Legal terms are in fact not that complicated and you will be surprised that you don’t even need to speak Latin to understand small business law. On the contrary, speaking “legal” is going to give you enormous power to take the best business decisions for your company and have less stressful nights over contracts and regulations you could never really get.
Let’s be honest – business law (and law as a whole) is complicated. And not because of the rules and regulations but because of the language that is used to talk about otherwise simple things.
In a way law is like the church.
All the scripts are written in a language no modern human can understand and that’s why we need priests to translate for us. In business law we need lawyers (did I just compare lawyers and priests?).
And we are more than happy to play the role of the interpreter – it puts us in a position of power. However, that’s not the most practical thing for a business owner or manager.
Each entrepreneur or company director needs to understand as much of the “legal” language as to know what’s actually going on in the company. This saves the business money and the manager time that can be invested in much more productive business activities.
If you are tired of feeling like you need a translator every time you read a legal document or new legislation, the following
Australian Business Law Glossary
is the perfect tool for you!
Australian Business Number – an identifier for dealings with the ATO and for future dealings with other government departments and agencies.
Australian Company Number – issued by ASIC that uniquely identifies each registered company/corporation.
Australian Consumer and Competition Commission
Australian Taxation Office
Act of bankruptcy
An action of a debtor that shows an inability to pay their creditors.
ADR is an umbrella term that covers methods of attempting to resolve a dispute without going to Court. Mediation and arbitration are types of ADR.
Money owed to you that you cannot collect, due to the inability of the debtor to pay.
Payment by a tenant to a landlord before the tenant takes over the premises as security for its obligations and from which the landlord may be able to deduct arrears of rent or the cost of rectifying damage.
Failure to comply with one or more terms or conditions of an Agreement.
Contractual promise is given in return for something of value. Consideration is the “price” given by each Party to a Contract in exchange of the contractual promise of the other Party.
Consumer Price Index – a measure of the aggregate rise or fall in prices of commonly used goods and services, published by the Commonwealth Government as a basis, among other things, for deciding what overall increases should be made to wages and salaries. The CPI is also often used to calculate rent increases on rent reviews.
Any type of property which has been formally committed to support or guarantee a loan.
Judge-made law, which applies on the basis of historical legal precedents developed over hundreds of years. Judges seek these principles out when trying a case and apply the precedents to the facts to determine a judgment. Common law is often contrasted with code jurisdictions which require all laws to be written enacted in statute.
Confidentiality / Nondisclosure
Protection against disclosure to an outside person or third party of information revealed in a professional or contractual relationship. The terms of agreements are sometimes required to be kept confidential.
Conflict of interest
A situation where a person’s fiduciary duty or contractual obligation towards someone else, are or may be affected by their own interests.
A right that gives the author of an artistic work, for a limited period, the exclusive right to make copies of their work and publish and/or sell those copies. Registration is not a prerequisite for protection.
A special type of written agreement. Unlike a contract, it does not require consideration to pass from one party to another, but must be in writing with copies exchanged between the parties.
Publication of false and derogatory statements about another person, without any justification recognised by law.
Where the plaintiff is able to enter judgment against a defendant in the absence of a defence being filed with the Court.
A personal guarantee given by a director of a company that she/he will be personally responsible for a debt or other liability of the company.
Discharge from bankruptcy
Releases the bankrupt from his/her debts.
The act of ending, terminating or winding-up a company or partnership.
Duty of Care
The obligation of a person to exercise reasonable care in the conduct of an activity. Breach of a duty of care which causes damage or loss to another may give rise to an action in negligence.
A clause in a contract which attempts to exclude, limit or avoid liability.
A formal statement made when offering goods for sale which is made for the purpose of encouraging people to buy those goods.
Country or State laws applicable to the Agreement. The Governing law will be used to interpret and make decisions on agreements, key in international dealings.
An unstated contract term that services and related goods will be fit for the purpose for which they are supplied, unless such warranty can be lawfully excluded.
Risk protection for activities for which a business is or may be liable.
Combine together – usually assets to form a limited liability company.
Joint and several liability
Arises as an express term of a contract where, say, several people agree to be liable for a debt, the party with the benefit of the obligation may sue any or all of those people.
Licensing of rights
Gives the licensee the right to use (but not own) the rights of the owner (licensor) upon agreed terms.
Letter of demand
Letter usually from a lawyer on behalf of a client that demands payment or some other action, in respect of an agreement. Usually a demand letter will set out why the payment or action is claimed, how it should be carried out (eg. payment in full), directions for the reply and a deadline for the reply.
Liability is someone’s legal responsibility, duty, or obligation to compensate another person for the harm the first person has caused by breaching legal duties to the other person.
A dispute is in litigation or is being litigated when it has become the subject of a formal court action or lawsuit.
A business structure – one person owns all assets and liabilities of the company.
A type of business structure that offers limited liability and legal protection for its owners.
Making a false statement, intentionally or not, to induce someone to do something they would otherwise not have done, e.g. enter into a contract.
Damages of a small amount ordered where a contract has been breached or a right has been affected, but no material damage results.
A business structure similar to sole trader but with multiple owners with equal liabilities that act as an entity and have an official agreement on that.
Power of attorney
A formal written legal document by which one person gives another power to represent them or act in their place for certain purposes. Must be registered to allow for the attorney to deal with the donor’s assets.
The document that governs the relationship between the company and the outside.
Waiver, to waive
To waive one’s rights means to intentionally give up one’s rights.
Assurance where one Party promises that that a certain fact is true. A Warranty may be express or implied. A Warranty is often coupled with an Indemnity. The following is an example of a Warranty:
Okay, we admit it – that’s not all. There are hundreds of legal terms used in business. There is a small detail that you need to understand – your job is to cover the business operations legal stuff.
If you need to go to court, no matter how many business law terms you know, you can’t make it without a lawyer. So don’t go deep into understanding the court language, leave this to the lawyer.
Learn, comprehend and use these terms above in your day-to-day business dealings with the law and you are fine (and will never need to learn the “court” legal terminology).
Now let’s make your life real easier:
Print out this business glossary and put it on a visible place on your desk. It will come in handy when you review your next contract or need to take an important business decision.
If you use it actively you will know all the legal terms that businesses need to use every day in no time.
You will be able to have more in-depth conversations with your lawyer and achieve results faster.
Your business is going to have a legal advantage and you will be confident that you are doing the best for it to grow and thrive.
If you want to take your knowledge of business law one step further to really understand the why behind regulations and be able to leverage law for the advantage of your business, follow Aquarius Education on Facebook, Twitter and LinkedIn so you can be the first to hear about our upcoming Essentials Of Business Law workshops.
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And I want to give you a FREE eBook that will help you start off on the right foot with business law, save money on legal fees, avoid legal trouble and create a legally sexy business.
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See you there!
DISCLAIMER: The glossary is for information purposes in Australian business law only. This is not legal advice, but a guide that does not claim to contain all terms. It is not an exhaustive list and is proposed as a guide only. Aquarius Education recommends that before taking any action you should obtain legal advice.