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Clickdocs legal glossary
Category: Business and Law
Date & country: 11/11/2007, UK
Words: 261


Ab extra
The Latin term 'Ab extra' means, in a UK legal context: 'from outside'.

Ab initio
The Latin term 'Ab initio ' means, in a UK legal context: 'from the beginning'.

Accounting Period
Under the Companies Act 1985 an accounting period runs from one accounting reference date to the next (not less than six months and not more than eighteen months) for which a company prepares financial statements and statutory accounts. The profit and loss account relates to the whole period but the balance sheet is taken on the last day of this period (Section 224 and Part VII of the Companies Act 1985).

Accounting Reference Date
Under Section 224 of the Companies Act 1985, the Accounting Reference Date is the date on which the financial year of a company ends, defining the period for which its statutory accounts are to be prepared.

Actus Reus
The Latin term 'Actus reus ' means, in a UK legal context: 'a guilty deed or act'.

Ad hoc
The Latin term 'Ad hoc ' means, in a UK legal context: 'for this purpose'.

Ad infinitum
The Latin term 'Ad infinitum ' means, in a UK legal context: 'forever, without limit, to infinity'.

Agency Agreement
An Agency Agreement is an agreement which allows one party (the Agent) to sell the products or goods of another party (the Principal) in return for commission payments.

Agent
An agent is a person who is authorised to carry out activities on behalf of his principal and to enter into commitments by which the principal will be bound. The term usually refers to a businessman who finds business for you and takes a commission.

Alibi
The Latin term 'Alibi' means, in a UK legal context: 'at another place, elsewhere'.

Aliunde
The Latin term 'Aliunde' means, in a UK legal context: 'from elsewhere' or 'from a different source'.

Alternate Director
Under the Articles of Association of a company a director can appoint another person to hold office and act in his place as a director on a temporary basis. An alternate director can vote at board meetings and carry out the same functions as his appointing director in his absence. The alternate carries full legal responsibility and liability as a director. Sometimes alternates may only be appointed from other members of the board to avoid the introduction of outsiders.

Amicus curiae
The Latin term 'Amicus curiae' means, in a UK legal context: 'a friend of the court'.

Annual General Meeting
Under the Companies Act 1985 a company must hold a meeting of shareholders in each calendar year to deal with matters such as the adoption of the previous year's financial statements, rotation of directors and the appointment of auditors. Shareholders may also use the opportunity to ask questions of the Board at the Annual General Meeting.

Ante
The Latin term 'Ante' means, in a UK legal context: 'before'.

Arbitration
The settling of a dispute by an arbitrator. Arbitration is a long established alternative to litigation (which may not always be less complex) and which involves an arbitrator reaching a judgment, which is binding on both parties. Where arbitrators cannot agree they may appoint an 'umpire'. The decision of an arbitrator is known as an 'award'.

Arbitration Award
An Arbitration Award is an agreement to submit to arbitration present or future disputes (whether they are contractual or not). The reference in an agreement to a written form of arbitration clause or to a document containing an arbitration clause constitutes an arbitration agreement if the reference is such as to make that clause part of the agreement.

Arbitrator
An Arbitrator is a disinterested person selected by agreement of contesting parties (or by the court) to hear and settle some disputed question between them. The test for apparent or unconscious bias in an arbitrator is whether there was any real danger that he was biased.

Articles of Association
The Memorandum of Association is the first constitutional document of a company containing fundamentals such as the name, the company's objects and powers, and its original share capital. Any restrictions on the company in the Memorandum of Association are no longer of material significance, at least for third parties dealing with the company. The Articles of Association contain the internal regulations and bye-laws covering procedure, shares, meetings, directors and other administrative issues and is commonly based on Table A.

Auditor
The general rule is that every company must appoint a firm of accountants as its auditors to carry out an audit of its accounts. The rule is relaxed for dormant companies or those with a low turnover. The appointment (or re-appointment) is made by shareholders at the general meeting of the company at which the accounts are read.

Authorised Share Capital
Under the Companies Act 1985 shares may be issued by the company to shareholders in return for cash or other value equal to or greater than its nominal value. Shares in the authorised share capital are available to be issued. The issued share capital refers to shares which have been allotted and issued and held by shareholders. Not all of the authorised share capital needs to be issued. When shares are issued the person subscribing must pay cash or equivalent value of at least the nominal amount. Where the share is worth more than its nominal amount, a premium may also be paid.

Bankruptcy
An order made under the Insolvency Act 1986 against an individual debtor (not a limited company) which signifies that he is unable to pay his debts and deprives him of his property which is distributed among his creditors. As a result of bankruptcy sbankrupt cannot trade or act as a company director.

Bequest
A gift in a will of personal property known also as a 'legacy'. A residuary bequest is a gift of the residue of the testator`s personal estate, namely, of what is left after payment of debts and legacies. A specific bequest is, strictly, where a testator bequeaths to a person all his property of a certain class or kind, but it is commonly used to mean a legacy of a particular article e.g. a watch.

Bona Fide
The Latin term 'Bona fide' means, in a UK legal context: 'sincere, in good faith'.

Bona vacantia
The Latin term 'Bona vacantia' means, in a UK legal context: 'goods without an owner'.

Breach of Contract
Damages may be awarded if a court decides that a defendant has either been negligent or broken a contract and foreseeable damage or loss results. The measure of damages in negligence is to compensate the plaintiff for foreseeable losses or damage. For breach of contract, he would normally be restored to the position he would have been in had the contract been properly fulfilled.

Business Assets
The undertaking and assets of an economic entity - as distinct from a company, are known as business assets. It is not a distinct legal person and its components e.g. goodwill, plant, contracts etc. belong to the company or individual which owns them. Where a business is referred to as a going concern it means it carries the benefit of orders, contracts, customers and other aspects of revenue generation on a continuing basis.

Cadit quaestio
The Latin term 'Cadit quaestio' means, in a UK legal context: 'the matter admits of no further argument'.

Certificate of Incorporation
A company is a separate legal entity governed by the Companies Act, which conducts activities on its own behalf and is distinct from the persons who own and control it. The shareholders are the owners and control the company, but their liability in relation to the company's creditors is limited. Incorporation is the process by which the company is entered on the register at the Companies Registry, and thereby comes into existence as a separate legal person. A Certificate of Incorporation will be sent to the company by the Companies Registry on first incorporation and on any change of name.

Certiorari
The Latin term 'Certiorari' means, in a UK legal context: 'a writ from a High Court to a lower Court'.

Ceteris paribus
The Latin term 'Ceteris paribus' means, in a UK legal context: 'other things being equal'.

Chairman
The procedure for appointing a chairman of a company and his functions are contained in the Articles of Association. Usually he is appointed by the directors from their number and will officiate as chairman of meetings of the directors and shareholders. If he is not able to act as chairman of a meeting for any reason there ought to be a mechanism in the Articles of Association to select another chairman. His role is primarily procedural. He does not carry greater obligations or legal responsibility than other directors. He may however, have a casting vote on a voting tie.

Collective Agreement
A collective agreement is one made between an employer (or employers' association) and a trade union governing the relationship between the parties. It will only be legally binding upon the parties if in writing and if it states it has legal status. Some of the terms and conditions of individual employment of those employees may be covered by a collective agreement.

Company
A company is a separate legal entity governed by the Companies Acts, which conducts activities on its own behalf and is distinct from the persons who own and control it. The proprietors control the company but their liability in relation to the company is limited. Incorporation is the process by which the company is entered on the register at Companies Registry and thereby comes into existence as a separate legal person. A Certificate of Incorporation will be sent to the company by Companies Registry on first incorporation and on any change of name.

Company Seal
Traditionally a company executed deeds and other instruments, including share certificates under seal. This is a device for impressing the company's name onto a red seal attached to the document in a position where two directors or one director and the secretary can sign as witnesses. The mechanical seal is no longer necessary as a company seal.

Confidential
Particularly in close trading relationships, giving access to confidential information and trade secrets to trading partners can be risky. A duty to keep such material confidential can be imposed. This needs to be in respect of keeping information secret, preventing disclosure to third parties or being used with a view to going into competition. A separate confidentiality agreement or a term in another agreement should address such issues both during and after the relationship.

Confidential Information
A contract will commonly contain a clause forbidding disclosure of trade secrets and confidential information to third parties during and after the contract. It will also often require company materials to be kept secure and returned (with any copies) when the contract ends. In the case of employment contracts, post termination restraints must be reasonable.

Confidentiality
Particularly in close trading relationships, giving access to confidential information and trade secrets to trading partners can be dangerous. If you are obliged to disclose sensitive material, you need protection to keep information secret and secure, prevent disclosure to third parties or stop commercial information being used to compete with you. A separate confidentiality agreement or a confidentiality undertaking term in another agreement should address these issues both during and after the relationship.

Consensu
The Latin term 'Consensu' means, in a UK legal context: 'unanimously or, by general consent'.

Consensus ad idem
The Latin term 'Consensus ad idem' means, in a UK legal context: 'agreement as to the same things'.

Constructive Dismissal
An employee resigns if he leaves his employment as a matter of choice. However, where there is a serious breach by the employer of the employment contract, the employee may be entitled to resign and claim constructive dismissal. Before the employer accepts a resignation, it ought to be clear and unambiguous with a specified leaving date. Great care should be taken if it is intended to rely on words uttered in temper or when interpreting an employee's contract as implied resignation. The test is whether the reasonable employer would have perceived the words or conduct as a resignation.

Consultancy
There is a distinction between someone who works full time for a company on an exclusive basis (as an employee) and someone who is engaged occasionally to assist or provide advice but who provides similar services to a range of businesses (consultant). Often the distinction is blurred, for example: in the case of non-executive directors or sales agents. The Inland Revenue will be quick to scrutinise any 'border-line' consultancy relationships.

Consultant
Where a person is taken on a self-employed or consulting basis to perform a role, as a consultant, there is tax flexibility for the worker and lower administrative burdens for the employer. Accordingly, the Inland Revenue may scrutinise such arrangements to see if they are genuine or whether they are schemes to avoid deductions of Schedule E income tax under PAYE, and National Insurance Contributions (NIC's).

Contra
The Latin term 'Contra' means, in a UK legal context: 'to the contrary'.

Contra bonos mores
The Latin term 'Contra bonos mores' means, in a UK legal context: 'contrary to good morals'.

Contracted-Out
An employer can contract out of the SERPs element out of the state pension scheme (hence qualifying for a contracted-out rebate on NIC's ) by means of an occupational pension scheme. There are strict rules reLating to occupational pension schemes generally and contracting-out. Benefits under a contracted-out scheme must be at least as good as SERPs benefits and such schemes must ensure a 'guaranteed minimum pension'. An occupational pension scheme need not be contracted out. Occupational pension schemes set up by smaller companies are often insured - whereby an insurance company takes over all responsibilities in return for a premium.

Copyright
Copyright is governed by the Copyright, Designs and Patent Act 1988 and is intended to protect against others copying and exploiting the form in which a copyright exists (a 'work'). It does not however protect the idea behind the work. The copyright, whether it be in a literary, dramatic, musical and artistic work or mechanical rights (sound recordings, film etc.) is generally owned by the author unless he assigns the rights to another. In addition to works already created, the author can agree to assign the rights of works to be created in the future.

Coram non judice
The Latin term 'Coram non judice' means, in a UK legal context: 'before one who is not a judge'.

Corpus
The Latin term 'Corpus' means, in a UK legal context: 'body'.

Corpus delicti
The Latin term 'Corpus delicti' means, in a UK legal context: 'the body of the offence'.

Custos morum
The Latin term 'Custos morum' means, in a UK legal context: 'a guardian of morals'.

Data Protection
Under the Data Protection Act 1984, those holding personal data on computer (where the data relates to identifiable individuals) must observe certain principles in how the data is held and in respect of the collection, holding, disclosure, use and granting of access to that data. In particular they must register with the Data Protection Agency.

De bonis asportatis
The Latin term 'De bonis asportatis' means, in a UK legal context: 'of goods carried away '.

De die in diem
The Latin term 'De die in diem' means, in a UK legal context: 'from day to day'.

De facto
The Latin term 'De facto' means, in a UK legal context: 'in fact'.

De futuro
The Latin term 'De futuro' means, in a UK legal context: 'in the future'.

De integro
The Latin term 'De integro' means, in a UK legal context: 'as regards the whole'.

De jure
The Latin term 'De jure' means, in a UK legal context: 'rightful, by right'.

De lege ferenda
The Latin term 'De lege ferenda' means, in a UK legal context: 'what the law ought to be (as opposed to what the law is)'.

De lege lata
The Latin term 'De lege lata' means, in a UK legal context: 'what the law is (as opposed to what the law ought to be)'.

De novo
The Latin term 'De novo' means, in a UK legal context: 'starting afresh'.

Deadlock
By splitting voting rights of shareholders and directors equally between two interests in a joint venture company, each party can prevent those activities of which it does not approve. If a dispute blows up, the deadlock is difficult to break without one of the parties being bought out.

Debenture
Companies can issue a series of debentures or debenture stock which essentially means secured loan stock. The document or instrument creates indebtedness owing by the company to the holder, usually carrying interest and maturing on a particular date when the principal amount is repaid. Debentures tend to be secured by a floating charge and/or a collection of fixed charges over the company's assets.

Deed
Only in relatively rare circumstances is a deed required to complete a transaction. In a commercial situation the most common use is where a variation or concession is made without the other party giving anything in return. A deed is enforceable regardless of the legal requirements for contracts such as the need for consideration. Where a deed is necessary, there are special requirements for a company wishing to enter into such an arrangement which may either involve use of the company seal or the signature of two directors or a director and a company secretary.

Directors
Persons who are appointed to the board of directors under procedures contained in the Articles of Association are the directors of the company. Shadow directors may also be treated as directors in some circumstances. Executives whose job title describe them as a director but are not members of the board are not treated as directors, although they may have ostensible authority to bind the company as if they were.

Directors Register
The Directors Register is one of the statutory registers that the company is required to maintain showing details of the directors and secretary. Name, address, occupation, nationality, date of birth and other directorships are recorded. (Sections 288 and 289 Companies Act 1985).

Disciplinary Procedure
An employer should draw up a disciplinary procedure preferably with union or employee involvement. It is normally a condition of the employment contract that it is subject to the disciplinary procedure in force from time to time. Such a procedure will assist the employer in arguing that he has acted fairly as well as setting down good practice for both employer and employee in disciplinary matters. If there is no such procedure, the provisions of the Advisory Conciliation and Arbitration Service (ACAS) Disciplinary Code would be the standard to be met. Under the Employment Rights Act 1996, where over twenty are employed, information as to the disciplinary procedure must be supplied to new employees within two months of commencement.

Discrimination
Under a range of different kinds of legislation, the law prohibits discrimination against various sectors of the workforce. Conduct is generally discriminatory where it may be considered to disadvantage a person of a particular sex or race, union members or non-members, ex-offenders, or from late 1996, the disabled. It may occur at recruitment, whilst employed or through termination. It is particularly important because in sex or race discrimination cases, the qualifying period of continuous employment for bringing a claim for dismissal does not apply when based upon discrimination and in such cases the limit on the amount an industrial tribunal may award is not applicable.

Dismissal
Dismissal may take place if the employer terminates the contract of employment, or if a fixed contract of employment expires. It also occurs in cases of constructive dismissal (breach of contract by the employer leading to the employee's resignation); or deemed dismissal in the case of refusal to allow a woman back to work after maternity leave. It may be contrasted with resignation (at the employee's instance) which does not amount to dismissal.

Dividend
In relation to a company, the profit of trading divided among the members in proportion to their shares and in accordance with their rights as shareholders. Dividends may be payable in respect of preference shares and ordinary shares, the payment first being made in respect of preference shares. There may be both one or more interim dividends as well as a final dividend. Shareholders cannot insist on the payment of dividends, even where the profits are amply sufficient, if the directors decline to declare a dividend, except in the case of fraud. Dividends must be paid in cash unless the Articles of Association of the company state that payment may also be made in e.g. paid up shares or debentures.

Doli incapax
The Latin term 'Doli incapax' means, in a UK legal context: 'incapable of crime'.

Dominium
The Latin term 'Dominium' means, in a UK legal context: 'ownership'.

Dubitante
The Latin term 'Dubitante' means, in a UK legal context: 'doubting the correctness of the decision'.

Due Diligence
The process by which a purchaser of or an investor in a company or business investigates the records of the target to support its value and find out whether there are 'skeletons in the cupboard'. Professional reports from accountants and solicitors may be included. The due diligence process is covered by confidentiality undertakings and supported by warranties.

Ei incumbit probatio qui
The Latin term 'Ei incumbit probatio qui' means, in a UK legal context: 'the onus of proving a fact rests upon the man'.

Employers Liability
The liability of an employer to pay damages to employees for personal injuries sustained in the course of employment. In general, an accident arising out of the course of employment will be deemed, in the absence of evidence to the contrary, to have arisen out of that employment.

Employment Contract
The contractual agreement between employer and employee governing their employment relationship. There must also be a written statement of the terms containing certain minimum conditions of employment which have to be included by statute. Certain terms may be implied by common-law (e.g. fidelity) by custom and practice or by collective agreements.

Et cetera
The Latin term 'Et cetera' means, in a UK legal context: 'other things of that type '.

Ex cathedra
The Latin term 'Ex cathedra' means, in a UK legal context: 'with official authority'.

Ex concessis
The Latin term 'Ex concessis' means, in a UK legal context: 'in view of what has already been accepted'.

Ex facie
The Latin term 'Ex facie' means, in a UK legal context: 'on the fact of it'.

Ex gratia
The Latin term 'Ex gratia' means, in a UK legal context: 'out of kindness, voluntary'.

Ex parte
The Latin term 'Ex parte' means, in a UK legal context: 'proceeding brought by one person in the absence of another '.

Ex post facto
The Latin term 'Ex post facto' means, in a UK legal context: 'by reason of a subsequent act'.

Extraordinary General Meeting
Any meeting of the shareholders other than an annual general meeting is known as an Extraordinary General Meeting. The length of notice depends on the nature of the resolutions being put to the meeting.

Extraordinary Resolution
A resolution passed by a majority of not less than three-fourths of such members as (being entitled to do so) vote in person or where proxies are allowed, by proxy, at a general meeting of the company of which notice specifying the intention to propose the resolution as an extraordinary resolution has been given. Extraordinary resolutions are required (i) where it is desired to wind up a company voluntarily on the ground that it cannot by reason of its liabilities continue its business, and that it is advisable to wind up; (ii) where, in the case of a member`s voluntary winding up, the books and papers of the company and of the liquidators are to be disposed of; and (iii) where, in the case of a member`s voluntary winding up, the liquidator wishes to exercise any of the powers given by section 539(1) (d), (e), (f) of the Companies Act 1985 (i.e. the power to pay any classes of creditors in full and to enter into certain compromises.) A copy of every extraordinary resolution must within 15 days after it has been passed be forwarded to the Registrar of Companies and recorded by him.

Faciendum
The Latin term 'Faciendum' means, in a UK legal context: 'something which is to be done'.

Factum
The Latin term 'Factum' means, in a UK legal context: 'an act or deed'.

Floating Charge
A mortgage, debenture or other security documentation, is likely to create charges over particular assets as security for borrowings or other indebtedness. There are essentially two types of charge, floating and fixed. A floating charge is appropriate to assets and material which is subject to change on a day to day basis, such as stock. Individual items move into and out of the charge as they are bought and sold in the ordinary course of events. The floating charge crystallises if there is a default or similar event. At that stage the floating charge is converted to a fixed charge over the assets which it covers at that time. A floating charge is not as effective as a fixed charge but is more flexible.

Force Majeure
A superior force. An event that no human foresight could anticipate or which if anticipated, is too strong to be considered e.g an industrial strike which leads to loss of profits. Circumstances must be abnormal and unforeseeable, so that the consequences could not have been avoided through the exercise of all due care.

Franchising
Business format franchising consists of selling a package of marketing experience and other business assistance to franchisees, who set up a business using the trade marks or service marks and the general get up of the franchiser. The franchisee will typically have a territory within which to sell the goods or services. Franchising benefits form an EU block exemption which defines those clauses that are acceptable under EU laws, thus avoiding the need for specific notification of the agreement to the European Commission.

Fructus naturales
The Latin term 'Fructus naturales' means, in a UK legal context: 'vegetation which grows naturally without cultivation'.

Fully Paid
In relation to a company, when a share is issued, the person applying for it must pay to the company, in cash or equivalent value, the amount of its nominal value together with any premium required by the company. Shares are fully paid when the whole amount has been received by the company (or exceptionally when the shareholder has given an undertaking to pay the whole amount). Shares may also be issued on the basis that only part of their price is to be paid at the outset with the remainder being required when called for by the company.

General Meeting
Companies are ultimately controlled by their shareholders voting in general meeting. Meetings of shareholders are convened by formal notice. The procedure is contained in the Articles of Association. Ordinary resolutions are passed by a simple majority of shareholders present in person or in proxy voting at the meeting. Special Resolutions require a 75% majority.

Going Concern
The Transfer of Undertakings (Protection of Employment) Regulations 1981 ('TUPE') apply where an undertaking (business) is sold as a going concern (as opposed to a sale of assets or a sale of shares) or where a unit within a business is contracted-out (outsourced) or where the contractor is changed. In the event of such a transfer, the employment rights (except pensions) of those employed by the seller immediately prior to the transfer are preserved and become the responsibility of the buyer. Dismissal in connection with the transfer gives the employee a right to claim unfair/wrongful dismissal against the transferee. What a 'going concern' is, is a matter of fact but transfer of goodwill is usually the key criterion. Prior to the transfer, there are obligations to consult with the appropriate representatives of the employees who may be affected.

Grievance Procedure
Under a grievance procedure, an employee dissatisfied with a disciplinary decision can apply to a higher authority. A grievance procedure generally advises an employee on how he can seek redress and what further steps may be taken. Under the Employment Protection (Consolidation) Act 1978, a grievance procedure must be supplied to new employees. It is normally a condition of the employment contract that it is subject to the grievance procedure in force at the time.

Guarantees
A guarantor undertakes that he will repay a debt incurred by another person or company to a bank or other creditor and the bank or other creditor can require him to pay the outstanding amount if that person cannot or will not pay their indebtedness. Proprietors and directors of companies are often asked to give personal guarantees for their company's borrowings to provide additional security. A bank will commonly require the guarantee to be secured, for example a mortgage over a director's house. In the case of co-guarantors each guarantor will be fully liable for the outstanding amount - it is up to guarantors to resolve their respective obligations between themselves.

Guarantor
A guarantor undertakes that he will repay a debt incurred by another person or company to a bank or other creditor and the bank or other creditor can require him to pay the outstanding amount if that person cannot or will not pay their indebtedness. Proprietors and directors of companies are often asked to give personal guarantees for their company's borrowings to provide additional security. A bank will commonly require the guarantee to be secured, for example a mortgage over a director's house. In the case of co-guarantors each guarantor will be fully liable for the outstanding amount - it is up to guarantors to resolve their respective obligations between themselves.

Holding Company
A company may own one or more other companies which are its subsidiaries. The relationship between parent and subsidiary depends on majority control of the voting rights of shares or the ability to appoint the majority of directors. The precise definition of a holding company is in section 736 of the Companies Act 1985.

Id est (i.e.)
The Latin term 'Id est (i.e.)' means, in a UK legal context: 'that is'.