Litigation Terms:

 

• Complaint: A formal written document that starts a lawsuit. The plaintiff (the party bringing the case) files a complaint with the court describing what the other side did wrong and what relief is sought. Think of it as a letter to the judge saying, “Here’s what happened and why I’m suing.” For example, if a contractor fails to finish a project, a business owner might file a complaint asking the court to order payment or completion of the work.
  
  

• Demand Letter: A formal written letter sent before a lawsuit is filed, demanding that the other party take a specific action or stop certain conduct. It usually describes the harm caused, cites the legal basis for the claim, and explains what the sender wants (such as payment or performance). A demand letter gives the other side a chance to resolve the matter without going to court. For example, if a supplier fails to deliver goods as promised, you might send a demand letter requesting either delivery or repayment before suing.
  
  

• Defendant: The person or business being sued. In a civil case, the defendant is the party whom the complaint names as having caused harm. If you are the plaintiff, the other party is the defendant. For example, if you sue a supplier for not delivering goods, the supplier is the defendant in your lawsuit.
  
  

• Deposition: An out-of-court, sworn testimony session where a witness or party answers questions from lawyers. It works like an interview under oath: a court reporter records everything said, and later the transcript can be used in court. For example, before trial a lawyer might depose the opposing party to ask about an incident, with all answers recorded for use as evidence.
  
  

• Discovery: The process of exchanging information and evidence before trial. Each side can request documents, ask written questions (interrogatories), and take depositions to learn about the other side’s case. For example, in a contract dispute the plaintiff might request invoices or email communications from the defendant during discovery to prove a breach of contract.
  
  

• Injunction: A court order requiring someone to stop doing something (or sometimes to do something). It’s like a legal “stop sign” imposed by a judge. For instance, if a competitor starts dumping toxic waste on your property, a court could issue an injunction ordering them to cease that activity immediately. Violating an injunction can lead to penalties, so it’s a powerful remedy to prevent harm.
  
  

• Mediation: An informal dispute-resolution process where a neutral third party (mediator) helps both sides talk and reach an agreement. The mediator does not decide the outcome but assists communication. For example, if two business partners are arguing over a deal, they might meet with a mediator who helps them negotiate a fair settlement. Unlike a judge, the mediator cannot force a decision; both parties must voluntarily agree to any resolution.
  
  

• Plaintiff: The person or business who starts a lawsuit. The plaintiff files the complaint with the court claiming to have been wronged. For example, if your company sues a contractor for not fulfilling a contract, your company is the plaintiff. The plaintiff must prove the case at trial to win damages or other relief.
  
  

• Settlement: An agreement between disputing parties to resolve a lawsuit without going to trial. Usually one side pays money or provides some benefit, and both sides agree to drop the case. Settlements often involve compromises and do not include an admission of fault. For example, instead of pursuing a full trial, you and the other company might settle the dispute by having them pay you a negotiated sum and signing an agreement to end all claims.
  
  

• Temporary Restraining Order (TRO): A short-term court order issued to prevent immediate harm until a hearing can be held. A TRO can be granted quickly, sometimes without notifying the other party, if a judge believes urgent action is necessary. For example, if a former employee is about to disclose trade secrets to a competitor, a business may request a TRO to immediately stop them until a fuller hearing determines whether a longer injunction should be issued.
  
  

• Trial: The formal court process where each side presents evidence and arguments, and a judge (or jury) makes a final decision. If a case isn’t settled or resolved earlier, it goes to trial. In trial, both sides call witnesses, introduce documents, and the judge/jury decides who wins. Think of it as the “big showdown” where legal disputes are resolved in court. For example, after a breach-of-contract lawsuit, a judge might hear testimony and then decide which party is correct based on the law and evidence.
  
  

Breach of Contract Terms:

 

• Breach of Contract: When someone fails to honor a term of a contract without a legal excuse. In plain terms, it means breaking a promise made in a legally binding agreement. For example, if you hire a contractor to renovate a store and they either don’t start or do a poor job, that contractor has committed a breach of contract. The non-breaching party may then seek remedies for that breach.
  
  

• Consideration: Something of value exchanged by the parties to form a contract. It is the “payment” or promise each side gives to the other. For example, in a service contract where you agree to paint a building for $5,000, your painting service is your consideration and the $5,000 is the other party’s consideration. Without consideration on both sides, a contract generally isn’t enforceable.
  
  

• Damages (Contract): The money awarded to compensate for losses caused by a breach. In contract law, damages are meant to put the injured party in the position they would have been in if the contract had been performed. For example, if your supplier breached a contract and you had to pay extra to get materials elsewhere, you might recover those extra costs as damages. The court usually awards compensatory damages – an amount calculated to cover actual losses and sometimes lost profits.
  
  

• Material Breach: A very serious contract violation that goes to the core of the agreement. It’s so significant that it effectively destroys the contract’s purpose. For example, if you ordered a custom vehicle and the seller delivers a completely different model, that would be a material breach because you did not get what you bargained for. A material breach usually justifies ending the contract and suing for damages or other remedies.
  
  

• Specific Performance: A court-ordered remedy requiring the breaching party to perform exactly what they promised in the contract. Instead of receiving money, the non-breaching party gets what they originally agreed to buy or receive. This remedy is used when the subject matter of the contract is unique (e.g., a rare antique or custom property). For example, if someone agreed to sell you a one-of-a-kind painting and later refuses, a court might order specific performance forcing them to complete the sale.
  
  

Partnership Dispute Terms:

 

• Buy-Sell Agreement: A contract among business partners or owners that spells out what happens if a partner leaves, dies, or otherwise exits the business. It typically provides that the remaining partners must buy the departing partner’s share, usually at a predetermined price or method. For example, it might specify that if a partner quits, the others have first option to purchase their ownership interest. This avoids fights by pre-arranging how ownership changes should be handled.
  
  

• Fiduciary Duty: A legal obligation for partners to act in the best interest of the partnership, with loyalty and honesty. It means each partner must not secretly benefit at the expense of the partnership. For instance, if one partner learns of a business opportunity that fits the partnership, they must present it to the partnership rather than taking it personally. Breaching fiduciary duty can lead to liability in a partnership dispute.
  
  

• Partnership Agreement: A written agreement that sets the rules for how a partnership operates. It covers issues like profit sharing, decision-making authority, and procedures for resolving disagreements or handling a partner’s departure. Having a clear partnership agreement helps prevent misunderstandings and disputes. For example, it might state that each partner gets an equal share of profits and that major decisions require unanimous consent.
  
  

Commercial Real Estate Terms:

 

• Deed: The legal document that transfers ownership of real estate from one party to another. When you buy property, the seller signs and delivers a deed to you, which serves as proof of your ownership. Think of it like the title certificate to land or a building. Without a properly recorded deed, ownership isn’t officially changed.
  
  

• Easement: A right that allows someone to use a portion of another person’s property for a specific purpose. For example, a utility easement might let an electric company run power lines across your land. You still own the land, but the easement holder has the legal right to access or use part of it. Easements are usually recorded and continue even if the property changes hands.
  
  

• Landlord: The property owner who rents out space to someone else. In a lease agreement, the landlord is the party who grants the tenant the right to use the property for a period of time in exchange for rent. For example, if you lease office space for your business, the building owner you lease from is the landlord.
  
  

• Lease: A written agreement between a landlord and tenant. It lets the tenant occupy property for a certain term (like one year) in exchange for rent. A commercial lease typically outlines rent amount, lease length, maintenance responsibilities, and other terms. For instance, a 5-year commercial lease might specify monthly rent and who pays for repairs. It is a binding contract: tenants must pay rent and landlords must provide the space under agreed conditions.
  
  

• Lien: A legal claim or hold on property, used to secure a debt. For example, if you take out a mortgage, the lender has a lien on the property until you repay the loan. Similarly, a contractor can place a mechanic’s lien on your building for unpaid work. If the debt isn’t paid, the lienholder can force a sale of the property to satisfy the debt. A lien must be cleared (paid) before clear ownership (title) can transfer.
  
  

• Mortgage: A loan specifically used to buy or finance real estate, with the property itself pledged as collateral. The borrower agrees to make payments to the lender; if the borrower stops paying, the lender can foreclose (take the property) to recoup the loan. In other words, the bank holds a lien on the property and has the right to seize and sell it through foreclosure if you default.
  
  

• Tenant: The person or business that rents property from a landlord. The tenant has the right to occupy the property under the lease terms and must pay rent. For example, if your startup rents an office suite, your company is the tenant. As tenant, you agree to use the space lawfully and follow any rules in the lease, and the landlord provides the space in return.
  
  

• Title: Legal ownership of property. Having title means you have the legal right to use and control the property. Title is often evidenced by a deed. For example, when you buy a building, the deed conveying it establishes that you hold the title. Title includes all the rights of ownership (subject to any liens or easements).
  
  

• Zoning: Local government rules dividing land into zones (such as residential, commercial, or industrial) and controlling how property in each zone can be used. Zoning laws might limit a commercial property to certain types of businesses, or restrict building height or density. For example, zoning might allow shops but ban factories in a given area. Always check zoning to ensure your intended business use is permitted on a property.
  
  

Business Formation Terms:

 

• Articles of Incorporation: The official legal documents filed with the state to create a corporation. These articles (sometimes called a certificate of incorporation) typically include the company’s name, address, number of shares authorized, and the names of initial directors. Filing them “creates” the corporation under state law. Think of it as the corporate charter: once filed and approved, the business legally exists as a corporation.
  
  

• Corporation: A business structure that is legally separate from its owners. As a separate entity, the corporation itself can own property, incur debt, and be sued. The owners (shareholders) generally have limited liability, meaning their personal assets are usually protected from the corporation’s liabilities. For example, if your business is a corporation and it goes bankrupt, creditors typically cannot go after your personal home or car. Corporations also have formal requirements like issuing stock and holding meetings.
  
  

• DBA (Doing Business As): Also called a fictitious name or trade name. A DBA lets a business operate under a name other than its legal, registered name. For instance, if “Smith & Jones LLC” wants to call itself “Sunshine Catering” in marketing and at the storefront, it files a DBA for “Sunshine Catering.” This way, legally Smith & Jones LLC does business under that trade name. DBAs help consumers identify the business under a recognizable name.
  
  

• LLC (Limited Liability Company): A flexible business structure that provides owners (members) limited liability protection. Like a corporation, an LLC separates personal assets from business liabilities, so members usually aren’t personally on the hook for business debts. Unlike a corporation, an LLC has fewer formalities (no stock, simpler taxation). For example, if an LLC is sued, the plaintiff can claim LLC assets but typically not the personal assets of the members. LLCs are popular for small businesses due to this personal asset protection combined with operational flexibility.
  
  

• Operating Agreement: A key internal contract for an LLC. It lays out how the company will operate: each member’s ownership percentage, how profits and losses are shared, management duties, and rules for adding or removing members. While not always required by law, an operating agreement helps prevent disputes by spelling out who has what rights and responsibilities. For example, it might state that major business decisions require a majority vote of members, or that any member can withdraw under certain conditions.
  
  

• Registered Agent: An individual or company appointed to receive official legal papers on behalf of a business. The law requires corporations and LLCs to name a registered agent in their state filing. This person or entity accepts documents like service of process (lawsuit papers) and tax notices for the company. For example, a small business might hire a service company as its registered agent, ensuring that if a lawsuit is filed against the company, someone will reliably receive the papers during business hours.
  
  

• Sole Proprietorship: The simplest business form, where one person owns and runs the business and is personally responsible for it. There’s no legal separation between the owner and the business; they file taxes together. For example, an independent consultant or a corner store run by an individual is a sole proprietorship. It’s easy and low-cost to set up, but the owner is personally liable for any business debts or legal issues.
  
  

Business Dissolution Terms:

 

• Dissolution: The formal process of legally ending or closing a business. The owners (or directors) decide to wind down operations. This usually involves filing paperwork with the state (like articles of dissolution) to cancel the company’s registration. It’s essentially saying, “We are closing the business officially.” After dissolution is declared, the company moves on to winding up its affairs.
  
  

• Liquidation: The process of selling a company’s assets for cash to pay debts. In a business closing, liquidation is how you turn property, inventory, or equipment into money. For example, selling off all office furniture and inventory when a store shuts down. The cash from liquidation is used to pay creditors first, and any remainder goes to the owners. Liquidation is usually part of winding up a dissolved business.
  
  

• Winding Up: Completing all remaining business matters after dissolution. This includes collecting outstanding debts owed to the company, notifying creditors, paying debts and obligations (often with proceeds from liquidation), and distributing any leftover assets to owners or shareholders. Think of it as tying up loose ends. For example, after dissolving an LLC, you would wind up by selling equipment (liquidation), paying bills, filing final taxes, and handing out remaining funds. Only after winding up can the business truly disappear.
  
  

Business Transactions Terms:

 

• Asset Purchase: A transaction where the buyer agrees to buy specific assets of a business, rather than buying the company itself. The buyer picks and chooses which assets (equipment, inventory, intellectual property, etc.) to buy and may leave certain liabilities behind. This is common when buying a particular part of a business. For example, one company might buy another’s machinery and customer list but not assume its debts. This lets buyers avoid unwanted liabilities, but they also don’t get the legal entity itself.
  
  

• Due Diligence: The thorough investigation conducted by a buyer before completing a business deal. It involves verifying all important information about the business: reviewing financial statements, contracts, legal issues, and operations. It’s like doing your homework. For example, before buying a company, you’d check records to confirm revenue, inspect key agreements, and ensure there are no hidden problems. Due diligence helps the buyer make an informed decision and avoid surprises.
  
  

• Indemnification: A contract provision where one party agrees to compensate the other for certain losses or liabilities. In business deals, an indemnity clause might say the seller will reimburse the buyer for any damages if a third party sues over a past issue. For example, if a seller misrepresented a patent and someone sues the buyer, the indemnification clause would require the seller to cover the loss. It essentially allocates risk for particular events between the parties.
  
  

• Letter of Intent (LOI): A preliminary, non-binding document outlining the basic terms of a proposed deal. An LOI shows each party’s intention to enter into a transaction and covers major points like price, timeline, and key conditions. It’s like a roadmap before drafting the final contract. For example, before buying a business, the buyer and seller might sign an LOI stating the purchase price and that the deal is subject to due diligence. It isn’t the final agreement, but it helps ensure both sides agree on the broad strokes.
  
  

• Non-Disclosure Agreement (NDA): A contract where parties agree to keep certain information confidential. In business transactions, NDAs are signed so that when you share sensitive details (like financials or trade secrets) with another party, they promise not to disclose it. For example, before discussing a potential investment, a start-up might have investors sign an NDA to prevent them from sharing the company’s private information. Breaking an NDA is a breach of contract and can lead to legal consequences.
  
  

Mergers and Acquisitions (M&A) Terms:

 

• Acquisition: When one company purchases another outright. This means the buyer obtains enough stock or assets to control the target. The acquired company may cease to exist as a separate entity, or become a subsidiary of the buyer. For example, if a large tech firm buys a smaller startup and takes over its operations, that is an acquisition. In an acquisition, the buyer may take on the seller’s debts or assume certain obligations as part of the deal.
  
  

• Hostile Takeover: A type of acquisition where the target company’s management does not agree to the deal. The acquirer may bypass the board and go directly to the shareholders with a purchase offer (often a tender offer) or attempt to replace management to get the deal done. It’s called “hostile” because the target’s leadership opposes it. For example, if Company A quietly buys up enough stock in Company B to force a sale, even though Company B’s board tried to block it, that’s a hostile takeover.
  
  

• Merger: When two companies mutually agree to combine into a single new entity. In a merger, both sets of shareholders typically become shareholders of the merged company. It’s often portrayed as a “merger of equals,” though one company’s name or structure may prevail. For example, if Company X and Company Y merge to become Company XY, both cease to exist separately. Mergers are meant to create synergies or expand market reach and require agreement and shareholder approval from both sides.
  
  

• Tender Offer: An offer by one company (or investor) to buy shares of another company directly from its shareholders at a specified price. A tender offer is often at a premium above market price to tempt shareholders. For example, if a large corporation wants to acquire a smaller public company, it might announce a tender offer to buy shares at $20 each, encouraging shareholders to sell directly to it. Tender offers can be friendly or hostile depending on whether the target’s management supports the bid.
  
  

Business Fraud Terms:

 

• Embezzlement: The fraudulent taking or misappropriation of money or property by someone to whom it was entrusted. It’s common in business when an employee or agent has access to funds and secretly steals them. For example, if an office manager takes cash payments intended for the company’s bank, that is embezzlement. It differs from ordinary theft because the embezzler lawfully possessed the funds initially, then abused that trust.
  
  

• Fraud: Intentional deception or misrepresentation made for personal or corporate gain. In business, fraud can take many forms: falsifying records, lying about product quality, or misleading investors. For instance, if someone sells you an asset claiming it’s free of defects when they know it’s not, that’s fraud. Corporate fraud refers to dishonest schemes conducted by a company or its officers that harm investors or the public.
  
  

• Ponzi Scheme: An investment scam that pays returns to earlier investors using money from new investors, rather than actual profits. A Ponzi scheme lures investors with promises of high, stable returns. It relies on continually bringing in new money to pay the old investors. For example, a fraudster may promise 20% returns and use new participants’ funds to pay existing clients. Eventually, when new investments dry up, the scheme collapses and most investors lose their money. It’s named after Charles Ponzi, who ran a famous scheme in the 1920s.
  
  

Shareholder Dispute Terms:

 

• Derivative Action: A lawsuit brought by a shareholder on behalf of the corporation. It is used when the company’s management refuses to enforce a right or claim on the company’s behalf. In a derivative suit, the shareholder claims the company suffered harm (often from insider wrongdoing) and sues to recover damages for the company. For example, if directors engage in self-dealing that hurts the company and the board won’t sue them, a shareholder can file a derivative action. Any recovery goes to the company (raising its stock value), indirectly benefiting all shareholders.
  
  

• Piercing the Corporate Veil: A legal concept where courts set aside the separation between a company and its owners to hold the owners personally liable for the company’s obligations. This happens in cases of fraud or when the business is just an alter ego of its owners (e.g., no separate records, undercapitalized). Essentially, the protective “corporate veil” is pierced. For example, if a single-owner LLC commingles personal and business funds and then avoids paying a creditor, a court may pierce the veil and allow the creditor to go after the owner’s personal assets.
  
  

Arbitration Terms:

 

• Arbitration: An alternative dispute resolution process where disputing parties agree to have their case decided by a neutral third party (an arbitrator) instead of a court. The parties typically present evidence and arguments, and the arbitrator renders a decision. It is often faster and private compared to court. For example, many contracts include an arbitration clause, meaning any future disagreements will go to arbitration. The arbitrator’s decision (called an award) is usually final and binding.
  
  

• Arbitration Clause: A provision in a contract requiring that any disputes be resolved through arbitration instead of litigation. It usually specifies the arbitration rules or forum. For example, an agreement might state, “Any dispute arising under this contract shall be resolved by binding arbitration before a neutral arbitrator.” This means the parties waive the right to sue in court and must arbitrate. Clauses like this aim to keep disputes out of court, potentially saving time and money.
  
  

• Arbitrator: A neutral third party chosen to hear evidence and arguments in an arbitration and make a decision. An arbitrator acts similarly to a private judge. For example, if two companies have an arbitration clause in their contract, they jointly select an arbitrator with industry expertise. The arbitrator conducts a hearing and issues an award. The process is more streamlined than court, but the arbitrator’s decision is usually final and enforceable by law.
  
  

Outside General Counsel Terms:

 

• Outside General Counsel: An attorney or law firm that serves as the primary legal advisor to a business on an ongoing, as-needed basis. They act much like an in-house counsel but are not employees. For example, a small company without its own legal department might retain an outside law firm to handle contracts, compliance, and litigation. The firm learns the business and provides advice over time, often through a retainer arrangement. This arrangement gives the company access to legal counsel without the cost of a full-time hire.
  
  

• Engagement Letter: A written agreement between a law firm (or lawyer) and a client that outlines the scope of work, responsibilities, and fees. It formally starts the attorney-client relationship once signed. For example, before an attorney works on your legal issue, they will send an engagement letter specifying what services they will provide and how they will charge (hourly rate, flat fee, etc.). Until you sign or otherwise agree to that letter, they generally haven’t officially agreed to represent you.