Some commonly used legal terms and what they mean in plain language
We want to make the law more understandable for volunteers and those in for purpose organisations. One of the barriers is that some terms used by lawyers are not commonly understood. In this article we want to unpack these terms and provide a simple explanation as to their meaning. We believe people would understand things more if lawyers could write contracts using plain language.
While it is not common for lawyers from different law firms to work together, our mutual desire to increase understanding and make law accessible, unites us in providing these explanations. To start we have chosen eight words:
Acquitted – to go free and be judged innocent of a crime.
Affidavit – a written document setting out your side of the story. You are required to take an oath verifying the content is true.
Chattel – is a personal item which you can pick up and move around. If you buy a house a chattel could be a dishwasher, or curtains.
Social Enterprise – it is a label to describe an organisation which seeks to combine both profit and a social purpose. Such an organisation could take the form of a company, a charitable trust or limited partnership. It is important the social purpose or impact to be achieved is clearly set out and the entity reports on that impact. Perhaps one day there will be an actual legal entity for this concept but for now it remains a label (more on this here).
Counterparts – a number of copies of the same document can be signed and combined to make the original version. This is useful when people signing a document are in different locations. A contract needs to have a “counterparts clause” to permit this.
Indemnity – this simply means that someone will pay another person for a loss they may incur. It’s like someone saying ‘I have your back if you do something for me and things go wrong’. An indemnity clause is used in many contracts. A common example is where you agree to be a committee member or trustee for a community organisation. The club will promise to pay your costs if you are required to pay for something personally or sued for the work you have done on behalf of the organisation. If I buy a business and there is a tax issue the person who sold the business might have agreed to cover any past tax liabilities and any losses.
Freehold – this is the most common form of ownership of property in New Zealand. You own the land and any buildings that are on it forever. It is ‘free’ from any holds! It doesn’t mean you are free to do whatever you want with the land but there are no limitations on the time you own the property or rent to pay.
Dissolution – isn’t this a divorce? ‘Separation’ and ‘divorce’ can sometimes get confused. A separation is when you decide to stop living together as a couple and a divorce is when the family court grants a ‘Dissolution Order’ to legally end your marriage or civil union.
We hope that these simple explanations help to break down some commonly used legal terms. Let us know if you’d like more explanation or if you have other terms or concepts you would like us to consider.