61 legal terms, in plain English.

A

Annual report

A yearly filing many states require from registered businesses to keep company information current. In Utah it is filed with the Division of Corporations and Commercial Code, generally during the anniversary month of formation.

Arbitration

A private dispute-resolution process where a neutral arbitrator hears both sides and issues a decision that is usually binding. It is often faster than court, and many business contracts include arbitration clauses.

Articles of organization

The document filed with the state to create an LLC. It typically lists the company name, registered agent, and basic organizational details.

Assignment

The transfer of rights or obligations under a contract from one party to another. Many contracts include an assignment clause that limits when this can happen.

At-will employment

The default employment relationship in most US states, including Utah, meaning either the employer or the employee can end the relationship at any time for any lawful reason. Written contracts or policies can modify this default.

B

Beneficial ownership

The individuals who ultimately own or control a company. Federal reporting rules in this area have changed over time; check current FinCEN guidance for what applies now.

Breach (of contract)

A failure to perform a duty required by a contract. A material breach can give the other party the right to damages or to end the agreement.

Bylaws

The internal rules that govern how a corporation operates, covering meetings, officers, voting, and similar matters. They are adopted by the corporation itself and are not filed with the state.

C

Capitalization table

A record showing who owns what percentage of a company, including founders, investors, and option holders. It is updated whenever ownership changes.

Collateral

Property pledged to secure a loan or obligation. If the borrower defaults, the lender can typically claim the collateral.

Consideration

Something of value exchanged between parties to make a contract binding, such as money, goods, or services. A promise without consideration is generally not enforceable as a contract.

Copyright

Federal protection for original works of authorship, such as text, software, images, and music. It arises automatically when a work is created, though registration with the US Copyright Office provides additional benefits.

D

Damages

Money awarded to compensate for a loss caused by a breach of contract or other legal wrong. Contract damages generally aim to put the injured party in the position they would have occupied had the contract been performed.

DBA (doing business as)

A registered trade name a business uses that differs from its legal name. Registration is handled at the state or county level depending on the jurisdiction.

Dilution

The decrease in existing owners' percentage ownership that occurs when a company issues additional shares. The effect on value depends on the price of the new shares.

Dissolution

The formal process of closing a business entity, including settling debts and filing dissolution paperwork with the state. Skipping formal dissolution can leave tax and liability obligations behind.

Due diligence

The investigation a buyer or investor performs before a deal, reviewing finances, contracts, legal exposure, and operations. Findings often affect price or deal terms.

E

EIN (Employer Identification Number)

A federal tax ID issued by the IRS to identify a business. Most businesses need one to hire employees, open a bank account, or file business tax returns.

Equity

Ownership interest in a company, usually represented by shares or membership units. Equity holders generally share in profits and in the proceeds if the company is sold.

Escrow

An arrangement where a neutral third party holds money or documents until agreed conditions are met. It is common in business sales and some service contracts.

F

1099 forms

IRS information returns used to report various types of income paid to non-employees. Form 1099-NEC reports payments to independent contractors; other 1099 variants cover interest, dividends, and similar income.

Fiduciary duty

A legal obligation to act in another party's best interests, applying to directors, officers, and in some cases managers or partners. It generally includes duties of care and loyalty.

Force majeure

A contract clause that excuses performance when extraordinary events beyond anyone's control, such as natural disasters, make performance impossible. Courts interpret these clauses narrowly.

Foreign qualification

The process of registering an existing business to operate in a state other than its formation state. Most states require it before a company transacts business within their borders.

Franchise

A business model where a franchisor licenses its brand and system to franchisees, who operate under detailed rules. Franchising is regulated at the federal level by the FTC's Franchise Rule and by some state laws.

G

Governing law

The contract clause specifying which state's or country's laws will be used to interpret the agreement. It matters because contract law varies by jurisdiction.

I

Indemnification

A contract promise that one party will cover specified losses or legal costs of the other. Indemnity clauses are among the most negotiated terms in business contracts.

Injunction

A court order requiring someone to do something or to stop doing something. Businesses sometimes seek injunctions to stop ongoing harm, such as misuse of trade secrets.

J

Joint venture

A business arrangement where two or more parties collaborate on a specific project while remaining separate entities. Rights and duties are set out in a joint venture agreement.

L

Lease

A contract giving one party the right to use property owned by another for a set time in exchange for rent. Commercial leases often run for multiple years and allocate maintenance, tax, and insurance duties.

Liability

Legal responsibility for a debt, obligation, or harm. One purpose of forming an LLC or corporation is to separate the owner's personal liability from the business's liabilities.

License

Permission granted to use something owned by another, such as software, a trademark, or a patent, on defined terms. Business licenses are a separate concept: government permits to operate.

Lien

A legal claim against property to secure payment of a debt. A lienholder can generally force sale of the property if the debt is not paid.

M

Mediation

A voluntary process where a neutral mediator helps disputing parties reach their own settlement. Unlike arbitration, the mediator does not decide the outcome.

N

NDA (non-disclosure agreement)

A contract in which parties agree to keep specified information confidential. NDAs are common before business discussions, partnerships, and contractor engagements.

Non-compete agreement

A contract restricting a person from competing with a business for a time and within a geographic area after the relationship ends. Enforceability varies widely by state, and some states sharply limit or ban them.

O

Operating agreement

The internal document that sets out how an LLC is owned and managed, including voting, profit sharing, and what happens when a member leaves. Utah does not require filing it with the state, but most LLCs keep a signed copy.

OSHA

The federal Occupational Safety and Health Administration, which sets and enforces workplace safety standards. Most employers must comply with its rules and display required postings.

P

Partnership

A business owned by two or more people who share profits and, by default, personal liability for the business's debts. A written partnership agreement defines each partner's rights.

Patent

A federal right granted by the USPTO giving an inventor exclusive rights to an invention for a limited time. Patents cover inventions and processes, distinct from trademarks and copyrights.

Personal guarantee

A promise by an individual, often a business owner, to repay a business debt personally if the business does not. It removes the entity's liability protection for that obligation.

Piercing the corporate veil

A court decision to hold owners personally liable for a company's obligations, typically when the entity was misused, such as by mixing personal and business funds. Keeping clean records and observing formalities reduces this risk.

Promissory note

A written promise to repay a specific sum on defined terms. Notes are used to document business loans and seller financing.

Proxy

Authorization for one person to vote on behalf of another, commonly used at shareholder meetings. Proxy rules are set by the corporation's bylaws and state law.

Q

Quorum

The minimum number of owners or directors who must be present for a valid vote. The threshold is usually set in the bylaws or operating agreement.

R

Registered agent

The person or company designated to receive legal and official mail on behalf of a business. Every Utah registered business must maintain one with a physical Utah address.

S

S-corp election

A federal tax election, made with the IRS, for an eligible corporation or LLC to be taxed under Subchapter S. It affects how business income is taxed, and eligibility rules apply.

Sales tax nexus

A connection between a business and a state sufficient for the state to require sales tax collection. Physical presence historically created nexus; many states now also use economic thresholds based on sales or transaction counts.

Severability

A contract clause stating that if one provision is found unenforceable, the rest of the agreement still stands. Courts may apply this principle even without the clause.

Sublease

An arrangement where a tenant leases some or all of their rented space to a third party. Most leases require the landlord's consent before subleasing.

T

Term sheet

A non-binding outline of proposed deal terms, used in investments and acquisitions before final documents are drafted. Some provisions, such as confidentiality, may be stated as binding.

Trade secret

Confidential business information that derives value from secrecy, such as formulas, processes, or customer lists. Protection lasts as long as the information is kept secret and reasonable measures guard it.

Trademark

A word, logo, or symbol identifying the source of goods or services. Rights can arise from use, and federal registration with the USPTO provides nationwide benefits.

U

UCC (Uniform Commercial Code)

A set of standardized laws adopted in some form by every state, governing commercial transactions including sales of goods and secured lending. Article 2 covers sales; Article 9 covers secured transactions.

Unemployment insurance

A joint federal-state program funded by employer taxes that pays benefits to eligible workers who lose jobs through no fault of their own. Employers generally must register with and pay into their state's system.

V

Venue

The proper geographic location for a lawsuit or dispute proceeding. Contracts often include venue clauses selecting where disputes will be heard.

Vesting

The process by which a person earns full ownership of equity or benefits over time. A common schedule vests shares over four years with a one-year cliff.

W

W-2

The IRS form employers use to report annual wages and withheld taxes for each employee. Employers furnish copies to employees and file with the Social Security Administration.

Waiver

The voluntary surrender of a known right, such as the right to sue or to enforce a contract term. Waivers must generally be clear, and some rights cannot be waived.

Withholding

Tax amounts an employer deducts from employee paychecks and remits to tax authorities. It covers federal income tax, Social Security, Medicare, and where applicable state income tax.

Workers' compensation

State-required insurance covering medical costs and lost wages for employees injured on the job. Utah employers generally must carry it through an authorized carrier or approved self-insurance.