Glossary of Legal Terms

The following is a list of words & expressions used by lawyers and their meanings to help you in your understanding of contracts. These should not be relied upon and you should always seek the advice of a Legally Qualified Professional.

Alternative Dispute Resolution (ADR) means where an impartial person assists those involved in a dispute to resolve the issues between them. See Arbitration, Mediation & Conciliation.

Addendum means an addition to a Contract that must be authorised by all parties to be binding.

Anticipatory Breach means where a Party makes it clear, before Performance of a Contract is due, that they are unwilling or unable to perform their obligations as promised, and as a result they will in the future breach the contract.

Arbitration means a form of Alternative Dispute Resolution where the participants to a dispute present arguments and evidence to an arbitrator who makes a binding determination.

Breach of Contract means a failure by one party to a contract to do what is required of them under that contract. This includes an Anticipatory Breach.

Clause means a term of a Contract.

Collective Bargaining means an arrangement under which two or more participants in an industry come together to negotiate terms and conditions, which can include price with a supplier or a customer.

Conciliation means a form of Alternative Dispute Resolution that is similar to Mediation except that the conciliator attempts to get the parties to agree on a resolution of the dispute based on relevant legal principles.

Contract means a Legally Enforceable Agreement made between two or more Parties. A contract may be a Verbal Contract or a Written Contract or may be partly verbal and partly written.

Damages means money that a court orders must be paid to compensate for any loss suffered by one Party because of a Breach of Contract by the other party.

Deemed Employee means an Independent Contractor who is treated as an Employee for the purposes of particular laws.

Description of Services means a term of a Services Contract which states the work that the Hirer expects the Independent Contractor to perform.

Employee means a person who performs work under an Employment Contract. An employee is not an Independent Contractor.

Employer means a person who employs an Employee under an Employment Contract. An employer is not a Hirer.

Employment Contract means a Contract which sets out the Employment Relationship, under which a person (the Employee) agrees to perform work for another person (the Employer). An employment contract is not a Services Contract.

Employment Relationship means an arrangement in which work is performed under an Employment Contract. An employment relationship is not an Independent Contractor Arrangement.

Exclusivity means a restriction on one or more parties to a contract to perform work or provide services during the life of the contract.

Essential Term means a term in a contract that is so important that a failure to abide by the term can allow Termination for Breach by the other party. For example, the terms relating to payment.

Federal Court means a court established by the Commonwealth Parliament, which has the power to decide on disputes arising under Commonwealth laws.

Federal Magistrates Court means a lower level court established by the Commonwealth Parliament with similar powers to the higher level Federal Court. The Federal Magistrates Court has less formal rules of evidence than the Federal Court and has lower filing fees.

Franchising means broadly, an ongoing business relationship in which one party (the franchisor) authorises another (the franchisee) to use their business model, including trademarks and marketing strategy, in return for an agreed fee and/or proportion of sales.

Frustration means the Termination of a Contract, because the contract cannot be Performed for some reason and neither party is at fault.

Hirer means a person who engages an Independent Contractor and receives the benefit of work under a Services Contract. A hirer in this context is not an employer. Sometimes a hirer is referred to as a 'principal'.

Indemnity means a term of a Contract, which, requires one party to compensate the other for any loss caused to the other (by Breaching the contract or acting Negligently while performing the contract).

Independent Contractor means a person who provides labour or skills or works to achieve a result for a Hirer under a Services Contract. An independent contractor is not a Employee.

Independent Contractor Arrangement means an arrangement in which work is performed under a Services Contract. An independent contractor arrangement is not an Employment Relationship.

Insurance means an indemnity made with a third party against specified loss, including Professional Indemnity Insurnance, Public Liability Insurance and Workers Compensation.

Labour Hire Worker means a worker who is engaged by a labour hire agency as either an Independent Contractor or an Employee to perform work for a third party. The worker's Contract is usually with the agency and not the organisation they perform work for.

Legally Enforceable means able to be enforced by a court.

Liquidated Damages means a term of a Contract which specifies what Damages will be payable in the case of a Breach of Contract.

Mediation means a form of Alternative Dispute Resolution in which the participants work with a mediator to identify the issues in dispute, develop options, consider alternatives and try to reach an agreement, sometimes assisted by a mediator.

Misleading or Deceptive Conduct means acting dishonestly.

Negligence means a failure to exercise the degree of care considered reasonable under the circumstances.

Negotiation means a process of bargaining leading up to the making of a Contract.

Party or Parties means a person or persons who have entered into a Contract. For example, a Hirer and the Independent Contractor are parties to a contract.

Performance means the carrying out of obligations under a Contract.

Professional Indemnity Insurance means insurance that protects a person against claims of Negligence made against them, to cover costs and expenses of defending legal claims and Damages. This type of insurance is common for independent contractors that provide advice or expertise, such as accountants, lawyers, architects or engineers.

Progress Payments means payments made by instalment or after certain milestones are reached.

Public Liability Insurance means insurance that protects a person against claims for property damage and bodily injury.

Remedies means types of orders that may be made by a court, which include Damages and Specific Performance.

Restraint of Trade means a clause that restricts the Employee or Independent Contractor from taking the Employer's or Hirer's clients or competing with their business for a specified period of time during or after the contract ends. This is sometimes known as a 'no poaching' clause.

Security of Payments Laws means state and territory laws that provide a dispute resolution mechanism for construction contractors who are owed Progress Payments for work performed for a Hirer.

Services Contract means a contract under which a person (the Independent Contractor) agrees to perform work for another person (the Hirer) in an Independent Contractor Arrangement. A services contract is not an Employment Contract.

Sham Contracting Arrangement means when a hirer deliberately disguises an Employment Relationship as an Independent Contracting Arrangement.

Specific Performance means a court order requiring one Party to perform obligations under a Contract.

Standard Form Contract means a pre-prepared Contract where most of the terms are set in advance and little or no Negotiation occurs.

Subcontracting means where an Independent Contractor enters into a Services Contract with another person (the subcontractor) under which the subcontractor performs work for the Hirer.

Termination means the bringing to an end of a Contract. A contract may be ended by Performance, by Agreement, by Frustration or by Termination for Breach..

Termination for Breach means the Termination of a Contract by one party in response to a Breach of Contract by the other party.

Third Party means a person who is not a Party to a Contract.

Written Contract means a Contract in which all the agreed terms are set out in writing.

Unfair Contract means a Contract, which is unfair or harsh under Federal, state or territory law.

Unconscionable Conduct means exploiting a special weakness of another Party to a Contract, both during Negotiations and during Performance of the contract.

Variation means a change to a Contract that is already in place, often requiring a new Agreement.

Verbal Contract means a Contract in which not all the agreed terms are set out in writing. For example, a handshake agreement.

Workers' Compensation means a type of insurance that ensures that benefits are paid to a worker, or the worker's family, if the worker suffers a job-related injury, death or disease.

Workplace Health & Safety (WH&S) means obligations on the owners and occupiers of premises to provide a safe workplace to Employees and Independent Contractors.