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You can reduce the chances of being exploited in your personal business dealings by understanding the meaning of the words in this glossary. In addition, you will be able to communicate better with your lawyer because these terms are commonly used in legal proceedings.

Abuse of process - A cause of action that arises when one party willfully misuses the legal process to injure another

Accord and satisfaction - An agreement between two parties to settle a dispute by compromise

Action in accounting - A type of lawsuit where one party seeks a determination of the amount of money owed by another

Admissible - Capable of being introduced in court as evidence

Advance - A sum of money that is usually applied against money to be earned; sometimes referred to as "draw"

Affidavit - A written statement signed under oath

Allegations - Charges one party expects to prove in a lawsuit

Answer - The defendant's reply to the plaintiff's charges in a civil lawsuit

Appeal - A proceeding whereby the losing party in a lawsuit applies to a higher court to determine the correctness of that decision

Arbitration - A proceeding where both sides submit their dispute to the binding decision of arbitrators rather than judges

Assault and battery - A harmful, offensive, unpermitted touching of one person by another

Assignment - The transfer of a right or interest by one party to another

Attorney in fact - A person appointed by another to transact business on his or her behalf; the person does not have to be a lawyer

Award - A decision made by a judicial body to compensate the winning party for losses or injuries caused by another

Bail bondsman - A person who posts money for a fee to free an incarcerated individual

Bailment - A legal relationship created when one person delivers property to another

Bill of particulars - A document used in a lawsuit that adds information contained in the plaintiff's complaint

Bonus - A sum of money paid by an employer to an employee

Breach of contract - The unjustified failure of a party to perform a duty or obligation specified in a contract

Breach of warranty - A legal cause of action often arising when a seller makes false representations regarding his or her product or service

Burden of proof - The responsibility for a party in a lawsuit to provide sufficient evidence to prove its claims

Business deduction - A legitimate expense that can be used to decrease the amount of reportable income subject to tax

Business slander - A legal wrong committed when a party orally makes false statements that impugn the business reputation of another (e.g., imply that the person is dishonest, incompetent, or financially unreliable)

Calendar - A list of cases to be heard each day in court

Cause of action - Legal theories that the plaintiff alleges in a complaint to recover damages from his or her opponent

Caveat emptor - A Latin expression frequently applied to consumer transactions; translated as "Let the buyer beware"

Certificate of incorporation - A document creating a corporation

Check - A negotiable instrument- the depositor's written order requesting his or her bank to pay a definite sum of money to a named individual or business

Civil court - Generally, any court that presides over noncriminal matters

Claims court - A particular court that hears tax disputes

Clerk of the court - A person who determines whether court papers are properly filed and court procedures followed

Common carrier - An entity that transports persons and property for a fee

Common law - Law that evolves from reported case decisions that are relied upon for their precedential value

Compensatory damages - A sum of money awarded to a party by a court or jury representing the actual harm or loss suffered

Complaint - A legal document that starts a lawsuit; the complaint alleges facts and causes of action that the plaintiff relies upon to collect damages

Computer consultant - A person hired to match his or her client's needs with appropriate computer hardware and software equipment

Conflict of interest - The ethical inability of a lawyer to represent a client because of competing loyalties

Consideration - An essential element of an enforceable contract; something of value given or promised by one party in exchange for an act or promise of another

Contempt - A legal sanction imposed when a rule or order of a judicial body is disobeyed

Contingency fee - A type of fee arrangement where the lawyer is paid a percentage of the money recovered

Continuance - The postponement of a legal proceeding to another date

Contract - An enforceable agreement, either in writing, oral, or implied

Contract modification - The alteration of contract terms

Counterclaim - A claim asserted by the defendant in a lawsuit

Covenant - A promise

Credibility - The believability of a witness in the minds of a judge or jury

Creditor - The party to whom money is owed

Cross-examination - The questioning of a witness by the opposing lawyer

Damages - An award, usually money, given to the winning party in a lawsuit as compensation for the wrongful acts of another

Debtor - The party who owes money

Decision - The determination of a case or matter by a judicial body

Deductible premium - The unrecoverable portion of insurance proceeds

Defamation - An oral or written statement communicated to a third party that impugns a person's reputation in the community

Default judgment - An award rendered after one party fails to appear in a lawsuit

Defendant -The person or business who is sued in a lawsuit

Defense - The defendant's justification for relieving himself or herself of fault

Definite term of employment - Employment for a fixed period of time

Deposition - A pretrial proceeding where one party is questioned, usually under oath, by the opposing party's lawyer

Disclaimer - A clause in a sales, service, or other contract that attempts to limit or exonerate one party from liability in the event of a lawsuit

Discovery - A general term used to describe several pretrial devices (e.g., depositions, interrogatories, etc.) that enable lawyers to elicit information from the opposing side

District court - A particular court that hears tax disputes

Dual capacity - A legal theory used to circumvent worker's compensation laws and allow an injured employee to sue his employer directly in court

Due process - Constitutional protections that guarantee that a person's life, liberty, or property cannot be taken away without the opportunity to be heard in a judicial proceeding

Duress - Unlawful threats, pressure, or force that induce a person to act contrary to his or her intentions; duress, if proved, will allow a party to disavow a contract

Employee - A person who works and is subject to an employer's scope, direction, and control

Employment at will - Employment that does not provide an employee with Job security, since the person can be fired on a moment's notice with or without cause

Employment discrimination - Conduct directed at employees and job applicants that is prohibited by law

Equity - Fairness; the term is usually applied when a judicial body awards a suitable remedy other than money to a party (e.g., an injunction)

Escrow account - A separate fund where lawyers are obligated to deposit money received from or on behalf of a client

Evidence - Information in the form of oral testimony, exhibits, affidavits, and so on, used to prove a party's claim

Examination before trial - A pretrial legal device; also called a "deposition"

Exempt from execution - Property or assets that cannot be seized to satisfy a judgment

Exhibits - Tangible evidence used to prove a party's claims

Exit agreements - Agreements sometimes signed between employers and employees upon termination or resignation of an employee's services

False arrest - The unlawful detention of one person by another who claims to have sufficient legal authority

False imprisonment - The unlawful detention of a person who is held against his or her will without authority or justification

Field examination - An audit conducted by IRS agents at a taxpayer's home or business

Filing fee - Money paid to start a lawsuit

Financial statement - A document usually prepared by an accountant that reflects a business's assets, liabilities, and financial condition

Flat fee - A sum of money paid to a lawyer as compensation for his or her services

Flat fee plus time - A form of payment where a lawyer receives one sum for his or her services, and then receives additional money that is calculated on an hourly basis

Fraud - False statements of an existing fact relied upon and causing damages to the defrauded party

General denial - A reply contained in the defendant's answer

Guaranty - A contract where one party agrees to answer for or satisfy the debt of another

Hardware - A computer unit

Hearsay evidence - Unsubstantiated evidence that is often excluded by a court

Hourly fee - Money paid to a lawyer for his or her services that is computed on an hourly basis

Independent contractor - A worker not subject to an employer's scope, direction, and control, and who pays his or her own social security, withholding tax, and unemployment insurance

Infliction of emotional distress - A legal cause of action where one party seeks to recover damages for mental pain and suffering caused by another

Injunction - A court order restraining one party from doing or refusing to do an act

Interrogatories - A pretrial device used to elicit information; written questions are sent to an opponent to be answered under oath

Invasion of privacy - The violation of a person's constitutionally protected right to privacy

Judgment - A verdict rendered by a judicial body; if money is awarded, the winning party is called the "judgment creditor," and the losing party is called the "judgment debtor"

Jurisdiction - The authority of a court to hear a particular matter

Legal duty - The responsibility of a party to perform a certain act

Letter of agreement - An enforceable contract in the form of a letter

Letter of protest - A letter sent to document a party's dissatisfaction

Liable - Legally in the wrong

Lien - A claim asserted against another party's property to satisfy a judgment

Lifetime contract - An employment agreement of an infinite duration that is often unenforceable

Limited partnership - A type of partnership with general partners and limited partners. Limited partners are liable only to the extent of money invested in the partnership

Liquidated damages - An amount of money agreed upon in advance by parties to a contract to be paid in the event of a breach or dispute

Malicious interference with contract rights - A legal cause of action where one party seeks to recover damages against another who induces or causes a party to terminate a valid contract

Malicious prosecution - A legal cause of action where one party seeks to recover damages after another party instigates or institutes a phony judicial proceeding (usually criminal) that is dismissed

Malpractice - The failure of a professional to render work, labor, services, or skill of suitable competence

Mediation - A voluntary dispute resolution process where both sides attempt to settle their differences without resorting to formal litigation

Medical malpractice - A legal cause of action where one party seeks to recover damages against a doctor for his or her failure to render services or skill of suitable competence

Misappropriation - The unlawful taking of another party's personal property

Misrepresentation - A legal cause of action that arises when one party makes untrue statements of fact that induce another party to act and be damaged as a result

Mitigation of damages - A legal principle that requires a party seeking damages to make reasonable efforts to reduce damages as much as possible; for example, to seek new employment after being unfairly discharged

Motion - A written request made to a court by one party during a lawsuit

Negligence - A party's failure to exercise a sufficient degree of care owed to another by law

No-fault insurance - A system of compensation whereby a victim injured in an auto accident is paid regardless of fault

Nominal damages - A small sum of money awarded by a court

Noncompetition clause - A restrictive provision in a contract

Notary public - A person authorized under state law to administer an oath or verify a signature

Notice of deficiency - A letter sent by the IRS notifying a taxpayer of the amount of money owed

Notice to show cause - A written document in a lawsuit asking a court to rule on a matter

Objection - A formal protest made by a lawyer in a lawsuit

Offer - The presentment of terms, which, if accepted, may lead to the formation of a contract

Office examination - A tax audit conducted at a regional IRS office

Opinion letter - A written analysis of a client's case prepared by a lawyer

Option - An agreement giving one party the right to choose a certain course of action

Oral contract - An enforceable verbal agreement

Order of execution - A court order enabling a creditor to seize property of a debtor to satisfy a judgment

Pain and suffering - A form of compensable injury

Parol evidence - Oral evidence introduced at a trial to alter or explain the terms of a written contract

Partnership - A voluntary association between two or more competent persons engaged in a business as co-owners for profit

Party - A plaintiff or defendant in a lawsuit

Perjury - Committing false testimony while under oath

Plaintiff - A party who commences a lawsuit

Pleading - A written document that states facts or arguments of a party in a lawsuit

Power of attorney - A document executed by one party authorizing another to act on his or her behalf in specified situations

Pretrial discovery - Legal procedures used to gather information of an opponent before the trial

Private letter ruling - An informal statement provided by the IRS at a taxpayer's request that reflects the IRS's position on a particular issue

Process server - An individual who delivers the summons and/or complaint to the defendant

Product disparagement - False statements or depictions about the quality, condition, or capability of another's product

Product liability - A type of lawsuit arising when a person is injured by a defective product

Promissory note - A written acknowledgment of a debt whereby one party agrees to pay a specified sum on a specified date

Proof - Evidence presented at a trial that is used by a judge or jury to fashion an award

Punitive damages - Money awarded as punishment for a party's wrongful acts

Quantum meruit - A legal principle where a court awards reasonable compensation to a party who performs work, labor, or services at another party's request; also referred to as unjust enrichment

Reasonable reliance - One of the elements required to prove misrepresentation

Rebuttal - The opportunity for a lawyer at a trial to ask his or her client or witness additional questions to clarify points elicited by the opposing lawyer during cross-examination

Release - A written document that, when signed, relinquishes a party's rights to enforce a claim against another

Replevin - A type of lawsuit where one party attempts to recover personal property unlawfully held by another

Reply - A written document in a lawsuit that is the plaintiff's answer to the defendant's counterclaim

Restrictive covenant - A provision in a contract that forbids one party from doing a certain act (e.g., working for another or soliciting customers, etc.)

Retainer - A sum of money paid to a lawyer for services to be rendered

Sales puffery - Statements of a general nature made by a salesperson that the customer is not expected to accept at face value

Service bureau - A company that processes data

Service letter statutes - Laws in some states that require an employer to furnish an employee with written reasons for his or her discharge

Sexual harassment - Prohibited conduct of a sexual nature that occurs in the workplace

Slander - Oral defamation of a party's reputation

Small claims court - A particular court that presides over small disputes (e.g., not exceeding $3,500)

Software - A computer program

Sole proprietorship - An unincorporated business

Statement of fact - Remarks or comments of a specific nature that have a legal effect

Statute - A law created by an administrative body

Statute of frauds - A legal principle requiring certain contracts to be in writing to be enforceable

Statute of limitations - A legal principle that requires a party to commence a lawsuit within a certain period of time

Stipulation - An agreement between lawyers

Subchapter S Corporation -A hybrid corporation having attributes of both a corporation and a partnership

Submission agreement - A signed agreement where both parties agree to submit a present dispute to binding arbitration

Subpoena - A written order demanding a party or witness to appear at a legal proceeding; a subpoena duces tacum is a written order demanding a party to bring books and records to the legal proceeding

Summation - The last part of a trial where both lawyers recap the respective positions of their clients

Summons - A written document served upon the defendant that notifies him or her of a lawsuit

Surety - A party who agrees to answer for the debt of another

Tax audit -An IRS investigation of a party's affairs to determine the amount of tax due

Tax court - A particular court that presides over tax disputes

Tax shelter - An entity created to minimize taxes

Testimony - Oral evidence presented by a witness under oath

Time Is of the Essence - A legal expression often included in agreements to specify the requirement of timeliness

Tort - A civil wrong

Trespass - A legal cause of action that arises when one party comes or remains on the property of another without permission

Unfair and deceptive practice - Illegal business and trade acts prohibited by various federal and state laws

Unfair discharge - An employee's termination without legal justification

Verdict - The decision of a judge or jury

Void - Legally without merit

Waiver - A written document that, when signed, relinquishes a party's rights

Warranty - A factual statement made by a seller orally, in writing, by samples, models, etc., regarding the capabilities or qualities of a product or service

Whistle-blowing - Protected conduct where one party complains about the illegal acts of another

Witness - A person who testifies at a judicial proceeding

Worker's compensation - A process where an employee receives compensation for his or her injuries