Glossary of Legal Terms

Agreement

Is a mutual assent between two or more parties to do or abstain from doing something. Moreover, it is a meeting of minds with a common intention with the understanding and acceptance of reciprocal legal rights and duties. 

Agreements are often confused with contracts, nevertheless, an agreement has a wider meaning than a contract.

Amendments

An amendment is an addition, deletion, or alteration made to a constitution, statute, law, pleading, or contract. It comes from the verb to amend, which means to change for the better, and there are formal steps to follow to make it valid.

In contract law, amendments provide one or more of the parties involved in an agreement to revisit or renegotiate the terms agreed upon, introducing changes to an existing contract.

Arbitration

Arbitration is a consensual and neutral procedure in which a dispute is submitted, by the parties of an agreement, to an independent third party who makes a binding decision without going to court. 

The third-party acting as an arbitrator must be agreed upon by both sides. Contracts often include arbitration clauses nominating an arbitrator in advance.

Assignment

This term refers to the action by a person to transfer rights, benefits, or property to another person. The one who transfers his rights (or benefits or properties) is the “assignor” and the one who receives them is the “assignee”.

Breach of contract

A breach of contract is a violation of the terms and conditions of a binding agreement, that is, of the contractual obligations that the parties involved agreed upon. In the event of a breach of contract, the non-breaching party may have a right to damages, specific performance, or termination of the agreement.

CLM

CLM is the acronym for "Contract Lifecycle Management", and is the process of digital tracking and managing every aspect of a contract through its completion.

This type of management solution can help parties' agreement to ensure compliance, mitigate unwanted risks, create a contract repository with the possibility of searching and retrieving information easily, and keep you updated on contractor milestone dates, along with others.

Clause library

Is a repository filled with a collection of preconstructed and preapproved clauses used by an organization in the drafting of contracts. This tool allows you to reduce time and human drafting risks. Furthermore, it helps to optimize the performance of legal tasks in an organization.

Consideration

Consideration is the benefit expected by the parties to a contract, and what each party to the contract gives up or promises to do, to form the contract. This is one of the most important elements of a contract, and without which a contract cannot be enforceable.

Contract AI

Is the use of text-based machine learning on contracts, often used to assist in the management and review of legal agreements. Contract AI takes the natural language in agreements and transforms it into structured data and highlights specific information like governing law.

In addition, this software can help you with other AI solutions, such as contract drafting.

Counterparty

Counterparty means a party to a contract. It usually refers to the entity with whom one negotiates on a given agreement, and it can refer to either party or both, depending on context. Any legal entity can be a counterparty. Usually, to say that there are counterparties to an arrangement means that there is some potential for conflict between them.

Damages

Damages are legal remedies for breach of contract that provide a non-breaching party with monetary awards. This compensation serves to restore the non-breaching party to the position they would have been in if the other party had performed as promised. If another type of remedy is wanted but cannot be or is not given by the court, then damages will be awarded instead.

Entire agreement

An entire agreement clause states that the contract that parties have signed constitutes the whole agreement between them. This clause seeks to prevent parties from relying on preceding agreements or negotiations that have not been outlined in the contract.

Force majeure

Force Majeure is French for “greater force” and refers to events that occur by an “act of God”, for which neither party can be held responsible. It’s a provision included in contracts to remove liability for failure to perform and is sometimes called excused performance.

This provision is triggered in cases whereby events that are beyond a party’s reasonable control (such as unforeseeable and unavoidable catastrophes) preventing the parties involved in a contract from fulfilling their obligations. Examples of events and situations that usually fall under Force Majeure are: natural disasters, wars, acts of terrorism, diseases, epidemics, pandemics, among others.

Governing law

Also known as Choice of Law Provision, this is a contractual provision that determines which laws may apply in the event of a dispute between the parties to a contract. The clause ensures certainty regarding the laws that will be applied to interpret and enforce the terms of the agreement.

Indemnity

An Indemnity clause serves to protect one party from harm or loss where such harm or loss is attributable to another party. The clause has the effect of transferring liability to the party causing the harm.

The clause may apply, for example, where a software developer may sell a software license to a customer. However, the software contains intellectual property owned by another company and that company brings a lawsuit against the customer for breach of their property rights. In this case, the customer can demand that the developer defend the customer against any claim and pay for any losses it incurs.

Injunction

An injunction is a court order requiring a party to do or abstain from doing some specific action. It is a type of remedy granted by courts to maintain or change some circumstances that affect someone. 

If a party fails to comply with an injunction, could make them face criminal or civil penalties.

Intellectual property rights (IPR)

Intellectual property rights are the legal rights relating to the ownership of inventions, designs, processes, techniques, drawings, specifications, technical information and 'know-how', copyright, patents, and trademarks.

Jurisdiction

Jurisdiction refers to the power or authority to interpret and apply the law, as well as the limits (for example, territory) within such authority may be exercised. Jurisdiction is established by the Constitution, Federal, and State law. It determines whether the court or tribunal has authority over the parties, the subject matter, and judgment sought.

Limitation of Liability

The limitation of liability is a contractual provision to reduce or exclude the types and amounts of damages one party may claim from another party relating to non-performance or default.

This clause may apply to the entire contract or may be limited to only certain breaches or failures, depending on the parties’ agreement, and the specific words of the terms and conditions.

Material breach

Is a failure to perform the contract by either party that deeply affects the contract’s heart and makes it irreparably broken. On the other hand, a non-material beach allows parties to continue the contract’s performance because the essence of the contract is intact. 

If a material breach of the contract takes place, the affected party can end the agreement and go to court to request damages caused by the breach.

Obligation management

This term refers to the process of cataloging and tracking obligations and due dates in a contract. It helps you to ensure fulfillment of obligations in the right terms and time, and to avoid failures of performance contracts. For this reason, it is a good tool to be sure that you are complying with efficiently the terms of a contract.

Remedies

A remedy in law refers to the means by which someone who has been wronged can seek justice and be compensated for the harm. Remedies include the right to compensation, specific performance, injunction, and other equitable remedies.

Representations

Is a statement of fact, circumstance, or an intention, regularly made during negotiations by one of the contract’s parties to another. Representations may induce the receiving party to enter into a contract.

Furthermore, either party can claim the remedy called “misrepresentation” in case of a false representation has been made.

Severability

This term refers to a type of boilerplate provision that states that each clause is independent of the others. It allows the contract remains valid in case a court invalidates any of the clauses.

Termination for cause

Also called “Termination for Default”, is a contract provision that allows a party to completely or partially terminate its rights and obligations in the event another party fails to compy with the terms of the contract.

Usually, contracts require the terminating party to identify to the other party the reasons for the “for cause” event, as well as to provide a period of time for the other party to cure the problem. If the other party fails to solve the problems within the given period of time, the harmed party has the right to terminate the agreement and/or recover damages.

Termination for convenience

This clause, sometimes called “Termination on Notice” allows one party to terminate the contract without the need to establish that the other party has not fulfilled the terms of the agreement. The party intending to terminate may do so because its interests or needs have changed. Typically, termination for convenience specifies a notice period informing the other party when the agreement will come to an end.

Waiver

This term refers to the voluntary relinquishment or abandonment of a legal right, claim or advantage. The waiving party must have had knowledge of the existing right and the intention of forgoing it.

It also refers to the official document indicating by writing that someone has given up or waived a right or privilege. 

Warranties

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

eSignature

Is the abbreviation for electronic signature. This concept refers to the legal and efficient method that allows you to replace a handwritten signature and sign binding contracts without printing paper. For this reason, it helps you to save a lot of time and help the environment.

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