Common Legal Terms

We recognise that some wording used by business solicitors and other third parties can be confusing, so we would like to explain some of the more common legal business jargon to make running your business a little easier.


Using an independent third party to settle a dispute out of court. The arbitrator must be agreed by both sides. Contracts often include arbitration clauses nominating an arbitrator in advance.

Breach of contract

Failure by one party to a contract to uphold their part of the deal. A breach of contract will make the whole contract void and can lead to damages being awarded against the other party.


This is a major term in a contract. Conditions are the basis of any contract and if one of them fails or is broken, the contract is considered breached. These are different to warranties (the other type of contract term) which are less important and will not usually lead to the breach of the contract - but rather an adjustment in price or a payment of damages.

Confidentiality agreement

This is an agreement made to protect confidential information if it has to be disclosed to another party. This often happens during negotiations for a larger contract, when the parties may need to give information about a project to each other. They are also known as a non-disclosure agreement (NDA).


A contract is an agreement that commits you or your business to a course of action. It is important that you ask your solicitor or business adviser to explain any terminology that you do not understand to ensure you completely understand what you are signing.

Employment contract

If you are employing someone then you need a contract between your business and the employee. This differs from other contracts in that it is governed by employment legislation - which trumps normal contract law.


This stands for General Data Protection Regulations.  This new law came into play in May 2018.  Businesses now have stricter rules to follow when collecting and processing customer data. If a business is not following the rules then there are fines in place.


A company is insolvent when it is unable to meet its debts when they fall due, and/or when their liabilities (monies owed) exceed their assets (things they own).


A person or business deemed liable is subject to a legal obligation. A person/business who commits a wrong or breaks a contract is said to be liable or responsible for it.

Limited liability

This usually refers to limited companies where the owners' liability to pay the debts of the company is limited to the value of their shares.


Liquidation is the legal process of bringing a business to an end and distributing its assets to claimants (people they owe money to), which occurs when a company becomes insolvent.

Mergers and acquisition

Mergers and acquisitions are transactions in which the ownership of a company is transferred or consolidated. A merger usually involves two businesses joining together to become one bigger business. An acquisition is when one business takes over another business sometimes known as a takeover.


These are the promises made in a contract, but are less than a condition. Failure of a warranty results in liability to pay damages but will not be a breach of contract unlike not meeting a condition.

Find out more about our legal services for businesses by clicking here  or contact us for more information.



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