, or implied, but written contracts provide the most certainty.  

Encumbrance  

A claim, lien, or liability attached to property that affects its value, use or transferability. Encumbrances do not always stop ownership, but they may limit what the owner can do with the property. They must usually be disclosed in sale contracts. An example would be a lien in a lease is a landlord’s right to possess a tenant’s movable property on the leased premises as security for unpaid rent, preventing the tenant from removing the goods until the debt is paid 

End User License Agreement (EULA)
A software contract granting users the right to use software under specific conditions. A EULA sets out what users can and cannot do with the software. It does not transfer ownership as it only grants a license. Breach of the EULA can result in termination of access or legal claim. A software EULA restricting copying or reverse engineering. 

Entire Agreement Clause  

A provision in a contract stating that the written contract contains all terms agreed upon by the parties, replacing any prior negotiations or discussions. This clause prevents either party from later claiming that additional promises were made outside the written contract. A lease contract where only the written terms are enforceable. 

Enforceability of Contracts
Enforceability of Contracts refers to whether a contract is legally binding and capable of being upheld in court. For a contract to be enforceable, it usually requires offer, acceptance, consideration, capacity, legality, and intention to create legal relations.  

Escrow Agreement
Contract where a neutral third party holds money, property or documents until specified conditions or obligations are met. Escrow agreements ensure trust and security in transactions by protecting both buyer and seller until the said obligations or conditions are fulfilled. Escrow agreements are common in real estate, finance, and international trade, where large sums or valuable assets are at stake. An example would be where a property sale escrow where money is held until transfer of title.  

Essential Elements of a Contract / Contract Formation Elements
The essential elements of a contract are the must-have ingredients or elements that make an agreement legally valid and enforceable.: The six core elements. 

1. Offer: a clear proposal. 

1. Acceptance: agreement to the offer. 

1. Consideration: something of value exchanged. 

1. Capacity: parties must have legal ability. 

1. Legality: subject matter must be lawful. 

1. Intention: intention to create legal relations. 

A contract with a valid offer, acceptance, payment, and lawful purpose is enforceable. Without these elements, a contract may be void or unenforceable. 

Estoppel / Estopped 

A legal principle preventing someone from going back on their previous statements, actions, or promises if someone else relied on them to their detriment. Estoppel protects fairness and reliance in contractual relationships. An example would be where a business promises not to enforce a deadline, then is estopped from suing for late delivery. 

Exclusivity Agreement
A contract that restricts one party from dealing with competitors for a certain period. It creates exclusivity in supply, distribution, or negotiation, giving one party a competitive advantage. An exclusive supply contract where a supplier sells only to one distributor is an example of such agreement.  

Executed Contract
A contract that has been fully signed by all necessary parties, which makes it legally binding and creates the framework for future actions. This term can also refer to a contract where both parties have fully fulfilled their obligations. It is completed and no further obligations remain, except perhaps warranties or guarantees. A sales contract where payment was made and goods delivered is an example of such a contract.  

Export Agreement / Import Agreement / International Trade Contract
An export agreement or import agreement is a cross-border contract governing international trade of goods or services. These contracts define pricing, delivery, customs, risk allocation, and dispute resolution. These agreements protect both buyer and seller in international trade, where currency risks, customs duties, and cross-border laws apply. These agreements define pricing, delivery, customs, risk allocation, and dispute resolution and often include Incoterms (e.g., FOB, CIF) to clarify responsibility.  

Ex Post Facto 

A Latin term meaning “after the fact” or “afterwards.” In law, it often refers to actions, rules, or decisions that are applied retroactively (with effect from a past date), after an event has already occurred. In contracts, parties sometimes make ex post facto changes or interpretations, applying unfamiliar terms to events that have already taken place. 

Express Terms 

Express Terms are the specific terms and conditions that are clearly stated in a contract, either in writing or spoken (oral contracts). Express terms are those that the parties explicitly agree on, as opposed to implied terms (which are read into the contract by law, custom, or courts). They cover the core obligations, rights, and promises between the parties. A sales contract stating the price, quantity, and delivery date of goods. 

F 

Fiduciary 

A person in a position of trust who must act in another person’s best interests. Fiduciaries must act with loyalty, honesty, and care, avoiding conflicts of interest. An example would be a director making decisions for shareholders. 

Fiduciary Duty / Fiduciary Agreement
A fiduciary (trustee, agent, director) duty is a legal obligation to act in another person’s best interests. Fiduciary duties arise in trusts, partnerships, company law, and agency contracts. Breach of fiduciary duty can lead to liability, damages, or removal from office. 

Finding 

The formal decision, conclusion, or determination made by a court, tribunal, arbitrator, or commission of enquiry on specific issues of fact or law. It is the outcome of examining evidence, hearing arguments, and applying legal principles to the matter in dispute. A finding is not just an opinion as it is a legal conclusion that carries authority. Findings are often steppingstones that lead to a judgment, award, or order, which then becomes enforceable. 

Fixed-Term Contract (employment / tenancy)
A contract with a defined start and end date. Fixed-term contracts are common in employment and tenancy law (Rental Housing Law). They automatically end when the agreed term expires, unless renewed or converted into a permanent agreement.  

Force Majeure
Force Majeure is a contract clause that frees parties from liability or obligation when an extraordinary, unforeseen, and uncontrollable event occurs that makes it impossible or extremely difficult to fulfill their contractual obligations. Common examples include natural disasters, war, strikes, or government actions. The purpose is to provide legal protection and relief by allowing for the temporary suspension or modification of performance, rather than termination of the contract.  

Foreclosure  

Legal process where a lender takes ownership of property when the borrower defaults on loan payments. Most often tied to mortgage contracts, foreclosure allows lenders to repossess and sell property to recover unpaid debt. A bank forecloses on a home mortgage after missing payments. 

Franchise Agreement
A business contract where a franchisor grants the franchisee the right to use its brand, systems, and business model. It sets out fees, territory, training, intellectual property use, and performance standards. A fast-food franchise agreement, for example, McDonald’s.  

Fraudulent Misrepresentation 

Fraudulent Misrepresentation is when a party deliberately lies or makes a false statement of fact to trick another party into signing a contract. It goes beyond a mistake or careless misstatement as this is intentional dishonesty, made either knowingly or with reckless disregard for the truth. 

Frustration of Contract (UK / Commonwealth)
Doctrine that automatically ends a contract when unforeseen events make performance impossible or radically different. Frustration is not a breach. It discharges obligations where neither party is at fault. In the US, this is covered by the doctrines of impossibility or impracticability. 

Full and Final Settlement Agreement
Contract where parties agree to resolve a dispute completely, agreeing to waive any future claims. It often involves payment or compromise, with both parties confirming that the matter is fully settled.  

G 

Garnishee Order 

A garnishee order is a court order that compels a third party to directly pay part of a debtor’s money or wages to a creditor, instead of paying it to the debtor. It is a legal enforcement tool that allows a creditor to recover debt by intercepting funds that are due to the debtor, instead of relying on the debtor to pay voluntarily. 

Good Faith  

This means acting honestly and fairly in business dealings without trying to cheat, defraud, or mislead the other party. It requires parties not only to avoid lying or cheating but also to cooperate and behave reasonably so that the contract works as intended. Many legal systems recognise an implied duty of good faith in contracts. It promotes trust, reduces disputes, and ensures that contracts cannot be used to exploit loopholes unfairly.  

Governing Law Clause
A contract provision that specifies which country’s jurisdiction’s laws will apply to interpret and enforce the agreement. Without this clause, courts must decide governing law based on conflict-of-law rules, which can create uncertainty and litigation risk. This clause is particularly important in cross-border and international contracts, where parties may be in different countries with vastly different legal systems. A governing law clause does not decide where disputes will be heard (that’s the jurisdiction clause) but rather which legal rules apply to interpret the contract.  

Guarantee/ Surety  

A promise by one party (the guarantor) to accept responsibility for another person’s debt or contractual obligations if they fail to perform. Guarantees provide creditors or lenders with extra security, making them more willing to enter into risky contracts. Guarantees are commonly used in finance, construction, leasing, and corporate transactions. Unlike insurance, which covers independent risks, a guarantee is tied to the performance of the primary obligor. 

Guarantee Agreement
A formal contract that sets out the guarantor’s obligations to step in if the primary party defaults. It specifies the scope of the guarantor’s responsibility (for example, repayment of debt, completion of work, or covering damages). These agreements must often be enforceable in writing. They can be unlimited, covering all obligations or limited restricted to a specific sum or time period.  

Guarantor
A person or entity that undertakes responsibility under a guarantee agreement if the borrower, tenant, or contractor defaults, the guarantor must fulfil the obligations. Guarantors can be individuals or corporations, for example, a parent company guaranteeing a subsidiary’s debts. The guarantor’s liability may be equal to or secondary to the original debtor, depending on the contract wording.  

General Conditions
General Conditions are the standardized clauses that appear in many contracts to cover rights, obligations, and procedures that apply broadly to most agreements. They are often included in construction contracts, procurement contracts, and employment agreements. They typically cover areas such as payment terms, liability limits, warranties, dispute resolution, and termination rights. General conditions provide a common framework that can be adapted to special conditions for each project or transaction. 

Goods and Services Contract
A broad agreement that covers the sale, supply, or exchange of goods, services, or both. It is one of the most common forms of contract in business law. Such contracts must set out the scope of work, quality standards, pricing, delivery timelines, payment terms, and remedies for breach. They may be subject to consumer protection laws or international trade rules (for example, the UN Convention on Contracts for the International Sale of Goods).  

H 

Heads of Agreement (Term Sheet / Memorandum of Understanding)
A Heads of Agreement is a preliminary, generally non-binding document that outlines the key commercial principles and terms of a tentative business transaction, such as a partnership or sale, before a formal, legally binding contract is drafted. Also known as a head of terms, letter of intent, or term sheet, it serves as a roadmap for negotiations, ensuring that parties are aligned on core aspects and can assess the viability of the proposed deal. 

Heirs  

People who are legally entitled to inherit property money, or assets when someone dies, either under a will or by intestate succession laws. Heirs may become relevant when contracts deal with inheritance, succession rights, or obligations that pass on after death. Some contracts explicitly exclude heirs from liability, while others bind heirs to continue obligations (for example leases or family business agreements). 

High Court 

A High Court is a superior court that hears serious civil and criminal cases, as well as appeals from lower courts such as Magistrates’ Courts. In contract law, High Courts usually handle disputes involving large sums of money, complex legal issues, or matters of significant importance. 

Hire Purchase Agreement
A financing contract where a buyer pays for goods in installments while using them, and ownership transfers only once all payments are completed. This type of contract combines elements of leasing and purchase. The buyer has possession and use of the goods but does not own them until the final instalment is paid.  

Holding Over
Holding over occurs when a tenant continues to occupy rented property after the lease term has expired, without signing a new lease. In some jurisdictions, this may automatically create a month-to-month tenancy on the same terms as the original lease. In others, the landlord may claim damages or treat the tenant as a trespasser. 

Hold Harmless Agreement 

This is a legal contract or clause in which one party agrees to protect another party from liability, loss, or claims that may arise during the performance of a specific activity, service, or transaction. In simple terms, it means one party takes on the risk and agrees not to hold the other responsible should something go wrong in terms of the agreement. 

Hypothecation  

Pledging of property as collateral for a debt without giving up possession of the property. It allows a borrower to retain use of the asset while the lender holds a legal charge over it until the debt is repaid. Unlike a mortgage, where the lender often registers ownership rights, hypothecation keeps ownership and possession with the borrower but gives the lender a legal claim if the borrower defaults. Hypothecation is widely used in banking, corporate finance, and trade credit. It protects lenders while allowing borrowers to continue using assets. However, if default occurs, the lender can seize or sell the hypothecated asset.  

I 

Immovable Property 

Immovable Property refers to property that cannot be moved from one place to another, such as land, houses, and permanent buildings or structures attached to the land. Unlike movable property (like vehicles, furniture, or equipment), immovable property is fixed and forms part of the land. 

Implied Contract
An implied contract is a legally binding agreement created by the actions, conduct, or circumstances of the parties rather than through written or spoken words. Courts infer an implied contract when it is clear the parties intended to form an agreement even though no express terms were recorded. A customer ordering a meal at a restaurant enters an implied contract to pay for it.  

Implied Terms 

Implied Terms are the provisions that form part of a contract even though they are not written down or spoken about by the parties. They are understood to exist because of law, custom, prior dealings, or the need to make the contract workable and fair. Courts or statutes may insert implied terms into contracts to fill gaps, prevent unfairness, or reflect the true intentions of the parties. These terms ensure that contracts operate effectively even when something important was left unsaid. 

Indemnity  

Indemnity is a legal obligation where one party protects another against financial loss, damages, or liability. It shifts the risk of loss from one party to another. Indemnity is central to risk allocation in contracts. It ensures that the party who suffers loss can recover compensation, even if they are not at fault. 

Indemnity Clause / Indemnity Agreement
An indemnity clause or agreement is a contractual promise by one party (the indemnitor) to compensate another party (the indemnitee) for specific losses, damages, or legal costs they may incur. These agreements essentially act as a form of protection, ensuring that one party will bear the financial burden of certain liabilities that arise from a particular transaction or action, rather than the party they are indemnifying. 

Independent Contractor Agreement
A contract that sets out the terms under which a self-employed individual or business provides services to a client. Unlike employees, contractors work independently and are responsible for their own taxes, insurance, and compliance.  

Injunction (Contract Law Remedy)
A court order requiring a party to do or stop doing something (mandatory injunction) or stop doing something (prohibitory injunction). It is a remedy often sought in contract disputes when damages (money) are not enough. A court grants an injunction to stop a contractor from breaching a confidentiality agreement.  

Intellectual Property (IP) License Agreement
A contract that grants permission to use intellectual property rights, such as patents, trademarks, copyrights, or trade secrets without transferring ownership. IP license agreements are essential in industries such as technology, entertainment, and franchising. They balance revenue generation with protection of the owner’s rights.  

International Sales Contract (CISG)
A cross-border agreement for the sale of goods, often governed by the United Nations Convention on Contracts for the International Sale of Goods (CISG). The CISG standardises rules for international trade, reducing uncertainty between parties in different countries and applies automatically to contracts between businesses in member states unless excluded.  

Insolvency  

Insolvency is the legal state of being unable to pay debts when they become due. Insolvency can lead to liquidation, restructuring, or business rescue procedures, depending on the jurisdiction. 

Intellectual Property (IP) 

Creations of the mind such as inventions, literary works, artistic works, trademarks, designs, and trade secrets that the law recognizes and protects as valuable assets. Unlike physical property, IP exists in ideas and expressions but can still be bought, sold, licensed, or inherited through contracts. 

Interest  

 Interest has two main meanings in law and contracts: 

1. Financial interest: the money paid for the use of borrowed money, usually expressed as a percentage of the loan amount. It represents the cost of borrowing or the return on lending. 

1. Legal or property interest: an enforceable right, share, or claim in property or assets, even if the person is not the full legal owner. 

Interest directly affects financial liability, ownership rights, and risk. Unclear or excessive interest clauses can lead to unenforceability under usury laws or consumer credit regulation, while vague property interest terms can create disputes over ownership. 

In Lieu Of 

In lieu of is a legal phrase meaning “instead of” or “in the place of.” In contracts, it is used when one obligation, benefit, or payment is substituted for another. This wording is common in employment contracts, settlement agreements, and commercial contracts, where parties agree that something different will be provided as a substitute for the original obligation. 

Instalment 

An instalment is a regular payment made by a buyer or borrower, usually weekly or monthly, towards the total price of goods, services, or a loan. Instead of paying the full amount upfront, the obligation is spread over a fixed period. Instalments make goods, property, and loans more affordable by spreading costs. 

Instalment Sale Agreement 

An Instalment Sale Agreement is a contract where the buyer pays the purchase price of goods or property in regular instalments, while the seller usually retains ownership until the final instalment is paid. Only once the last payment is made does full ownership (title) pass to the buyer. The seller keeps ownership (or a security interest) as protection until the buyer completes payment. The buyer often gets possession and use of the goods or property immediately, but not ownership. Contracts typically include terms allowing the seller to repossess or cancel the agreement if the buyer fails to pay instalments. In many jurisdictions, instalment sale agreements are regulated by credit laws to protect buyers from unfair terms. 

Inter Alia 

Inter alia is a Latin phrase meaning “among other things.” In legal and contractual documents, it is used to indicate that the statement being made is part of a wider list of items, rights, or obligations, but not the complete list. 

Interdict / Injunction  

An interdict is a court order issued to protect someone’s rights by either prohibiting another person from doing something (prohibitory interdict) or compelling them to take a specific action (mandatory interdict). It is similar to what many jurisdictions call an injunction. There are several types of interdicts, such as a prohibitory interdict that stops someone from continuing wrongful conduct (for example, a contractor trespassing on property). A mandatory interdict forces someone to take action (for example, removing unlawfully placed equipment). An interim (temporary) interdict is usually granted urgently to preserve rights until a full hearing can take place. 

Ipso Facto 

Ipso facto is a Latin phrase meaning “by that very fact” or “because of that fact itself.” In law and contracts, it is used to describe a situation where certain consequences follow automatically from a fact or event, without needing further action or proof. Some jurisdictions (such as under insolvency laws in the US, UK, and Australia) restrict or invalidate ipso facto clauses to protect businesses in financial distress. 

J 

Joint and Several Liability 

When multiple parties are responsible under a contract or judgment, each party can be held individually responsible for the entire amount of damages or debt, not just their share Creditors can recover the full amount from any one debtor, even if others were also at fault. The debtor who pays more than their share can later seek contribution from co-debtors. These are common in loan agreements, partnership contracts, and guarantees, where creditors want maximum protection. 

Joint Development Agreement (JDA)
A contract where two or more parties collaborate to research, develop a product, service, or technology, while sharing resources, costs, risks, and benefits. For example, a university and a pharmaceutical company enter into a JDA to develop a new drug.  

Joint Venture Agreement (JV)
An agreement between two or more parties to carry out a specific business project, sharing profits, control, and risks. Unlike mergers, the parties remain separate legal entities but collaborate for a defined purpose.  

Judgment 

A judgment is the formal decision made by a judge or magistrate at the end of a court case, setting out the outcome and the legal reasoning. In contract disputes, a judgment determines whether a contract has been breached, what remedies apply, and which party must pay damages or perform obligations. 

Jurisdiction  

The legal authority of a court or tribunal to hear and decide cases, or the geographic area where this authority applies. In contract law, jurisdiction determines which court has the power to enforce or interpret the agreement. 

Jurisdiction Clause
A contract clause specifying which court, tribunal or arbitration body has authority to resolve disputes under the agreement. This clause is often paired with a governing law clause, which sets the substantive law that applies. 

K 

Key Performance Indicators (KPIs in Contracts)
Specific metrics used to measure how well a party is performing its obligations under a service or business agreement. KPIs are usually included in service level agreements (SLAs) or outsourcing contracts to ensure accountability and measurable results. Keyman clauses provide financial stability and risk protection, particularly in industries where a single person’s expertise or reputation drives business value. They reassure investors, creditors, and partners that the business can survive the loss of a key figure. 

Keyman Clause / Keyman Insurance
A keyman clause is a contract term requiring the presence and active involvement of a crucial individual such as a founder, executive, or specialist for the contract to remain valid and for certain actions to be taken. 

L 

Lease Agreement
A contract where a landlord grants a tenant the right to use property (residential, commercial, or industrial) for a fixed period in exchange for rent. The landlord retains ownership, while the tenant gains lawful possession and use.  

Letter of Credit (
A document issued by a bank in international trade that guarantees payment to a seller once specific conditions are met. It reduces risk by ensuring that exporters are paid if they meet the agreed terms (such as providing shipping documents).  

Liability 

 Liability means legal responsibility for actions, debts, or damages. In contracts, liability usually refers to the duty to pay compensation if obligations are breached or harm is caused. 

License to Occupy 

A short-term agreement giving someone the right to use property without creating a lease or tenancy. It gives permission to occupy, but not exclusive possession.  

Lien  

 A Lien is a legal right or claim over someone else’s property used as security for a debt or obligation. The property cannot be sold or transferred until the lien is discharged. For example, a mechanic has a lien over a repaired car until repair costs are paid. 

Limitation of Liability Clause
A limitation of liability clause is a provision that restricts the amount or type of damages one party can recover from another if something goes wrong with the contract. It acts as a safeguard by setting a ceiling on potential financial exposure by capping liability at a specific amount or excluding certain categories of losses, such as lost profits. This protects parties from excessive financial risk and clarifies the allocation of risks inherent in the contractual relationship.  

Liquidation 

Liquidation is the legal process of closing down a company, selling its assets, and using the proceeds to pay creditors when the company cannot meet its financial obligations. In some countries, it is also referred to as winding-up. 

Lockout 

A lockout is when employers prevent workers from entering the workplace in order to pressure them into accepting certain terms or reaching an agreement. It is the employer’s counterpart to a strike and is usually connected to disputes over wages, working conditions, or collective agreements. 

Locus Standi 

Locus standi is a Latin legal term meaning “legal standing” which is the right of a person or entity to bring a case to court or be heard in legal proceedings. A party must show sufficient connection to and interest in the matter to have locus standi. A person generally has locus standi if they are a party to the contract or can show a direct legal interest in its enforcement or breach.  

Litigation  

The process of resolving disputes through the court system, rather than by negotiation, mediation, or arbitration. Litigation is used to enforce rights, claim damages for breach, or obtain court remedies such as injunctions or specific performance.  

Loan Agreement
A contract between a lender and a borrower that sets out the terms of a loan, including repayment schedule, interest rate, security, and default remedies.  

M 

Mala Fide / Bad Faith  

Mala fide is a Latin term meaning “in bad faith.” In law, it describes actions taken with dishonest or improper intentions, such as fraud, deception, or acting against the spirit of fairness. A mala fide action is not genuine and may cause a contract, decision, or agreement to be challenged or set aside in court. 

Master Services Agreement (MSA)  

A master service agreement (MSA) is a comprehensive contract that sets out the general terms and conditions governing a long-term business relationship between two parties. It is usually a client and a service provider. Instead of negotiating a new contract each time services are needed, the MSA provides the overall legal framework (such as payment terms, liability, confidentiality, dispute resolution, and intellectual property rights) that will apply to all future projects. 

Maintenance Agreement
A contract that sets out the obligations for ongoing maintenance, servicing, or repairs of equipment, property, or systems. It ensures that assets remain in good working order and that responsibilities are clearly assigned.  

Malicious 

In law, malicious means doing something intentionally harmful or damaging on purpose. It refers to actions carried out with the aim of causing injury, loss, or distress to another person, rather than by accident or negligence. Malicious conduct can be a factor in both civil and criminal law, affecting liability, penalties, and damages. 

Mediation Agreement
A contract that requires parties to attempt to resolve disputes through mediation before going to court or arbitration. It promotes amicable settlement and reduces litigation costs. Outcomes of mediation are usually non-binding unless recorded in a settlement agreement.  

Memorandum of Understanding (MOU)  

A Memorandum of Understanding (MOU) is a written document between two or more parties that outlines their mutual intentions, expectations, and responsibilities for a collaboration or partnership, typically serving as an initial step before a formal, legally binding contract is established. While MOUs are often not legally binding, they clarify the terms of an understanding and are used across various sectors, including business, government, and international law.  

Merger Agreement
A contract governing the combination of two or more companies into a single legal entity. It sets out the terms, structure, and process of the merger, including asset transfers, liabilities, and shareholder rights.  

Misrepresentation 

Making a false, incorrect, or misleading statement of fact that causes another person to enter into a contract. It does not have to be intentional as even innocent misrepresentation can make a contract invalid or give the other party the right to cancel or claim damages. 

Mitigation  

The duty of the injured party is to take reasonable steps to minimize losses or damages after a breach of contract. A party cannot simply allow losses to accumulate if they could have been reasonably reduced as the failure to mitigate may reduce the amount of damages recoverable in court. 

Mortgage Agreement / Mortgage Loan Agreement
A loan agreement where money is borrowed and secured by real estate property. The borrower retains possession, but the lender has a legal right over the property until repayment is completed. 

Mutatis Mutandis 

A Latin phrase meaning “with the necessary changes having been made.” In contracts and legal documents, it indicates that certain words, clauses, or rules apply in a similar way to a new situation, but with the obvious or required adjustments. A contract may state that “the provisions for Party A apply to Party B, mutatis mutandis.” This means the same rules apply to Party B, but with names, roles, or details adjusted where necessary. 

Mutual Non-Disclosure Agreement (Mutual NDA)
A confidentiality agreement where both parties agree not to disclose each other’s sensitive or proprietary It is commonly used in negotiations, joint ventures, and partnerships. information.  

N 

Negligence 

Negligence means not taking proper care when the law requires you to. A person is negligent if they fail to act with the level of caution or responsibility that a reasonable person would use in the same situation. In law, negligence can make someone legally liable for the harm or damage caused. 

Negotiation 

Negotiation is the process where people or businesses disagree discuss their differences to try to reach an agreement. In contracts, negotiation allows the parties to talk through terms such as price, deadlines, or responsibilities until they settle on wording that works for both sides. 

Non-Compete Agreement
A contract that prevents one party, usually an employee or business partner from starting a competing business or working with a competitor for a set period and within a defined area. It may also stop someone from soliciting clients, employees, or using trade secrets. Jurisdiction notes: enforceability varies by country or state. SEO: “non-compete agreement template,” “non-compete contract meaning.” 

Non-Disclosure Agreement (NDA)  

A non-disclosure agreement (NDA) can also be referred to as a Confidentiality Agreement and is a legally binding contract used to protect confidential information that one party shares with another. It sets out what information must be kept secret, who may access it, and for how long the obligation of confidentiality lasts. NDAs are most commonly used in business negotiations, employment relationships, joint ventures, research projects, and technology or product development. 

Notarization  

Notarization is an official, fraud-deterrent process by which a notary public verifies the authenticity of a document and its signatories. This process involves the notary examining the document and/or the identity of the people signing it, certifying its authenticity, and keeping a record of the act. The result is a trustworthy, officially recognized document that can be trusted by parties involved in a transaction. Notarization is often required for property transfers, affidavits, and certain contracts.  

Novation Agreement
A novation agreement is a new, separate legal contract that extinguishes an original contract and replaces it with a new one, typically substituting a third party for one of the original contracting parties. For a novation to occur, all original and new parties must consent to the transfer of rights and obligations, releasing the outgoing party from its duties and creating a new agreement.  

O 

Oath 

An oath is a formal promise to tell the truth, often made by calling on a higher power, such as God, to witness it. Oaths are commonly used in court when witnesses testify, or when someone takes up a public office. In many jurisdictions, people who do not wish to swear a religious oath can make a solemn affirmation instead. 

Obligation  

A legal or moral duty to do something or pay something, provide something, or pay something. In contracts, obligations are the specific promises or responsibilities each party agrees to carry out. Failing to perform an obligation can lead to breach of contract and legal consequences. 

Offer (Contract Law)
A proposal made by one party (the offeror) to another (the offeree), setting out terms that are capable of being accepted. Once accepted, the offer can create a binding contract. An offer must be definite and communicated by an invitation to negotiate is not the same as an offer. 

Option Contract
A contract gives one party the right, but not the obligation, to complete a transaction at a later date, usually within a fixed time frame. These are common in real estate or business acquisitions. The party holding the option usually pays a fee for this right.  

Order of Court (Court Order) 

A court order is a formal written instruction from a judge or court requiring someone to do something or stop doing something. Court orders are legally binding and enforceable by law. Disobeying a court order can lead to penalties, fines, or imprisonment. 

Ordinance 

An ordinance is a law made by a local or regional authority, such as a provincial, state, or municipal council. Ordinances deal with matters within that authority’s powers, such as zoning, public safety, or local services. In some countries, the term also refers to temporary laws made by the executive authority until confirmed by the legislature. 

Outsourcing Agreement
A contract where one business hires an external company or service provider to handle certain tasks, services, or business processes. This can include IT services, customer support, payroll, or manufacturing. The agreement defines service levels, responsibilities, and costs.  

Overage  

An overage clause is a contractual agreement, often in a property or land sale, which requires the buyer to make an additional payment to the seller if the value of the property increases after the sale. It is also known as a “clawback” or “uplift” agreement. 

Overpayment Clause
An overpayment clause defines the process and conditions under which an overpayment is recovered when a payer sends more money than is owed, such as an employee receiving excess salary or a customer paying too much for a service. These clauses specify the obligated party’s duty to repay the overpaid amount, often outlining the method and rate of recovery to prevent financial harm and ensure the accurate reconciliation of accounts.  

P 

Parol Evidence Rule  

 A legal principle that generally prohibits the use of extrinsic evidence to contradict, alter, or add to the terms of a complete and final written contract, ensuring that the written document stands as the sole and true representation of the parties’ agreement. While the rule preserves the integrity of written agreements, it has two functions: the “integration rule” prevents evidence that changes the written terms, and the “interpretation rule” allows external evidence to clarify ambiguous terms within the contract itself. 

 Patent  

A patent gives an investor exclusive legal right to make, use, and sell their invention for a limited period, usually 20 years. Patents protect new inventions, processes, or designs and stop others from copying or profiting from them without permission. 

Patent agreement  

A legally binding contract that outlines the terms and conditions for the use, ownership, or transfer of a patented invention. These agreements enable an inventor to commercialize their intellectual property (IP) and can take several forms, depending on the nature of the transaction. 

Partnership Agreement
A contract between business partners that sets out their rights, duties, profit-sharing, and responsibilities. It covers decision-making, contributions, dispute resolution, and what happens if a partner leaves.  

Pending 

Pending means that something is waiting for a decision, outcome, or completion. In legal terms, a case, application, or action is pending when it has been started but not yet resolved. 

Performance  

 In contract law, performance means carrying out the obligations promised in the contract. Each party must perform as agreed, such as delivering goods, making payment, or completing services. Failure to perform may lead to a breach of contract. 

Performance Bond
A financial guarantee, often used by a bank or insurer to ensure that a contractor completes their contractual obligations. If the contractor fails, the bond compensates the client for losses. Common in construction and government contracts.  

Per se 

Per se is a Latin phrase meaning “in itself” or “by itself.” In law, it is used to show that something is considered on its own, without needing additional proof. 

Power Purchase Agreement (PPA)
A contract often used in energy projects, where a buyer agrees to purchase electricity or power at agreed rates for a fixed period. PPAs provide stability for both energy producers and buyers.  

Power of Attorney (POA)
A written legal document in which a person, known as the principal, appoints another person, the agent or attorney, to act on their behalf in legal, financial, or personal matters. This grants the agent the authority to make decisions and perform actions as if they were the principal. The agent’s actions are binding on the principal, and the document can grant general powers for various matters or special powers for a specific transaction.  

Precedent  

A legal decision made by a court that serves as an example or authority for future cases with similar facts or issues. Precedents create consistency in the law through the principle of stare decisis. 

Prenuptial Agreement (Prenup)
A contract made before marriage, setting out how assets, debts, and financial matters will be handled if the marriage ends. Prenups are common where one or both spouses want to protect property, inheritance, or business interests. 

Prescribe / Prescription Period 

To prescribe in law means that a claim or case expires after a set period of time, known as the prescription period. Once this time has passed, a person can no longer bring the case to court. The length of the period varies by type of claim and by jurisdiction. 

Privity  

The legal relationship between parties to a contract, which gives them rights and obligations toward each other. Only parties in privity can enforce the contract or be bound by it unless an exception applies. 

Prima Facie 

Prima facie is a Latin term meaning “at first sight” or “based on first impression.” In law, it refers to evidence that is sufficient to prove a fact unless it is rebutted or disproved. 

Provisions / Provision 

Provisions are the specific rules, terms, or clauses contained in a law or contract. Provisions set out what must be done, what is allowed, or what is prohibited. 

Postnuptial Agreement
A Postnuptial Agreement is similar to a prenup but is made after marriage. It sets out financial arrangements, property rights, and responsibilities if the marriage ends. Postnups may also update or replace earlier prenuptial terms. 

Purchase & Sale Agreement
A contract that sets out the terms for buying and selling goods, property, or assets. It includes details such as price, payment, delivery, conditions, and remedies if something goes wrong.  

Q 

Quantum Meruit
Latin phrase meaning “as much as earned.” In law, it is a claim for reasonable payment for services provided, even where there is no enforceable contract or where the contract does not specify a price. The principle stops one party from unfairly benefiting at another’s expense.  

Quasi-Contract
A legal obligation imposed by a court to prevent one party from being unjustly enriched at the expense of another, even if no formal contract exists. It is also called an implied-in-law contract. Quasi-contracts ensure fairness by requiring repayment or compensation where keeping a benefit without payment would be unfair.  

Quid pro quo 

Quid pro quo is a Latin phrase meaning “something for something” or “one thing in exchange for another.” In law and contracts, it refers to the idea of mutual exchange, where each party provides something of value in return for what the other gives. This exchange is what makes a contract valid. 

R 

Real Estate Contract
A legally binding agreement that sets out the terms and conditions for buying or selling immovable property. It usually includes the purchase price, payment terms, property description, closing date, and obligations of both buyer and seller. 

Rebates 

A rebate is an amount of money deducted from the tax or payment you owe, usually granted by law or policy. Rebates may reduce income tax, sales tax, or other charges, and are often used as an incentive or form of relief. 

Regulation 

A regulation is a law or rule made by a government minister or authority who has been given the legal power to do so under an Act of Parliament. Regulations give details of how broad laws should be applied in practice and are legally binding. 

Remedy  

The legal solution is available when someone’s rights are violated, or a contract is breached. Remedies can include financial compensation (damages), cancelling the contract, or requiring performance of the agreed terms. 

Remedies for Breach of Contract
The remedies for breach are the specific legal options available when one party fails to honour a contract. These may include financial compensation for loss, cancelling the contract and restoring parties to their original positions or a court order requiring the breaching party to fulfil their contractual promise. 

Renewal Clause
A provision in a contract that allows the agreement to be extended beyond its term, either automatically or the option of one or both parties. Renewal may be for the same terms or with new negotiated terms.  

Repossession 

Repossession is when a lender or seller takes back goods or property that were sold on credit because the buyer has failed to keep up with instalments. Repossession is common with vehicles, furniture, or homes bought on hire-purchase or mortgage. 

Rescission of Contract
The cancellation of a contract, with the aim of restoring the parties to the position they were in before entering into the agreement. Rescission may occur by mutual consent, by law, or as a remedy for fraud, misrepresentation, mistake, or breach.  

Restrain 

To restrain means to stop, limit, or prevent someone from doing something. In law, restraint may take the form of a court order (injunction) preventing certain actions. 

Retainer  

Money paid in advance to secure the services of a lawyer or other professional’s services. It may be a one-off upfront fee, or funds held in trust and used as work is carried out. Retainers ensure availability and commitment from the professional. 

Review 

A review is when a higher court examines the decision of a lower court or authority to check whether the correct procedures and laws were followed. Unlike an appeal, which reconsiders the merits of the case, a review focuses on legality and fairness of the process. 

Right of First Refusal  

The contractual right that gives one party the first opportunity to buy or lease property, goods, or shares before the owner offers them to others. If the holder declines, the owner may then sell to others. 

Rule nisi 

A rule nisi is a temporary court order that will become final on a future date (the “return day”) unless the affected party shows why it should not. It is often used in urgent matters to provide immediate but conditional relief. 

S 

Sales Contract
A legally binding contract that sets out the terms of selling and buying goods or products. It normally includes the description of goods, price, payment terms, delivery conditions, and remedies for breach.  

Secondment Agreement
A contract where an employee is temporarily assigned to work for another organization, while remaining employed by their original employer. It sets out the duties, duration, reporting lines, and who pays the employee’s salary.  

Security Agreement
A contract that creates a security interest in personal or real property to guarantee repayment of a loan or performance of an obligation. If the borrower defaults, the secured party may take or sell the property. In the U.S., these are often governed by the Uniform Commercial Code (UCC).  

Service Level Agreement (SLA)
A contract between a service a provider and customer that defines the standards and levels of service to be delivered. It often includes performance metrics, monitoring methods, and penalties if standards are not met.  

Severability Clause  

A provision that ensures if one part of the contract is found invalid or unenforceable, the rest of the agreement still applies. This prevents an entire contract from failing due to one defective term. 

Settlement Agreement
A contract used to resolve a dispute without going to court. Each party agrees on how the matter will be settled, such as payment, confidentiality, or future obligations. Settlement agreements are common in employment, commercial, and civil disputes.  

Sequestration 

Sequestration is the formal legal process used to declare a person insolvent (bankrupt) when they cannot pay their debts. Once sequestration is granted by a court, the debtor’s estate (all their assets and property) is placed under the control of a trustee or liquidator. The trustee sells the assets and uses the proceeds to pay creditors according to legal rules. After sequestration, the debtor may be discharged from their debts, but this can also limit their ability to trade, borrow, or hold certain positions. 

Servitude 

A servitude is a real right registered over land that allows someone to use or benefit from another person’s property without owning it or paying rent. Servitudes can be personal (benefiting a specific person, like a right of habitation) or praedial (benefiting another piece of land, like a right of way). They are often used for access, utility lines, or shared resources. Servitudes are enforceable against future owners of the land if they are registered. 

Set Aside 

To set aside means to cancel, annul, or overturn a decision, judgment, or contract, usually by order of a court. If something is set aside, it has no legal effect as if it never happened. 

Shareholders’ Agreement
A contract among the shareholders of a company that sets out their rights, duties, and obligations, including decision-making processes, share transfers, dividend policies, and dispute resolution.  

Statute of Limitations  

A statute of limitations is a law that sets a maximum time limit for starting legal proceedings, like filing a lawsuit, after an incident or discovery of a harm occurs. This period varies by the type of legal claim and the jurisdiction, meaning the time limit can differ significantly from one case to another. The purpose is to ensure fairness by preventing stale claims and providing legal certainty. 

Stock Purchase Agreement
A contract that sets out the sale and transfer of company shares between a seller and buyer. It typically includes purchase price, warranties, closing conditions, and restrictions on transfer.  

Specific Performance  

Specific performance is a legal remedy in contract law where a court orders a party to fulfill their contractual obligations exactly as agreed upon, rather than paying monetary damages. This equitable remedy is typically reserved for unique or irreplaceable subject matters, such as real estate or rare goods, where monetary compensation would be inadequate to remedy the harm caused by the breach. The court grants specific performance at its discretion, considering the specific facts and circumstances of the case. 

Sublease Agreement
A contract where a tenant rents out all or part of the leased premises to another party, while still remaining responsible to the landlord. It outlines rent, duration, and rights of the subtenant. 

Sue / Suing 

To sue means to start a civil case in court against someone to claim money or enforce a right. Suing is different from criminal prosecution and is used to resolve private disputes. 

Surety 

A person or company that guarantees another person’s debt or obligation. If the debtor fails to perform or pay, the surety is responsible. Sureties are common in bonds, loans, and construction contracts. 

Subrogation  

The legal right of one party to step into another’s legal position to enforce a claim or collect a debt. It commonly occurs in insurance, where an insurer pays a claim and then seeks reimbursement from the third party responsible. 

Supply Agreement
A contract where one party agrees to provide goods or services on an ongoing basis to another party. It usually covers pricing, delivery schedules, quality standards, and duration. 

T 

Tenancy  

The legal right to occupy and use property owned by someone else, usually under a lease or rental agreement. The tenant pays rent and must follow the terms of the tenancy, while the landlord retains ownership. Tenancies can be residential, commercial, or agricultural. 

 Tenant 

A tenant is a person who rents property from a landlord or landlady under a lease or rental agreement. Tenants have the right to occupy and use the property but must pay rent and follow the terms of the lease. 

Tenure 

Tenure refers to the way property, especially land, is held or occupied. It describes the legal basis of a person’s right to use land, which may be freehold (ownership), leasehold (temporary right to occupy), or customary land tenure in some jurisdictions. 

Term  

establishes the rights, obligations, and responsibilities of the parties involved. These terms form the essence of the contract, specifying details like prices, delivery times, or specific tasks, and can be either express (explicitly written) or implied (assumed to be part of the contract due to law or custom). Term can also refer to the duration or length of time that a contract will remain in effect, specifying the period during which the parties’ obligations are binding. 

Terms and Conditions (T&C)
They define expectations for both parties, detailing responsibilities, restrictions, and consequences for violations, and can include information on dispute resolution, liability, and intellectual property. T&Cs are also known as “Terms of Use,” “Terms of Service,” or “User Agreements”.  

Termination Clause / Termination of Contract
A clause that explains how and when a contract can end. Termination may occur by notice, breach, expiry of term, or mutual agreement. Some contracts also allow for termination for convenience. The clause sets out required notice periods and consequences of ending the contract.  

Third Party  

A person or entity that is not directly part of a contract but may be affected by it. Generally, only parties to a contract those in privity have rights and duties, but some laws allow third parties to enforce certain terms. 

Trust Agreement
A Trust Agreement is a formal, legal document that establishes a legal arrangement where a person transfers assets to another party the trustee/s to hold and manage for the benefit of a third party, a beneficiary. This agreement outlines the instructions for how the trust assets are to be controlled, governed, and distributed, functioning as a set of rules for the trust’s operation. 

Turnkey Contract
A contract where a contractor agrees to deliver a fully completed, ready-to-use project to the client. The contractor handles design, construction, and delivery, and the client only needs to “turn the key” to start using it. These contracts are common in construction and engineering. 

Turnover 

Turnover is the total income a business earns from sales and services, before subtracting any expenses or costs. It is different from profit, which is turnover minus expenses.  

U 

Unconscionable  

A contract, term or clause that is extremely unfair, oppressive, or one-sided. Courts may refuse to enforce an unconscionable agreement because it shocks the conscience or takes advantage of unequal bargaining power. 

Unilateral Contract
A contract where only one party makes a promise, and the contract is completed when the other party performs the requested act. It differs from bilateral contracts, where both sides exchange promises.  

Unenforceable Contract
A contract that may have been validly formed but cannot be upheld in court, usually because it has legal defects. Common reasons include illegality, lack of required formalities (e.g., not being in writing where the law requires it), or the passage of a statute of limitations. 

Upfront Payment Agreement
A contract clause that requires a payment to be made in advance, before goods are delivered or services are performed. It provides security to the seller or service provider and is common in high-risk or custom work arrangements. 

Usufruct 

A usufruct is a real right that allows a person to use and enjoy property that belongs to someone else, including its income or fruits, without owning it. The owner keeps ownership, but the usufructuary has rights of use and enjoyment, often until death or for a fixed period. This is common in civil law jurisdictions. 

V 

Valid  

A valid contract, document, or action is one that is legally acceptable, enforceable, and compliant with all legal requirements. For a contract to be valid, it usually must include an offer, acceptance, consideration (something of value), and legal capacity of the parties. 

Vendor Agreement
A contract between a supplier (vendor) and a client, setting out the terms of supply, pricing, delivery, warranties, and payment. Vendor agreements are common in retail, manufacturing, and service industries, and help manage relationships with third-party suppliers. 

Venue  

The specific location or court where a legal case should be heard. Venue rules determine which geographic area is appropriate for a case, often based on where the dispute arose or where the parties live. Venue is different from jurisdiction, which concerns a court’s legal authority. 

Vis-à-vis 

Vis-à-vis is a French phrase meaning “in relation to” or “with regard to.” In contracts and legal writing, it is often used to compare or connect two things. A contract may describe the obligations of one party vis-à-vis the other, meaning in relation to the other’s duties. 

Void Contract
A contract that is invalid from the beginning and has no legal effect. It cannot be enforced by law, usually because it involves illegality, lacks essential elements, or is against public policy. In the eyes of the law, a void contract is as if it never existed.  

Voidable Contract
A contract that is initially valid and enforceable but may be declared void by one of the parties due to certain legal reasons. Common grounds include misrepresentation, duress, undue influence, or contracts with minors. Unless voided, the contract remains in force.  

W 

Waiver 

The voluntary surrender or giving up of a known right, claim or privilege. By waiving a right, a person chooses not to enforce it, either temporarily or permanently. Waivers are common in contracts, where one party may excuse non-performance or agree not to enforce certain terms. 

Warrant 

A warrant is a formal legal document issued by a court or authorised officer (such as a magistrate or senior police officer) giving permission for specific actions, such as arrests, searches, or evictions. Warrants must be based on legal grounds and often require sworn evidence. 

Warranty (Contract Clause)
A promise, or guarantee made in a contract about the quality, condition or performance r of goods or services. If a warranty is breached, the buyer may be entitled to repair, replacement, or damages. Warranties can be express (clearly stated) or implied by law.  

Will 

A will is a signed legal document in which a person (the testator) states how their property and possessions should be distributed after their death. A will may also appoint guardians for minor children and name executors to carry out its terms. 

Wind Up 

To wind up an estate means to collect all the possessions and money belonging to the deceased, pay debts, and distribute what remains to heirs or beneficiaries. The process is managed by an executor or administrator. 

Witness 

A witness is a person who has seen, heard, or experienced something relevant and may give evidence in court. Witnesses may testify orally, sign statements, or provide sworn affidavits. Some contracts also require witnesses to confirm signatures. 

Work-for-Hire Agreement
A contract that specifies that intellectual property created by an employee or contractor belongs to the hiring party, not the creator. These agreements are common in publishing, software, media, and design.  

Withdrawal Clause
A contract clause that allows for a party to withdraw from an agreement under specific conditions. It sets out when and how withdrawal may occur and what notice or penalties apply.  

Written Contract
A legally enforceable agreement recorded in writing. It provides unmistakable evidence of the parties’ rights, obligations, and terms, making disputes easier to resolve than with oral contracts. In many cases, certain contracts (for example, property sales) must be in writing to be valid.  

X

Y 

Yield 

To give up, surrender, or concede a right, claim, or position. Yielding a right may be voluntary (by agreement) or required by law. It is similar in effect to a waiver. 

Yield Guarantee Agreement
A contract where one party guarantees a minimum level of return or production, regardless of the actual results. These agreements are common in agriculture (crop yields), investment, and energy contracts (solar or wind farms). If the guaranteed yield is not met, the guarantor must compensate the other party.  

Yield Maintenance 

A Yield Maintenance Clause is a provision in loan contracts requiring the borrower to compensate the lender if the loan is repaid early, ensuring the lender receives the same return (yield) as if the loan had run to full term. It protects lenders against interest rate changes and lost income. 

Yield Spread Agreement 

A Yield Spread Agreement is a financial arrangement where the difference (spread) between interest rates or returns is shared or allocated between parties. It is often seen in mortgage lending, investment agreements, and structured finance. 

Yardstick Clause / Benchmark Clause
A clause that measures a party’s performance or obligations against a specific standard, index, or benchmark. It provides an objective way to judge whether contractual duties are met.  

Z 

Zero-rated supply 

A Zero-rated supply refers to goods or services that are taxable but charged at a 0% VAT (Value-Added Tax) or sales tax rate. This allows businesses to recover input tax even though no output tax is charged. Common in international trade and essential goods. 

Zero Tolerance Clause
A contract clause specifying strict compliance with specific rules, policies, or standards, leaving no room for exceptions. These clauses are common in employment, contracts, safety agreements, compliance frameworks, and workplace codes of conduct. Breach of a zero-tolerance clause often results in immediate disciplinary action, termination, or contract cancellation. 

Zoning  

Local government regulations that control how land and buildings can be used in different areas. Zoning laws divide areas into zones (such as residential, commercial, industrial, or agricultural) and restrict development and land use accordingly. 

Zoning Compliance Agreement
A contract between a property owner and local authorities that ensures the use of land or buildings complies with zoning laws and regulations. It may set conditions for use, restrictions, or remedies for non-compliance.  

Zone of Risk Clause
A contractual that allocates responsibility for risks related to certain operations, areas, or events. These clauses are used in construction, energy, mining, and other industries where projects involve inherent dangers. The clause clearly identifies which party bears liability for accidents, damages, or losses within the defined “zone of risk.”  

Zone Pricing Agreement 

A Zone Pricing Agreement is a contract where prices for goods or services vary depending on the geographic zone or region of delivery. It is often used in transport, utilities, and supply contracts.