A glossary of the contract and legal terms you need to know.

Agency
A fiduciary relationship created by contract or law where one party (principal) grants authority for another (agent) to act on behalf of and under the control of the principal to deal with a third party.
Amendment
A formal change to the terms of an existing contract made by adding, removing, or updating parts of the contract. An amendment must normally be agreed up by all parties to a contract.
Applicable Law
Any and all laws issued or implemented by the government or regulators of the country whose laws apply to a contract. Also includes rules, codes, treaties, licenses, permits and principles of common law which have been deemed applicable in that country.
Arrears
The part of a debt that is overdue after missing one or more payments required under a contract. The sum of the arrears is equal to the total amount amassed from the due date of the first missed payment.
As is
A common contractual condition which gives notice to consumers that the product is in its present state or condition. An “as is” notice is to inform the consumer that they are taking a risk on the quality of the good.
Assignment
The legal transfer of a right, benefit, or liability from one party (assignor) to another (assignee).
Associated Employer
The relationship between two employers where one is a company of which the other has control, or both are companies of which a third person has control. In both cases, the control can either be direct or indirect.
Assurance
A promise intended to inspire full confidence in another party.
Assured shorthold tenancy
The most common type of tenancy agreed used in residential letting. It is unique in its limited security of tenure i.e. the landlord can evict the tenant without a reason so long as they follow the correct procedure.
Audit
An official and unbiased inspection of an organisation’s financial statements, typically undertaken by an independent body.
Bailiff
Agents with special legal powers sent to retrieve debts on behalf of either a creditor or the courts. If a debtor cannot make the necessary payments, a bailiff can repossess their belongings and sell them at an auction.
Bankruptcy
A legal status declared by a court when an individual or a business cannot pay off their debts. An Official Receiver is appointed to oversee the bankruptcy. The debtor's assets are liquidated to repay creditors, and then the rest of their debts are cancelled.
Bargaining Power
This is the relative power of parties in a negotiation to exert influence over each other in order to achieve a deal favourable to themselves.
Bedsit
A form of accommodation which consists of a single room per occupant, with all other occupants sharing facilities such as a living room and a kitchen. A bedsit may be a unit in the legal category of housing known as a house in multiple occupation.
Beneficiary
Any person or entity who is set to receive assets or profits from an instrument in which there is distribution, such as a trust, insurance policy, or will.
Binding
A legal or contractual obligation which cannot be broken.
Boiler Plate Clause
These are general and miscellaneous clauses found at the end of most contracts, which can be reused in several contexts without significant changes to them.
Breach of contract
The act of breaking or failing to comply with the terms of a legally binding contract.
Break Clause
A contractual term providing for the early termination of a contract before the fixed term expires. These clauses are typically associated with tenancy agreements, and give either the landlord or tenant the right to end the agreement before the agreed end date.
Brexit
The withdrawal of the UK from the European Union and the European Atomic Energy Community in January 2020, following a public vote to do so in June 2016.
Certainty
An assessment of whether the terms of a contract are sufficiently clear and certain to be able to bind the parties. Uncertain, incomplete, or vague contract terms cannot be relied upon or enforced.
Change of Control
A change of control is the sale or acquisition of the whole or part of a company, by which the control of the company vests in someone other than the original contracting party.
Citizens Advice Bureau
A network of independent charities in the UK which provide free and confidential advice and information to people on a range of civil, consumer and legal matters.
Civil Law
A type of legal system originating in Europe which has been adopted by about 60% of the world. It is historically based on ancient Roman law. Its primary source of law are core principles which have been written and codified into a referable system.
Claim
(Previously known as an action) These are proceedings issued in a court or tribunal to demand compensation, property, or the enforcement of a right from another party.
Common Law
A type of legal system originating in England which has been adopted across the commonwealth. It is historically based on the judicial decisions of courts and similar tribunal. It is characterised by relying on prior case law rather than written codes to resolve disputes.
Common areas
The parts of a property which are available for use by all the tenants, such as a hallway, stairway, or playground.
Company
A legal entity formed by different individuals in order to undertake commercial business. In the UK, a company must be incorporated at Companies House.
Company Number
A unique combination of numbers and even letters, which is automatically assigned by Companies House to a newly incorporated UK company.
Confidential Information
All material and non-public information in any form, whether or not it is marked as such, which is disclosed in circumstances giving rise to an obligation of confidence on the part of the recipient.
Consent
The voluntary agreement by a person of age with requisite mental capacity It represents the ethical and legal expression of a person’s autonomy and right to self-determination. In contract law, consent is the knowledge and understanding that the parties have of the contract.
Consideration
Anything of value promised or given in exchange for the undertaking or promise of another.
Consultant
A person who provides expert or professional advice on a particular subject to an organisation or an individual. Consultants are typically hired as independent contractors.
Consumer price index
The measure used in the government's target for inflation. It is found by calculating the average change in price of a weighted basked of consumer goods and services purchased by households.
Continuous Employment
A period of unbroken service (without breaks) by an employee with the same employer. The length of continuous employment may give rise to certain rights. Note that events such as sick leave or strikes will usually not interrupt the continuity of employment.
Contract
A contract is a legally binding agreement by one party to fulfil an obligation to another party in return for consideration. It can either be oral or in writing.
Contract Audit
The inspection of a written contract to investigate whether the rights and duties set out in it are being properly performed by all the parties to the contract.
Contract Automation
The use of document automation software to develop, manage, and store routine legal documents within and beyond an organisation.
Contract Compliance
A contract management strategy that seeks to ensure that performance of contractual obligations comply with government standards and regulations.
Contract Lifecycle Management
CLM is the methodical management of a contract by streamlining contract processes into key stages. These stages may include initiation, negotiation, execution, performance and renewal.
Contract Management
The process of systematically managing contracts from their creation through to their execution and eventual termination, in order to ensure all parties perform their contractual obligations as efficiently as possible, thereby minimising financial and other risks.
Contract Management Software
A program or series of programs used to store and manage contracts from their creation through to their execution and eventual termination. It enables teams to digitally search, review, and agree all their routine contracts.
The information in this glossary is for general educational use only, and does not constitute any legal advice on which you should rely. While all the definitions have been carefully drafted and we believe them to be accurate, all information in this glossary is provided “as is” and with no guarantee of completeness.