The law tends to get complicated with its terms and many different concepts. While law students have an edge wherein they learn terms thoroughly, grasping these terms for a layman can be quite challenging. To make things easier, here are 10 essential terms that are frequently used in corporate law:
Procurement refers to the act of buying goods and services. This process includes proper preparation and processing a demand. It ends with a proper end receipt as well as approving the payment. Your lawyer would tell you about this particular procedure, as many times one or the other party falters in this specific section. However, it is best to remain acquainted with this term yourself too. This procedure involves the following:
- Purchase planning
- Specifications development
- Value analysis
- Standards determination
- Supplier research as well as a selection
- Making a purchase
- Administration for the supply contract
- Disposals as well as the other associated functions
- Price negotiation
This process is typically a constituent of the company’s strategy; mainly because of the ability to produce essential materials that determine the running of the operations.
Without prejudice is a law term that implies the following: Without the abandonment of a right, privilege, and a claim. It also means that no admission of liability is implied.
When one uses this in a letter or a document, this term covers matter which:
- Cannot be used in the form of an evidence
- Cannot be considered as the last word on any subject matter
- Cannot even be used in the form of a precedent
While the content of such documents is not permissible in courts, it can be used for out of court settlements.
Additionally, when a court case gets dismissed; a court order may be issued without prejudice. In this case, it may imply that a new situation can be brought or a new order can be brought in on the same pretext as the original order.
Contract law refers to the body of law which governs both- oral and written agreements. These are both associated with the exchange of money, goods, services, and properties. It consists of topics including:
- Limitation of the actions
- Contract freedom
- Contract privity
- Contract termination
- Commercial paper
- Agency relationships
- Employment contracts
While these terms are well known to lawyers, even as a layman you should be well versed with these specific constituents of this law as it may come in handy later while resolving legal disputes.
Most people assume that they need to know only the legal context when it comes to a definition related to law. However, the situation is different for corporate law. Here is what you need to know about liability in all three contexts that may come in handy for you in the future:
Liability refers to the responsibility of one’s consequences of one’s ommissions as well as the acts. This is enforceable through a civil remedy or by criminal punishment
In finance, liability speaks of a claim made against assets or the legal obligations of an organization or a person. This may arise out of current or past transactions as well as actions. Liabilities not only require a mandatory assets transfer but also need the provision of services to be carried out in a determinable future.
When it comes to accounting, this term refers to the payable wages and accounts. It also refers to taxes and accrued rent as well. You can trade short and long term loans along with trade debt. The equity of owners is also considered to be a liability because it is an obligation for the company.
Non-circumvention, non-disclosure (NCND) agreement
This forms the basis of corporate law and is a relevant term to know. It is an instrument which is used in the early stages of a business transaction. Typically used by brokers, the purpose of this document is to ensure that:
- Intermediaries do not get bypassed (basically the ones who bring the seller and the buyer together)
- The information which is disclosed while making the negotiations is not quickly revealed to any other unauthorized party.
- Pro-rata Pro-rata refers to the proportionate allocation of a particular quantity. This is done based on a common factor. For instance, the profit gets divided amongst different stockholders based on the number of stocks that each holds.
- Fiduciary Duty Fiduciary duty refers to a legal obligation of a certain party where they are supposed to act in the favorable interest of the other one involved. The obligated party here is basically a fiduciary. It is someone whom you can entrust with the care of your money or property; whichever is relevant.
- Punitive Damages The court awarded sum, which is higher than the measurable value of an injury is considered to be punitive damage. They are not meant for compensation for the aggrieved party, but basically for punishing the offensive party which has been reckless.
- Voidable Contract A voidable contract refers to a contract that has a legal force and effect when made but can be annulled by the courts through rescission in the future.
- Indemnity Clause An indemnity clause refers to a specific provision in which one party commits to compensate each other or the other party involved in the case a liability, or harm which rises due to the contract.
All of the aforementioned terms are crucial for people to know; especially while dealing with corporate law.
Bonus terms you should know
Some bonus terms that we think you should be aware of include the following. Look these up, in case you are involved with any corporate law debacle.
- Cause of Action
- Provisional Remedy
- Stare Decisis