English for business lawyers and contract managers
Contract & Commercial Law Vocabulary: 100 Key English Terms
Contract and commercial law English is the working language of international business: supply and distribution contracts, licences, company acquisitions, employment terms and arbitration clauses. These are the terms that business lawyers, in-house counsel and contract managers use every day, from offer and acceptance to warranties, indemnities and dispute resolution. Many of them look like ordinary English words but carry a precise legal meaning, so learning them in context helps you read, negotiate and draft contracts with confidence.
100 terms
9 topics
53 core terms
206 example sentences
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No account needed. Read the meaning, see where the term is used, then study the examples. Click any word in the lesson for help. You can also select a word and press Alt + Enter.
Forming & Drafting Contracts
contract
noun
Meaning
A legally binding agreement between two or more parties in which each side promises to do, or not to do, certain things.
Where you use it
The central word of commercial law. You enter into, sign, perform, breach and terminate a contract. 'Under the contract' means 'according to its terms'. As a verb, 'contract with' means to make a formal agreement with someone.
Examples
We cannot start the work until both sides have signed the contract.
Under the contract, the supplier must deliver the parts within 30 days.
The company has contracted with a local firm to maintain its servers.
Usage note
The noun is stressed on the first syllable (CON-tract); the verb is usually stressed on the second (con-TRACT).
Common phrases
enter into a contract · sign a contract · breach a contract · terminate a contract · under the contract
An arrangement between parties about what each of them will do; it becomes a contract when the law treats it as binding.
Where you use it
Very often used as a synonym for contract, especially in document titles such as 'Share Purchase Agreement' or 'Distribution Agreement'. 'Reach an agreement' describes the successful end of negotiations; 'in agreement' means sharing the same opinion.
Examples
The parties reached an agreement after three weeks of negotiation.
This Agreement is governed by the laws of England and Wales.
A verbal agreement can be binding, but it is much harder to prove.
Usage note
In everyday English a 'verbal agreement' usually means a spoken one, but 'verbal' strictly means 'in words', so lawyers prefer the clearer 'oral agreement'.
Common phrases
reach an agreement · sign an agreement · written agreement · oral agreement · breach of the agreement
A person or organisation that has signed a contract or is directly involved in a legal agreement or dispute.
Where you use it
Contracts name the parties at the start and then refer to them as 'a Party' or 'the Parties'. A 'third party' is someone outside the contract. Phrases such as 'the defaulting party' and 'the other party' appear in almost every clause.
Examples
Each party shall bear its own legal costs.
The contract cannot be transferred to a third party without written consent.
Usage note
In contracts 'Party' is often capitalised because it is a defined term. This meaning has nothing to do with a celebration or a political party.
Common phrases
the parties · third party · contracting party · defaulting party · party to the contract
A clear proposal by one party to enter into a contract on specific terms, which becomes binding if the other party accepts it.
Where you use it
Together with acceptance, the first step in forming a contract. An offer can be made, withdrawn (revoked), rejected or accepted. A price list or an advertisement is usually only an 'invitation to treat', not a legal offer.
Examples
Our offer remains open until Friday at 5 p.m.
They withdrew the offer before we could accept it.
Common phrases
make an offer · accept an offer · withdraw an offer · reject an offer · firm offer
Clear and unconditional agreement to all the terms of an offer; once it is communicated, a contract is usually formed.
Where you use it
Acceptance must match the offer exactly; if you change any term, you make a counteroffer instead. It can be given in writing, orally or by conduct, for example by starting work. Purchase orders and email confirmations often serve as acceptance.
Examples
Your email of 3 May was treated as acceptance of our quotation.
Acceptance must reach the seller before the offer expires.
Usage note
In project and construction contracts 'acceptance' also means the buyer formally approving delivered goods or work, as in 'acceptance test' or 'acceptance certificate'.
Common phrases
acceptance of an offer · unconditional acceptance · communicate acceptance · letter of acceptance
Something of value that each party gives or promises in exchange for the other's promise, such as money, goods or services; common law requires it for most contracts.
Where you use it
A key idea in English and American contract law: a promise without consideration is generally not enforceable unless it is made by deed. Contracts often say 'in consideration of the payment of…' or 'for good and valuable consideration'.
Examples
In consideration of the fee, the consultant agrees to deliver a full report.
Under English law, a promise to give a gift is not binding without a deed, because there is no consideration.
Usage note
False friend: in contracts, consideration does not mean 'taking into account'. 'In consideration of' means 'in return for'.
Common phrases
in consideration of · good and valuable consideration · provide consideration · lack of consideration
Having legal force, so that the parties must do what they have agreed and can be held responsible if they do not.
Where you use it
Mostly used in 'legally binding' and 'binding on the parties'. Drafters state which parts of a document are binding; in a letter of intent, for example, often only the confidentiality and exclusivity sections are. The opposite is 'non-binding'.
Examples
This term sheet is not legally binding, except for clause 8 on confidentiality.
The arbitrator's decision is final and binding on both parties.
Common phrases
legally binding · binding on the parties · final and binding · non-binding · binding agreement
Able to be made effective through a court or tribunal, so that a party can be forced to comply or to pay compensation.
Where you use it
Lawyers ask whether a contract or a clause is enforceable, that is, whether a court would uphold it. A clause can look valid on paper but be unenforceable in a particular country. The noun is 'enforceability' and the verb is 'enforce'.
Examples
A non-compete clause that lasts ten years is unlikely to be enforceable.
We need local advice on whether the guarantee is enforceable in Turkey.
Common phrases
legally enforceable · enforceable against · unenforceable clause · valid and enforceable
To write the text of a contract or legal document carefully; as a noun, a version of a document that is not yet final.
Where you use it
Drafting is a core skill of commercial lawyers. One side usually prepares the 'first draft' and the other sends back a 'marked-up' version with tracked changes. Versions are numbered until the parties agree the final text.
Examples
Our legal team will draft the distribution agreement this week.
I have attached the latest draft with our comments in the margin.
Usage note
In banking a 'bank draft' is something different: a payment order guaranteed by a bank.
Common phrases
draft a contract · first draft · marked-up draft · drafting error · circulate a draft
To discuss the terms of a deal with the other side in order to reach an agreement that both can accept.
Where you use it
You negotiate a contract, terms or a price, and you negotiate 'with' someone. The noun is 'negotiation', often plural ('negotiations broke down'). English law generally does not impose a duty to negotiate in good faith unless the parties agree one.
Examples
We spent two months negotiating the payment terms.
Negotiations with the buyer broke down over the warranty package.
Common phrases
negotiate a contract · negotiate terms · negotiate with · enter into negotiations · negotiations break down
A reply to an offer that changes some of its terms; it rejects the original offer and becomes a new offer that the other party can accept or refuse.
Where you use it
Important because, once you make a counteroffer, you usually cannot go back and accept the original offer. It is central to the 'battle of the forms', when buyer and seller exchange documents with different standard terms.
Examples
Their reply asked for a 15% discount, so legally it was a counteroffer, not an acceptance.
We sent a counteroffer with a shorter payment period.
Usage note
Also written 'counter-offer', especially in British English.
Common phrases
make a counteroffer · reject a counteroffer · accept a counteroffer · battle of the forms
Having no legal effect at all from the start, so that the contract or clause is treated as if it never existed.
Where you use it
A contract can be void because, for example, its purpose is illegal. 'Voidable' is different: the contract is valid until the injured party chooses to set it aside, for example after a misrepresentation. 'Null and void' is a common emphatic phrase.
Examples
A contract to sell stolen goods is void.
Any assignment made without our consent shall be null and void.
Usage note
Void and voidable are often confused: void means invalid from the start; voidable means valid until someone sets it aside.
Common phrases
null and void · void contract · void and unenforceable · render void
A document that records the parties' intention to make a deal and its main points before the final contract is negotiated and signed.
Where you use it
Shortened to LOI. It usually states that it is non-binding, except for clauses such as confidentiality, exclusivity and costs. Courts may still treat it as binding if its wording and the parties' conduct point that way, so precise drafting matters.
Examples
The buyer signed a letter of intent setting out the price range and timetable.
Apart from the exclusivity clause, the letter of intent is not binding.
Common phrases
sign a letter of intent · non-binding letter of intent · issue a letter of intent
To sign a contract or legal document and complete any other formalities so that it becomes legally effective.
Where you use it
Very common in formal legal English: 'executed by the parties on the date below', 'duly executed', 'execution version' (the final text ready for signature). It can also mean carrying out work under a contract, as in 'execution of the works'.
Examples
The agreement was executed in Istanbul on 14 March.
Please send us the execution version so that our CEO can sign it.
Usage note
In this sense 'execute' has nothing to do with capital punishment or running a computer program; it simply means 'sign and make effective'.
Common phrases
duly executed · execute an agreement · execution version · date of execution
One of several identical copies of a contract, each signed by one or more of the parties, which together form a single agreement.
Where you use it
Appears in the standard counterparts clause: 'This Agreement may be executed in any number of counterparts'. It lets parties in different cities sign separate copies, often exchanged as PDFs, instead of signing one physical document.
Examples
The agreement may be signed in counterparts, and each counterpart is an original.
We received the buyer's signed counterpart by email this morning.
Usage note
In general English a 'counterpart' is a person with the same job in another organisation, as in 'my counterpart in the Ankara office'.
Common phrases
sign in counterparts · counterparts clause · signed counterpart · any number of counterparts
A document that records the main points the parties have agreed on and their plan to cooperate, usually without creating full legal obligations.
Where you use it
Shortened to MOU or MoU. Common between companies exploring a partnership and between public bodies. Whether an MOU is binding depends on its wording, so drafters state clearly which parts, if any, are legally binding.
Examples
The two companies signed a memorandum of understanding to explore a joint venture in renewable energy.
The memorandum of understanding is non-binding except for the confidentiality section.
Common phrases
sign a memorandum of understanding · non-binding MOU · enter into an MOU
The legal ability of a person or company to enter into a binding contract; minors and people who cannot understand the transaction may lack it.
Where you use it
In commercial deals the question is usually corporate capacity and authority: can the company enter into this contract, and is the person signing authorised? Contracts often include a statement that each party 'has full power and capacity' to sign.
Examples
Each party warrants that it has the capacity to enter into this agreement.
A contract signed by a 15-year-old may be challenged for lack of capacity.
Usage note
In general business English 'capacity' also means production volume ('plant capacity') or a role ('in my capacity as director').
Common phrases
legal capacity · lack of capacity · power and capacity · capacity to contract
A numbered section of a contract that deals with one specific subject, such as payment, confidentiality or termination.
Where you use it
Lawyers refer to clauses by number ('under clause 7.2') or by subject ('the termination clause'). You insert, delete, amend or rely on a clause. American contracts often use 'section' in the same way.
Examples
Please delete clause 12; we do not accept automatic renewal.
The supplier relied on the force majeure clause after the factory was flooded.
Under clause 9.1, either party may terminate on 60 days' notice.
Common phrases
insert a clause · delete a clause · termination clause · under clause · rely on a clause
A duty that a party must perform under a contract or the law, such as paying the price, delivering goods or keeping information confidential.
Where you use it
Contracts are largely lists of obligations, usually written with 'shall' or 'must'. You perform, fulfil, comply with or breach an obligation. 'Payment obligations' and 'confidentiality obligations' are typical headings.
Examples
The seller has fulfilled all its obligations under the agreement.
The confidentiality obligations continue for five years after termination.
Usage note
British spelling is 'fulfil'; American spelling is 'fulfill'.
Common phrases
perform an obligation · fulfil an obligation · breach an obligation · payment obligations · contractual obligation
The legal system, usually chosen by the parties, that is used to interpret a contract and decide any disputes about it.
Where you use it
Almost every international contract has a governing law clause, often next to the jurisdiction or arbitration clause. English, New York and Swiss law are popular choices. It is also called 'applicable law' or 'choice of law'.
Examples
The governing law of this agreement is Swiss law.
We agreed on English law as the governing law, with arbitration seated in Istanbul.
Usage note
Governing law (which law applies) and jurisdiction (which court hears the case) are separate questions, even when they appear in the same clause.
Common phrases
governing law clause · choice of governing law · governed by English law · governing law and jurisdiction
An unforeseeable event outside the parties' control, such as a natural disaster or war, that prevents a party from performing; a force majeure clause may suspend or excuse performance.
Where you use it
Under English law its effect depends entirely on the wording of the clause, which usually lists events (floods, strikes, epidemics, government action) and requires prompt notice. Parties 'invoke' or 'rely on' force majeure. The term comes from French and is used unchanged in English.
Examples
The supplier sent a force majeure notice after the earthquake closed its plant.
A lack of money is not normally treated as force majeure.
Usage note
Pronounced roughly 'fors ma-ZHUR'. Spellings such as 'force majour' or 'force major' are common mistakes.
Common phrases
force majeure clause · force majeure event · invoke force majeure · force majeure notice
A promise by one party to cover specific losses or costs that the other party suffers, for example claims brought against it by third parties.
Where you use it
Very common in IT, supply and M&A contracts, and often heavily negotiated. The verb is 'indemnify': one party indemnifies the other 'against' or 'from and against' losses. An indemnity can make it easier to recover a loss than an ordinary claim for damages.
Examples
The licensor will indemnify the customer against any claim that the software infringes a patent.
We asked the seller for a specific indemnity covering the unpaid taxes.
Usage note
Damages are awarded by a court for a breach; an indemnity is a payment promise agreed in advance in the contract itself.
Common phrases
indemnify against · give an indemnity · indemnity clause · specific indemnity · claim under an indemnity
A promise in a contract that a fact is true or that goods or services meet a certain standard; if it proves wrong, the other party can usually claim damages.
Where you use it
Two main uses: product warranties (a 12-month warranty on equipment) and contractual warranties in M&A, often paired as 'representations and warranties'. In English law a breach of warranty normally gives a right to damages, not a right to terminate.
Examples
The seller warrants that the accounts give a true and fair view of the company.
The machines come with a two-year warranty against defects.
We will bring a claim for breach of warranty.
Usage note
In commercial law a 'guarantee' usually means a promise to answer for someone else's debt, so use 'warranty' for a seller's promise about quality and do not translate every 'garanti' as 'guarantee'.
Common phrases
breach of warranty · give a warranty · representations and warranties · warranty period · warranty claim
A provision of a contract that sets out a right or obligation; also the period of time for which a contract lasts.
Where you use it
In the plural, 'the terms' means the content of the deal: 'agree terms', 'on the following terms'. Lawyers separate express terms (stated by the parties) from implied terms (added by law or custom). In the singular it often means duration: 'an initial term of three years'.
Examples
We are close to agreeing terms with the new distributor.
The agreement has an initial term of two years and renews automatically.
Implied terms can protect a buyer even when the contract says nothing.
Usage note
Do not confuse it with the Turkish business word 'termin' (delivery date); in English contracts that idea is 'delivery date' or 'lead time', not 'term'.
Common phrases
agree terms · express terms · implied terms · initial term · terms of payment
An essential term of a contract whose breach allows the other party to terminate; also an event that must happen before an obligation starts or that brings it to an end.
Where you use it
In English contract law, terms are classed as conditions, warranties or innominate terms, and the class decides whether termination is possible. In everyday drafting, 'subject to the following conditions' and 'conditions precedent' describe things that must happen first.
Examples
The date of delivery is a condition of this contract.
The loan is subject to the condition that the guarantee is signed first.
Common phrases
breach of condition · subject to conditions · condition subsequent · satisfy a condition · conditions of sale
A statement of fact made by one party, before or when the contract is signed, that encourages the other party to enter into it.
Where you use it
Mostly used in the phrase 'representations and warranties'. If a representation turns out to be false, the other party may have a claim for misrepresentation, which can allow rescission as well as damages. The verb is 'represent': 'The Seller represents that…'.
Examples
The seller made a representation that no lawsuits were pending.
Each party relies on the representations set out in Schedule 4.
Usage note
'Representation' also means acting for someone, as in 'legal representation'. The context tells you which meaning is intended.
Common phrases
make a representation · representations and warranties · false representation · rely on a representation
A contract clause that caps or restricts the amount or the types of loss a party must pay for if something goes wrong.
Where you use it
Usually one of the most negotiated clauses. It often sets a cap (for example 100% of annual fees) and excludes indirect or consequential loss. Some liabilities cannot be limited by law, such as liability for fraud or, in England, for death or personal injury caused by negligence.
Examples
The limitation of liability clause caps our exposure at the contract value.
The customer rejected our limitation of liability and asked for an uncapped indemnity.
Common phrases
limitation of liability clause · cap on liability · exclude liability · uncapped liability
A clause that requires the parties to keep certain information secret and to use it only for the purpose of the contract.
Where you use it
Found in almost every commercial contract. It defines 'Confidential Information', lists exceptions (public information, information that must be disclosed by law) and says how long the duty lasts, often several years after termination.
Examples
Sharing the price list with a competitor would breach the confidentiality clause.
The confidentiality clause survives termination for three years.
Common phrases
breach the confidentiality clause · survive termination · confidential information · mutual confidentiality
A change made to the text of a signed contract, usually agreed in writing by all the parties.
Where you use it
Contracts usually say that any amendment must be in writing and signed by both parties. The document is often called an 'amendment agreement' or 'Amendment No. 1'. The verb is 'amend'.
Examples
No amendment to this agreement is valid unless it is in writing and signed by both parties.
We signed an amendment extending the delivery date to June.
Common phrases
sign an amendment · amendment agreement · propose an amendment · written amendment
The giving up of a legal right or claim, either expressly in writing or through conduct, so that it can no longer be enforced.
Where you use it
Most contracts contain a 'no waiver' clause saying that a delay in using a right is not a waiver of it. The verb is 'waive': 'waive a fee', 'waive a condition', 'waive a right'. In banking and customer relations, a waiver is also an exemption from a fee or rule.
Examples
Accepting a late payment once is not a waiver of our right to charge interest.
The buyer agreed to waive the condition so that closing could take place on time.
Common phrases
no waiver clause · waive a right · written waiver · waiver of claims
The transfer of a party's rights under a contract, such as the right to receive payment, to another person or company.
Where you use it
Contracts usually forbid assignment without the other party's consent but often allow it within the same group or to a buyer of the business. Under English law obligations cannot be assigned; transferring the whole contract requires a 'novation'.
Examples
This agreement prohibits assignment without the other party's prior written consent.
The assignment of the receivables to the bank was notified to all customers.
Usage note
In everyday English an 'assignment' is a task or a piece of homework; in contract law it always means a transfer of rights.
Common phrases
assignment clause · assignment of receivables · prohibit assignment · deed of assignment
A clause stating that the written contract contains everything the parties agreed, replacing earlier discussions, emails and drafts.
Where you use it
Standard boilerplate in commercial contracts. It stops a party from relying on side promises made during negotiations. It is often combined with a non-reliance statement, but it usually cannot exclude liability for fraud.
Examples
Because of the entire agreement clause, the promises made at the sales meeting are not part of the contract.
Check that the entire agreement clause does not cancel the side letter we signed.
Common phrases
entire agreement and non-reliance · boilerplate clauses · supersede prior agreements · side letter
The principle, usually set out in a clause, that if one provision of a contract is invalid, the rest of the contract remains in force.
Where you use it
A typical boilerplate clause headed 'Severability'. It may also say that an invalid provision should be changed as little as needed to make it valid. The adjective is 'severable': 'each provision is severable'.
Examples
Thanks to the severability clause, the court struck out only the non-compete and kept the rest of the contract.
Our standard severability wording is in clause 24.
Common phrases
severability clause · severable provision · sever the invalid part
The introductory statements at the start of a contract that explain its background and purpose, often beginning with 'Whereas'.
Where you use it
Usually labelled A, B, C under the heading 'Recitals' or 'Background'. They are generally not binding obligations, but courts may use them to interpret the operative clauses. Modern plain-English drafting replaces 'Whereas' with simple sentences.
Examples
The recitals explain that the parties want to develop the software together.
Please update the recitals, as the project name has changed.
Failure by a party to do what it promised in a contract, for example paying late, delivering faulty goods or not delivering at all.
Where you use it
The basis of most commercial disputes. A party 'is in breach of contract' or 'commits a breach', and the other side may 'sue for breach of contract'. The injured party can claim damages and, if the breach is serious enough, terminate.
Examples
Delivering the goods two months late was a clear breach of contract.
The distributor is suing the manufacturer for breach of contract.
Usage note
Breach is also a verb: 'The supplier breached the contract.' 'Break a contract' is heard in everyday speech, but formal legal writing uses 'breach'.
Common phrases
sue for breach of contract · in breach of contract · claim for breach of contract · commit a breach
Money that a court or tribunal orders one party to pay another as compensation for loss caused by a breach of contract or another legal wrong.
Where you use it
Always plural in this meaning. You claim, seek or recover damages, and a court awards them. In contract cases the usual aim is to put the injured party in the position it would have been in if the contract had been performed.
Examples
The court awarded the buyer damages of €250,000.
We will seek damages for the lost sales.
Usage note
'Damage' (singular, uncountable) means physical harm or loss; 'damages' (plural) means money paid as compensation: 'The storm caused damage', but 'the court awarded damages'.
Common phrases
claim damages · award damages · recover damages · liable in damages · consequential damages
Legal responsibility for something, especially the duty to pay compensation for loss or harm; in accounting, also a debt that a business owes.
Where you use it
Central to how contracts share risk: parties accept, limit, exclude or cap liability. The adjective form is 'be liable for': 'The seller is liable for defects.' Lawyers distinguish contractual liability from liability in tort, such as negligence.
Examples
The supplier's total liability under this agreement shall not exceed the fees paid in the previous 12 months.
The company denied liability for the damage to the shipment.
Usage note
Turkish speakers often write 'responsibility' where an English contract needs 'liability'. Responsibility is a general duty or task; liability is legal responsibility that can lead to paying money.
To end a contract officially, for example because the other party has breached it, or by giving the notice that the contract allows.
Where you use it
Contracts set out when each party may terminate: 'for cause' (after a breach or insolvency) or 'for convenience' (without giving a reason). The noun is termination. Termination normally ends future obligations, while rights that have already arisen survive.
Examples
Either party may terminate this agreement by giving 90 days' written notice.
After the third late delivery, we terminated the contract for cause.
Termination does not affect any rights that have already accrued.
Usage note
'Terminate' means one party actively ends the contract; 'expire' means it ends by itself when its term runs out.
Common phrases
terminate for cause · terminate for convenience · terminate with immediate effect · right to terminate · terminate on notice
A way the law helps a party whose rights have been breached, such as damages, specific performance, an injunction or termination.
Where you use it
Lawyers discuss which remedies are available, and contracts sometimes say a remedy is 'exclusive' or 'without prejudice to any other rights or remedies'. As a verb, 'remedy a breach' means to correct it, often within a 'cure period'.
Examples
If the supplier fails to remedy the breach within 30 days, we may terminate.
Damages are the usual remedy for breach of contract.
Common phrases
remedy a breach · available remedies · exclusive remedy · legal remedy · seek a remedy
A serious breach of contract that goes to the heart of the agreement and usually gives the other party the right to terminate.
Where you use it
Common in termination clauses: 'either party may terminate if the other commits a material breach'. Because 'material' is vague, careful drafters give examples or define it. A material breach that can be fixed often has to be remedied within a set period first.
Examples
Repeated failure to pay on time is a material breach of this agreement.
We terminated for material breach after the supplier ignored our warning letter.
Usage note
Here 'material' means 'important, significant', not 'malzeme'. The same sense appears in 'material adverse change' and 'material facts'.
Common phrases
commit a material breach · material breach of contract · terminate for material breach · remediable material breach
A court order that requires a party to actually do what it promised in the contract, instead of just paying damages.
Where you use it
In common law countries it is a discretionary remedy, ordered mainly when damages would not be enough, for example for the sale of land or a unique object. In civil law systems such as Turkey's, asking for performance itself is the normal first claim.
Examples
The buyer asked the court for specific performance of the sale of the building.
Specific performance is rarely ordered for ordinary goods that can be bought elsewhere.
Common phrases
order specific performance · claim specific performance · equitable remedy · decree of specific performance
A court order that tells a party to stop doing something, or sometimes to do something, often granted urgently to prevent harm.
Where you use it
Common in IP, confidentiality and non-compete cases. An 'interim' (UK) or 'preliminary' (US) injunction is granted before the full trial. You apply for, seek or obtain an injunction, and the court grants or refuses it.
Examples
The company obtained an injunction stopping its former manager from using the customer list.
We will apply for an urgent injunction to stop the sale of the counterfeit products.
Common phrases
apply for an injunction · grant an injunction · interim injunction · obtain an injunction
A fixed sum agreed in the contract that one party will pay if a specific breach occurs, most often late completion or late delivery.
Where you use it
Typical in construction, supply and IT projects, for example '0.5% of the price for each week of delay'. Often shortened to 'LDs'. English courts will not enforce a clause that is really a penalty, meaning out of all proportion to the innocent party's legitimate interest.
Examples
The contractor must pay liquidated damages of €5,000 for every day of delay.
Liquidated damages are capped at 10% of the contract price.
Usage note
Turkish practice often translates liquidated damages as 'cezai şart'. The ideas overlap, but in English law a clause that works as a punishment (a penalty) is unenforceable, so English drafters avoid the word 'penalty'.
Common phrases
pay liquidated damages · liquidated damages clause · delay liquidated damages · cap on liquidated damages
To take reasonable steps to reduce the loss caused by the other party's breach, for example by quickly finding a replacement supplier.
Where you use it
The injured party has a 'duty to mitigate' its loss: it cannot recover damages for losses it could reasonably have avoided. The noun is 'mitigation'. In general business English, 'mitigate a risk' simply means to reduce a risk.
Examples
The buyer failed to mitigate its loss by ordering from another supplier.
We took steps in mitigation, including renting a temporary warehouse.
Usage note
Do not confuse 'mitigate' (make less serious) with 'militate': 'militate against' means to make something less likely.
Common phrases
mitigate loss · duty to mitigate · failure to mitigate · mitigate the risk
A false statement of fact made by one party that persuades the other party to enter into a contract.
Where you use it
English law distinguishes fraudulent, negligent and innocent misrepresentation. The main remedies are rescission and damages. Contracts often include non-reliance and entire agreement clauses to reduce the risk of misrepresentation claims.
Examples
The buyer claims misrepresentation because the sales figures in the brochure were false.
A contract induced by misrepresentation may be set aside.
Common phrases
fraudulent misrepresentation · negligent misrepresentation · claim for misrepresentation · induced by misrepresentation
To cancel a contract from the beginning, so that the parties are put back in the position they were in before it was made.
Where you use it
The noun is 'rescission'. It is a typical remedy for misrepresentation and may be lost if the parties cannot be restored to their original position or if the injured party waits too long. Rescission looks backwards, while termination ends obligations only for the future.
Examples
The buyer rescinded the contract and asked for the deposit back.
Rescission is usually not possible once the goods have been resold to a third party.
Usage note
In American English 'rescind' is also used for cancelling or withdrawing almost anything, as in 'rescind an offer' or 'rescind a decision'.
Common phrases
rescind a contract · right to rescind · rescission of the contract · claim rescission
The automatic ending of a contract when an unforeseen event that neither party is responsible for makes performance impossible or radically different from what was agreed.
Where you use it
An English law doctrine that courts apply very narrowly: a contract becoming more expensive or difficult is not enough. Because frustration is hard to prove, parties rely mainly on force majeure clauses. Lawyers say a contract 'is frustrated'.
Examples
The court held that the lease was not ended by frustration, even though the shop had to close for months.
English courts rarely accept frustration of contract.
Usage note
In everyday English 'frustration' means annoyance; in contract law it is a technical term with no emotional meaning.
Common phrases
frustration of contract · doctrine of frustration · frustrating event · plead frustration
The standard rules that a business applies to all its sales or services, usually published on its website, in quotations or on the back of order forms.
Where you use it
Often written 'T&Cs' or 'Ts&Cs'. Businesses try to make sure their own terms and conditions apply, for example by referring to them in every quotation. Consumer and business protection rules may make unfair standard terms ineffective.
Examples
All orders are subject to our standard terms and conditions of sale.
Please read the terms and conditions before you accept the quotation.
Common phrases
standard terms and conditions · terms and conditions of sale · accept the terms and conditions · general terms and conditions
A contract in which one or both parties promise to keep shared information secret and not to use it for any purpose other than the one agreed.
Where you use it
Almost always called an NDA, or a confidentiality agreement. It is usually the first document signed before talks about an acquisition, a partnership or a supply deal. It can be one-way (unilateral) or mutual.
Examples
We need a signed non-disclosure agreement before we send the technical drawings.
The two companies signed a mutual non-disclosure agreement before discussing the joint venture.
Common phrases
sign an NDA · mutual non-disclosure agreement · breach of the NDA · under NDA
A business that provides goods or services to another business, usually under a supply agreement or individual purchase orders.
Where you use it
In contracts the parties are often defined as 'the Supplier' and 'the Customer' or 'the Buyer'. Typical topics are the supplier's obligations, delivery, quality standards, price changes and the right to switch to another supplier.
Examples
The supplier must notify us at least 60 days before any price increase.
We are looking for a second supplier to reduce our risk.
A contract under which a distributor buys products from a manufacturer and resells them in its own name in an agreed territory.
Where you use it
Key terms are territory, exclusivity, minimum purchase targets, pricing, use of trademarks and termination. Competition law limits some restrictions, such as fixing resale prices. Unlike an agent, a distributor owns the goods and carries the commercial risk.
Examples
Under the distribution agreement, the distributor has exclusive rights in Turkey and Azerbaijan.
We terminated the distribution agreement because the minimum targets were not met.
Common phrases
exclusive distribution agreement · sign a distribution agreement · distribution territory · minimum purchase targets
A contract under which an agent finds customers or makes sales on behalf of a principal, usually for a commission, without buying the goods itself.
Where you use it
The two parties are the principal and the agent. In the EU and the UK, commercial agents are specially protected, including a right to compensation or an indemnity when the agreement ends. Turkish law gives agents a similar right, the denkleştirme tazminatı.
Examples
Under the agency agreement, the agent earns 6% commission on every order it brings in.
The agency agreement does not allow the agent to sign contracts in our name.
Usage note
Do not confuse it with a contract signed with an advertising or travel agency; in law, 'agency' means acting on behalf of someone else.
Common phrases
commercial agency agreement · exclusive agency agreement · agent's commission · principal and agent
A business arrangement in which the owner of a brand and business system lets others run outlets using its name, methods and support in return for fees.
Where you use it
The brand owner is the franchisor and the operator is the franchisee. A franchise agreement covers the initial fee, ongoing royalties, the operations manual, quality controls and the territory. Cafés, hotels and retail chains commonly use franchising.
Examples
She opened the café as a franchise of an international coffee chain.
The franchise agreement requires all staff to complete the brand's training programme.
A promise by one person or company, the guarantor, to pay another party's debt or perform its obligations if that party fails to do so.
Where you use it
Banks and suppliers often ask for a parent company guarantee or a personal guarantee from a director. A bank guarantee is a separate promise by a bank to pay on demand. The guarantor 'guarantees' the debtor's obligations.
Examples
The parent company signed a guarantee for its subsidiary's lease payments.
The buyer must provide a bank guarantee covering 10% of the contract price.
Usage note
Some banking and US documents use the older spelling 'guaranty' for the same idea.
Common phrases
parent company guarantee · personal guarantee · bank guarantee · give a guarantee · call on a guarantee
A contract, or part of a contract, that sets measurable standards for a service, such as availability or response times, and says what happens if they are not met.
Where you use it
Usually called an SLA and common in IT, cloud, outsourcing and logistics contracts. If the provider misses the targets, the customer typically receives 'service credits' (a price reduction) and, after repeated failures, may have a right to terminate.
Examples
The service level agreement guarantees 99.9% availability each month.
Under the service level agreement, critical incidents must be answered within one hour.
Common phrases
meet the SLA · SLA targets · service credits · breach the SLA
A clause in a sale contract stating that the seller keeps ownership of the goods until the buyer has paid for them in full.
Where you use it
Also called a 'Romalpa clause' in the UK. It protects suppliers if the buyer becomes insolvent before paying. Its effect varies by country; in Turkey, a retention of title agreement is valid only once it is entered in an official register kept by notaries.
Examples
Under the retention of title clause, the steel remains our property until the invoice is paid.
The insolvency administrator accepted our retention of title claim and returned the unused stock.
Usage note
'Title' here means legal ownership, not the name of a book or a person's job title.
Common phrases
retention of title clause · reservation of title · Romalpa clause · title passes
A business organisation registered as a separate legal person, so it can own property, sign contracts and sue or be sued in its own name.
Where you use it
In legal texts 'company' usually means an incorporated company with limited liability. UK company names end in 'Ltd' (private) or 'plc' (public); US firms use 'Inc.', 'Corp.' or 'LLC'. Americans often say 'corporation' where the British say 'company'.
Examples
The contract is signed by the company, not by the directors personally.
They set up a company in the Netherlands to hold the trademarks.
Common phrases
set up a company · private company · public company · holding company · company law
A person or company that owns shares in a company and therefore owns part of it, usually with rights to vote and to receive dividends.
Where you use it
The British term; Americans also say 'stockholder'. Shareholders vote at general meetings, approve major decisions and often sign a shareholders' agreement. Common types are majority, minority and sole shareholders.
Examples
The sale requires the approval of shareholders holding 75% of the shares.
As a minority shareholder, we want a veto on any new borrowing.
A person appointed to manage a company and make major decisions on its behalf, usually as a member of the board of directors.
Where you use it
Directors owe duties to the company and can sometimes be personally liable. Common types are executive and non-executive directors, and the managing director (UK, roughly the CEO). In company law 'director' means a board member; a title like 'Director of Sales' is just a job title.
Examples
The contract must be signed by two directors or by one director in front of a witness.
The directors approved the acquisition at yesterday's board meeting.
Common phrases
appoint a director · non-executive director · managing director · directors' duties · resign as director
A company whose owners are responsible for its debts only up to the amount they have invested, so their personal assets are protected.
Where you use it
In the US, the 'LLC' is a specific and flexible business form. In the UK the usual equivalent is the 'private limited company' (Ltd). In Turkey the closest forms are the limited şirket (Ltd. Şti.) and, for larger businesses, the anonim şirket (A.Ş.).
Examples
They set up a limited liability company in Delaware for the US business.
As members of a limited liability company, they are not personally liable for its debts.
Usage note
The owners of a US LLC are called 'members', not shareholders, and its main internal document is the 'operating agreement'.
Common phrases
form a limited liability company · members of the LLC · LLC operating agreement · single-member LLC
A business run by two or more people who share its profits and, in a general partnership, are personally responsible for its debts.
Where you use it
Law and accounting firms are often partnerships, and their senior professionals are 'partners'. Forms include the general partnership, the limited partnership (LP) and the limited liability partnership (LLP). Partners usually sign a partnership agreement.
Examples
The three architects run the firm as a partnership.
Under the partnership agreement, profits are shared equally.
Usage note
In business English 'partnership' is also used loosely for any cooperation, as in 'a strategic partnership', which is not a partnership in the legal sense.
Common phrases
general partnership · limited partnership · partnership agreement · enter into a partnership
A company that is controlled by another company, usually because the other company owns more than half of its shares.
Where you use it
Contracts often extend rights and duties to a party's 'subsidiaries and affiliates'. A 'wholly-owned subsidiary' is 100% owned by its parent company. Groups use subsidiaries to separate risks and to operate in different countries.
Examples
The contract was signed by our Turkish subsidiary, not by the parent company.
The license covers the customer and its wholly-owned subsidiaries.
Usage note
Turkish 'iştirak' usually means a company in which another company holds a significant but non-controlling stake, so it is closer to 'associate' or 'affiliate' than to subsidiary.
Common phrases
wholly-owned subsidiary · parent company · subsidiaries and affiliates · set up a subsidiary
The group of directors elected by the shareholders to manage a company and make its most important decisions.
Where you use it
Often just 'the board'. The board meets regularly, passes resolutions and appoints senior management. Signing a major contract may require a 'board resolution'. In a Turkish joint stock company (A.Ş.) the yönetim kurulu plays the same role.
Examples
The board of directors approved the new distribution strategy.
Please send us a copy of the board of directors' resolution authorising the signatory.
Common phrases
board meeting · board resolution · sit on the board · board approval · chair of the board
A company's constitution: the document that sets out its internal rules, such as how shares are transferred, how directors are appointed and how meetings work.
Where you use it
The UK term, often shortened to 'the Articles'. In the US these rules are split between the 'certificate of incorporation' and the 'bylaws'. Investors check the articles for share transfer restrictions and special rights; changing them usually needs a special shareholder resolution.
Examples
The articles of association require board approval for any share transfer.
The shareholders voted to amend the articles of association.
Common phrases
amend the articles of association · under the articles · memorandum and articles of association · constitutional documents
A business arrangement in which two or more independent parties combine resources for a specific project or business while remaining separate companies.
Where you use it
Shortened to JV. It may be purely contractual or take the form of a new jointly owned company. The joint venture agreement covers contributions, control, profit sharing, deadlock and exit. Common in construction, energy and entering new markets.
Examples
The two firms formed a joint venture to build the airport terminal.
Each partner owns 50% of the joint venture company.
Common phrases
form a joint venture · joint venture agreement · joint venture partner · joint venture company
A legal duty to act in the best interests of another person or organisation, owed for example by directors to their company or by agents to their principal.
Where you use it
It includes duties of loyalty and care, such as avoiding conflicts of interest and not making secret profits. You 'owe', 'breach' or 'discharge' a fiduciary duty. Common in company law, trusts, agency and financial services.
Examples
The director breached his fiduciary duty by giving the contract to his brother's company.
Directors owe a fiduciary duty to the company, not to individual shareholders.
Common phrases
owe a fiduciary duty · breach of fiduciary duty · fiduciary relationship · act as a fiduciary
To form a company as a separate legal entity by registering it with the authorities; in contracts, also to make terms from another document part of the agreement.
Where you use it
In company law: 'incorporated in England and Wales', 'date of incorporation', 'certificate of incorporation'. In contracts: 'the Schedules are incorporated into this Agreement', or terms 'incorporated by reference'. The US abbreviation 'Inc.' comes from 'incorporated'.
Examples
The company was incorporated in Turkey in 2015.
Our general terms and conditions are incorporated into every purchase order.
Common phrases
incorporated in · certificate of incorporation · incorporate by reference · newly incorporated company
The combination of two or more companies into one, either by one company absorbing the others or by forming a completely new company.
Where you use it
Usually heard in the pair 'mergers and acquisitions' (M&A). Mergers often need shareholder approval and clearance from competition authorities. The verb is 'merge with'. In business news the word is also used loosely for any combination of companies.
Examples
The merger of the two banks needs approval from the competition authority.
After the merger, the new company will have 4,000 employees.
Common phrases
mergers and acquisitions · merger agreement · approve a merger · merger control · merge with
The purchase of a company, part of a company or a business, usually by buying its shares or its assets.
Where you use it
Lawyers distinguish a share acquisition (buying the company itself, with all its history and liabilities) from an asset acquisition (buying selected assets). The verb is 'acquire'; the buyer is the 'acquirer' and the company being bought is the 'target'.
Examples
The acquisition of the software firm closed in March.
We are advising a Turkish group on its acquisition of a German supplier.
Common phrases
make an acquisition · share acquisition · asset acquisition · acquisition target · complete an acquisition
A detailed investigation of a company's legal, financial and commercial position, carried out before buying it, investing in it or signing a major contract with it.
Where you use it
A standard phase of every acquisition. Lawyers review documents in a 'data room', send questionnaires and prepare a due diligence report that highlights risks ('red flags'). You carry out, conduct or complete due diligence; it is often shortened to DD.
Examples
Our due diligence found three unpaid tax assessments.
The buyer needs six weeks to complete due diligence.
Common phrases
carry out due diligence · legal due diligence · due diligence report · financial due diligence · data room
The main contract in a company acquisition, under which the seller transfers shares in the target company to the buyer for an agreed price.
Where you use it
Usually called the SPA. It contains the price mechanism, conditions precedent, warranties and indemnities, limits on the seller's liability and the closing steps. When assets rather than shares are bought, the equivalent is an asset purchase agreement (APA).
Examples
The share purchase agreement was signed in June, and the deal closed in September.
The seller's warranties are set out in Schedule 3 to the share purchase agreement.
Common phrases
sign the share purchase agreement · draft SPA · SPA negotiations · under the SPA
The final stage of a deal, when the last documents are signed or exchanged, the price is paid and ownership passes to the buyer.
Where you use it
In M&A there is often a gap between signing and closing so that conditions such as regulatory approvals can be met. Lawyers prepare a 'closing checklist' and 'closing deliverables'. British lawyers usually call this stage 'completion'.
Examples
Closing is expected once the competition authority approves the deal.
At closing, the buyer will pay 80% of the price and the rest after twelve months.
Common phrases
closing date · closing conditions · at closing · closing checklist · between signing and closing
An event or action that must happen before a contract, or a particular obligation in it, takes effect, such as a regulatory approval.
Where you use it
The plural is 'conditions precedent', often shortened to CPs. In M&A, typical CPs are competition clearance, shareholder approval and third-party consents. A party may 'satisfy' or 'waive' a CP, and a 'long-stop date' sets the final deadline.
Examples
Approval by the Competition Authority is a condition precedent to closing.
If the conditions precedent are not satisfied by 31 December, either party may walk away.
Common phrases
satisfy a condition precedent · waive a condition precedent · CP satisfaction · long-stop date
Part of the price in an acquisition that is paid later, and only if the business reaches agreed financial targets after the sale.
Where you use it
Used when buyer and seller disagree on value, especially for fast-growing companies. The SPA defines the targets (often EBITDA or revenue), the earn-out period and how the business must be run meanwhile. Earn-outs frequently lead to disputes.
Examples
The sellers will receive an earn-out of up to €2 million if revenue doubles within three years.
The founders stayed on as managers during the earn-out period.
The act of gaining control of a company, usually a listed one, by buying a majority of its shares, sometimes against the wishes of its management.
Where you use it
A takeover can be 'friendly' (recommended by the target's board) or 'hostile'. Takeovers of listed companies follow strict rules, such as the UK Takeover Code or the Turkish Capital Markets Board's rules on mandatory tender offers. The phrasal verb is 'take over'.
Examples
The board rejected the takeover bid as too low.
After the takeover, the new owners replaced most of the management team.
The company that a buyer plans to acquire or invest in during a merger, acquisition or takeover.
Where you use it
Often just 'the target' or, in an SPA, 'the Company'. Due diligence focuses on the target company's contracts, employees, assets, debts and disputes. In a takeover, the target's board must advise its shareholders on the offer.
Examples
The target company has three subsidiaries and 500 employees.
We reviewed all of the target company's customer contracts for change of control clauses.
Common phrases
acquire a target company · target company's shareholders · identify a target · change of control
Legal rights over creations of the mind, such as inventions, brands, designs, software and written works; the main types are patents, trademarks, copyright and designs.
Where you use it
Usually shortened to IP. Commercial contracts decide who owns IP created during a project, how it may be licensed and who is liable if it infringes someone else's rights. 'IP rights' and 'IP portfolio' are common phrases.
Examples
All intellectual property created under this agreement belongs to the client.
The start-up's main asset is its intellectual property, not its office or equipment.
Common phrases
intellectual property rights · own the intellectual property · protect intellectual property · IP license · IP infringement
A sign such as a name, logo or slogan that identifies the goods or services of one business and distinguishes them from those of others.
Where you use it
Trademarks are registered for specific classes of goods and services, in Turkey with TÜRKPATENT and in the EU with the EUIPO. You register, use, license or infringe a trademark. The symbol ® marks a registered trademark; ™ is often used for unregistered ones.
Examples
We registered the trademark in Turkey and the EU before the launch.
The distributor may use our trademarks only on approved packaging.
Usage note
British legislation often writes 'trade mark' as two words; American usage is 'trademark'.
An exclusive right, granted by the state for a limited period, to make, use and sell an invention in exchange for publicly disclosing how it works.
Where you use it
A patent usually lasts 20 years from the filing date and only protects inventions that are new, inventive and industrially applicable. You apply for, file, grant, license or infringe a patent. 'Patent pending' means an application is still being examined.
Examples
The company holds patents on the battery design in 30 countries.
We filed a patent application before presenting the device at the trade fair.
Usage note
In American English the noun is pronounced /ˈpætnt/; British speakers also say /ˈpeɪtnt/. The adjective 'patent' meaning 'obvious' is usually /ˈpeɪtnt/.
Common phrases
file a patent application · grant a patent · patent infringement · patent pending · hold a patent
The legal right of the creator of an original work, such as a text, photo, piece of music or software, to control how it is copied, published and adapted.
Where you use it
In most countries copyright arises automatically when a work is created, without registration, and usually lasts for the author's life plus 70 years. Contracts decide who owns the copyright in work made by employees or contractors.
Examples
The agency keeps the copyright in the photos and grants us a license to use them.
Copying a competitor's user manual would infringe copyright.
Usage note
It is spelled 'copyright' (right = hak), not 'copywrite'.
Common phrases
own the copyright · copyright infringement · copyright notice · assign copyright · protected by copyright
Permission from the owner of a right, such as a patent, trademark or software, allowing someone else to use it under agreed conditions, often in return for payment.
Where you use it
The owner is the licensor and the user is the licensee. A license may be exclusive or non-exclusive, limited to a territory and a period, and transferable or not. The verb is also 'license': 'We license the software to 200 customers.'
Examples
The customer receives a non-exclusive license to use the software in Turkey.
They licensed the brand to a manufacturer in Egypt.
Usage note
In British English the noun is spelled 'licence' and the verb 'license'; American English uses 'license' for both.
Common phrases
grant a license · exclusive license · license agreement · license fee · under license
The use of someone else's intellectual property, such as a patent, trademark or copyright, without permission.
Where you use it
The verb is 'infringe' and the person is an 'infringer'. Owners send 'cease and desist' letters, sue for infringement and seek injunctions and damages. License and supply contracts often contain an IP infringement indemnity.
Examples
Selling the copies online is a clear infringement of our copyright.
The court found trademark infringement and ordered the products to be destroyed.
A payment made to the owner of a right, such as a patent, brand, book or song, usually calculated as a percentage of sales or a fee per unit sold.
Where you use it
Usually plural: 'royalties'. License and franchise agreements set the royalty rate, the reporting period and audit rights. A 'minimum royalty' guarantees the owner a fixed income even if sales are low.
Examples
The licensee pays a royalty of 4% on net sales.
Royalties are reported and paid every quarter.
Usage note
'Royalty' also means the members of a royal family; the business meaning is always about payments for using a right.
Valuable business information, such as a formula, a process or a customer list, that gives a company an advantage because it is kept secret.
Where you use it
Unlike patents, trade secrets are not registered and can be protected for as long as they stay secret. The owner must take reasonable steps to protect them, such as NDAs, access controls and confidentiality clauses in employment contracts.
Examples
The recipe for the sauce is a trade secret known to only three employees.
The former engineer is accused of taking trade secrets to a competitor.
Common phrases
protect trade secrets · misuse of trade secrets · trade secret protection · disclose a trade secret
A contract between an employer and an employee that sets out the job, pay, working hours, holidays and the rules for ending the relationship.
Where you use it
Also called a 'contract of employment' (UK, more formal) or an 'employment agreement' (US, especially for senior staff). Many terms are fixed by employment law and cannot be reduced by contract, such as the minimum wage and statutory leave.
Examples
Her employment contract includes a six-month non-compete clause.
The employment contract can be terminated by either side with one month's notice.
Usage note
Turkish speakers sometimes say 'work contract' or 'job contract'; the standard terms are 'employment contract' and 'contract of employment'.
Common phrases
sign an employment contract · fixed-term employment contract · permanent employment contract · terms of the employment contract
A clause that stops a person or company from competing with the other party, for example by working for a rival, for a limited time and in a limited area.
Where you use it
Found in employment contracts, share sales and distribution deals. Courts generally enforce it only if it protects a legitimate interest and is reasonable in length, area and scope. It is also called a 'restrictive covenant' or 'non-competition clause'.
Examples
The sales director's contract has a 12-month non-compete clause.
A non-compete clause covering the whole world for ten years is unlikely to be enforced.
Common phrases
enforce a non-compete clause · breach a non-compete clause · restrictive covenant · non-compete period
The length of time between giving notice to end a contract and the date on which the contract actually ends.
Where you use it
Used in employment contracts ('a three-month notice period') and in commercial contracts that can be ended on notice. The contract continues during the notice period, although an employer may instead make a payment in lieu of notice (PILON).
Examples
She is serving her notice period and leaves at the end of March.
The contract can be ended at any time, subject to a 90-day notice period.
Common phrases
serve a notice period · give notice · payment in lieu of notice · three-month notice period
The ending of an employee's contract by the employer, whether for misconduct, poor performance, redundancy or another reason.
Where you use it
UK law distinguishes 'unfair dismissal' (without a fair reason or procedure) from 'wrongful dismissal' (in breach of contract, for example without proper notice). The verb is 'dismiss'; in informal English people say 'fire' or 'sack'.
Examples
The employee claims that his dismissal was unfair.
Gross misconduct can justify dismissal without notice.
Usage note
In court language 'dismissal' also means a judge rejecting a case or claim, as in 'dismissal of the claim'.
Common phrases
unfair dismissal · wrongful dismissal · dismissal without notice · constructive dismissal · claim for unfair dismissal
A person or business that provides services to a client under a contract for services, without being the client's employee.
Where you use it
Contractors decide how they do the work, send invoices and usually pay their own taxes and insurance. Courts look at the reality, not the label: if the relationship works like employment, the person may be treated as an employee. Also called a freelancer or consultant.
Examples
She works for us as an independent contractor, not as an employee.
The authorities treated the independent contractors as employees because they worked fixed hours under our supervision.
Common phrases
engage an independent contractor · independent contractor agreement · contract for services · contractor status
Money paid by an employer to an employee whose job ends, often based on length of service and sometimes required by law.
Where you use it
Also called 'severance' or a 'severance package', which may include extra pay, benefits and a reference. In the UK, 'redundancy pay' is the statutory payment when a job disappears. Employers often pay severance in return for a settlement agreement in which the employee waives claims.
Examples
Employees with more than five years' service receive six months' severance pay.
The severance pay was agreed as part of a settlement agreement.
Usage note
Turkish 'kıdem tazminatı' is a specific statutory payment; when you translate it into English, add a short explanation such as 'statutory severance pay under Turkish law'.
Common phrases
severance package · statutory severance pay · be entitled to severance pay · redundancy pay
A clause that stops a party, for a limited time, from approaching the other party's employees or customers in order to take them away.
Where you use it
Used in employment contracts, share sales and services agreements, often next to a non-compete clause. Because it is usually narrower than a non-compete, courts are more willing to enforce it. You 'solicit' or, informally, 'poach' staff or customers.
Examples
The non-solicitation clause prevents us from hiring the supplier's engineers for 12 months.
He did not breach the non-compete, but he did breach the non-solicitation clause by contacting his old clients.
Common phrases
breach a non-solicitation clause · non-solicitation of employees · non-solicitation of customers · restrictive covenants
A disagreement between parties about their rights or obligations, for example over payment, quality or the meaning of a clause.
Where you use it
Contracts include dispute resolution clauses that say how disputes are handled: negotiation, mediation, arbitration or court. As a verb, you 'dispute' an invoice or a claim, meaning you say it is wrong. 'In dispute' means currently contested.
Examples
Any dispute arising out of this contract shall be referred to arbitration.
The customer disputes the last two invoices.
Common phrases
resolve a dispute · settle a dispute · dispute resolution · commercial dispute · a dispute arises
A private way of resolving disputes in which the parties agree to let one or more independent arbitrators decide the case instead of a national court.
Where you use it
Popular in international contracts because it is usually confidential and awards are easier to enforce abroad under the New York Convention. Contracts name an institution (ICC, LCIA, ISTAC), the seat and the language. Parties 'refer a dispute to arbitration' or 'commence arbitration'.
Examples
The dispute will be resolved by arbitration under the ICC Rules, seated in Paris.
They commenced arbitration after the settlement talks failed.
Usage note
The person who decides is usually called an 'arbitrator'. 'Arbitrage' is a finance term with a completely different meaning.
Common phrases
refer to arbitration · commence arbitration · arbitration clause · international arbitration · seat of arbitration
The process of taking a dispute to a national court and having a judge decide it, as opposed to resolving it through arbitration or mediation.
Where you use it
Usually uncountable ('litigation is expensive'). Law firms have litigation departments and lawyers called litigators. Parties try to avoid litigation, threaten it or are 'in litigation'. Pending litigation must often be disclosed in M&A deals.
Examples
We would rather settle than spend two years in litigation.
The seller confirmed that there is no pending litigation against the company.
A way of resolving a dispute in which a neutral person, the mediator, helps the parties reach their own settlement but does not impose a decision.
Where you use it
Usually faster and cheaper than court or arbitration, and confidential. Many contracts require mediation before arbitration or litigation (escalation clauses). In Turkey, mediation is a compulsory first step for many commercial and employment claims.
Examples
The parties agreed to try mediation before starting arbitration.
The dispute was settled after one day of mediation.
Usage note
Mediation is not the same as arbitration: a mediator helps the parties agree, while an arbitrator decides the case.
Common phrases
go to mediation · mandatory mediation · mediation session · refer to mediation
An agreement that ends a dispute or lawsuit, usually with one party paying an agreed amount and both sides dropping their claims.
Where you use it
Parties 'reach a settlement' or 'settle out of court'. The terms are recorded in a settlement agreement, which often includes a release of all claims and a confidentiality clause. In banking and trade, 'settlement' also means the completion of a payment.
Examples
The two companies reached a settlement the day before the hearing.
Under the settlement agreement, the supplier will pay €400,000 in two instalments.
Common phrases
reach a settlement · settlement agreement · out-of-court settlement · settlement offer · negotiate a settlement
The final decision of an arbitrator or arbitral tribunal that resolves the dispute and is binding on the parties.
Where you use it
Often simply called 'the award'. Under the 1958 New York Convention it can be enforced in more than 170 countries, and courts can set it aside only on limited grounds. The tribunal 'renders' or 'issues' an award; the winning party 'enforces' it.
Examples
The arbitral award ordered the buyer to pay the outstanding price plus interest.
We have started proceedings to enforce the arbitral award in Turkey.
Common phrases
enforce an arbitral award · issue an award · set aside an award · final award
The power of a court to hear and decide a case; also a country or territory with its own courts and laws.
Where you use it
A jurisdiction clause chooses the courts that will hear disputes, for example 'the courts of Istanbul shall have exclusive jurisdiction'. Lawyers also say 'in some jurisdictions', meaning 'in some countries or legal systems'.
Examples
The courts of England shall have exclusive jurisdiction over any dispute.
This type of clause is not enforceable in every jurisdiction.
Common phrases
exclusive jurisdiction · jurisdiction clause · submit to the jurisdiction · non-exclusive jurisdiction · in this jurisdiction
A label for written or spoken settlement communications, meaning they cannot later be used as evidence in court against the party who made them.
Where you use it
Common in English letters and emails ('Without prejudice', 'Without prejudice save as to costs'). It lets parties make offers without admitting liability, but only genuine attempts to settle a dispute are protected. In contracts, 'without prejudice to' means 'without affecting'.
Examples
Our letter was marked 'without prejudice', so it cannot be shown to the judge.
Termination is without prejudice to any rights that have already accrued.
Usage note
In US court language a case 'dismissed without prejudice' can be brought again, while one 'dismissed with prejudice' is finally rejected.
Common phrases
without prejudice letter · without prejudice save as to costs · without prejudice to · without prejudice discussions
The time limit within which a legal claim must be started; after it expires, the claim is usually barred.
Where you use it
In England most contract claims have a six-year limitation period from the date of breach, or twelve years for deeds. The US term is 'statute of limitations'. Contracts such as an SPA often set shorter periods for warranty claims.
Examples
The claim was rejected because the limitation period had expired.
Warranty claims under the SPA have a shorter limitation period of 24 months.
Common phrases
the limitation period expires · statute of limitations · time-barred · within the limitation period
Ten questions from this glossary. Pick the right meaning for each term and see your score.
How to learn contract & commercial law vocabulary
Read real contracts every week: a published template, a company's online terms and conditions or a sample NDA. Mark each clause heading and the verbs around key terms, such as terminate for cause, waive a right or indemnify against losses.
Learn the boilerplate clauses at the end of most contracts first: governing law, jurisdiction, entire agreement, severability, waiver, notices and counterparts. Their wording is very similar from one agreement to the next, so they are a quick win.
Watch the small modal verbs: 'shall' and 'must' create obligations, 'may' gives a right or an option, and 'will' can be ambiguous. Misreading one of them can change who has to do what.
Keep a list of terms with no exact Turkish equivalent, such as consideration, warranty, liquidated damages and without prejudice, and write a one-line explanation next to each instead of a single word.
Practise by summarising a contract you have read in a short English email: the parties, the main obligations, the payment terms, how it can be terminated and how disputes are resolved.
Frequently asked questions
How can I learn contract English effectively?
Work with real documents rather than word lists alone. Choose one type of contract you deal with, such as an NDA or a supply agreement, read several published examples and compare how the same clauses are worded. Note each term with its typical verbs and prepositions, then reuse those phrases when you write summaries, comments or emails. A little reading every day works better than long sessions once a month.
Why do English contracts use words like 'shall', 'hereby' and 'whereas'?
They come from traditional legal drafting. 'Shall' marks an obligation ('The Supplier shall deliver…'), 'hereby' means 'by this document' and 'whereas' introduces the background in the recitals. Many modern contracts prefer plain English, for example 'must' for obligations and a simple 'Background' section, but the traditional style is still very common, so you need to recognise it.
Which contract law terms should I learn first?
Start with the life cycle of a contract: party, offer, acceptance, consideration, term, clause, obligation, breach of contract, damages and termination. Then add the clauses that appear in almost every commercial agreement: governing law, jurisdiction, force majeure, limitation of liability, indemnity, warranty and confidentiality. The first terms on this page follow this order.
Do English contract terms have exact Turkish equivalents?
Often not. English and American contract law belong to the common law tradition, while Turkish commercial law is based on codes such as the Turkish Code of Obligations (Türk Borçlar Kanunu) and the Turkish Commercial Code (Türk Ticaret Kanunu). Concepts such as consideration, warranty, liquidated damages and without prejudice either do not exist in Turkish law or work differently. When you translate, choose the closest Turkish term and add a short explanation where the difference matters.
Is a 'contract' the same as an 'agreement'?
In everyday business English they are often used as synonyms, and many contracts are titled 'Agreement'. Strictly speaking, an agreement is any arrangement the parties have reached, while a contract is an agreement that the law will enforce. A non-binding memorandum of understanding, for example, is an agreement but not a contract.
