A contract terms glossary is a short dictionary of contract terms.

A

Abeyance — Momentary suspension of activity.

Abscond — To run away to avoid prosecution.

Accord and satisfaction — An agreement that puts an end to obligations and settles a legal dispute between two or more entities.

Acquiescence — An intentional or unintentional action or inaction that legally binds a person to an obligation.

B

Bad faith — Plan to take advantage of by deceit.

Bid — The offer a supplier makes, for consideration, to provide services or goods.

Bill of material — A list of a product's component parts and materials.

Boilerplate — Standard clauses used generally as a type of template for contracts. Examples are:

  • Entire agreement clauses.
  • Arbitration clauses.
  • Majeure clauses.

Breach of contract — The failure of a party to satisfy the terms or conditions of a contract.

C

Call-off agreements — Canceled contracts.

Collateral — Property put forth to guarantee a loan.

Copyright — The legal and assignable right an originator has, for a fixed number of years, to claim exclusive ownership of and take credit for an intellectual property.

D

Debt — An amount of money, goods, or services owed.

Debtor — A person who borrowed money, goods, or services from another person known as the creditor.

Debriefing — Explaining to an unsuccessful bidder why they were not awarded a contract.

E

Employment contract — A legally binding agreement between an employer and an employee.

End-user — Consumer.

Enquiry — An invitation to suppliers to bid according to specification.

F

Force Majeure — A clause that excuses a party when they fail to do their contractual duties owing to circumstances beyond their control.

Franchise — A commercial agreement, which allows one party to do business with the product, property, or business name of another party.

G

Guarantee — An agreement that allows one party to provide assurance of a second party's loan duty to a third-party.

I

Invitation to treat — A call for quotation issued by a buyer.

Intellectual property rights — The exclusive, legal rights of the originators of intellectual properties.

J

Joint venture — An agreement that allows two or more independent businesses to run a common business, share its costs, profits, and losses.

L

Liability — The subjection of a liable entity to legal obligations.

Liquidation — The official disbanding of a company or business partnership.

M

Misrepresentation — The deception of one party by another through false statements.

O

Obligation — A requirement established legally in a contract or as a result of damage done to some entity or property.

Offer — A clearly stated request for the possible supply of goods or services for a defined monetary reward, which becomes a legally binding contract when granted.

P

Parent company — A company that owns more than 50 percent of the right to vote or controls the board of directors of another company.

Partnership — The joining of two or more organizations to run a business together.

Patent — A license or authority exclusively conferred on an inventor for their invention, allowing them the monopoly of producing, marketing, profiting from, and taking credit for it for a defined period.

Q

Quorum — The least number of people required at a meeting in order to make binding decisions.

Quote — A supplier's offer in response to a buyer's request.

R

Recitals — The introductory paragraphs of a written contract, which serve as an overview of the contract.

Rescind — To cancel a contract.

Restrictive covenant — An agreement between parties not to work with competitors within a defined period in the agreement.

S

Settlement discount — A discounted price offered by a supplier to a buyer for immediate clearance of invoices.

Shareholders' agreement — An agreement between shareholders on the running of their company.

Stock turn — The amount of use the total stockholding of an item gets annually, calculated by dividing the sum of yearly usage by the average stockholding.

T

Trademark — A name or logo registered and protected by law.

U

Underwriter — Someone who signs as a party to a contract.

V

Variation of price — Terms of payment that provide for an alteration in price caused by defined events such as an upsurge in the volume of sales above a defined limit.

W

Waiver — A known right or privilege that's intentionally let go of.

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