Contract Vocabulary: 20 Business English Words to Know Before You Sign

Contracts are very common these days.

But honestly, do we even read them before signing? Most of the time, even native English speakers don’t read contracts, because they’re written in an unusual kind of English.

In general, you shouldn’t sign what you can’t understand! So, get ready to learn some important law vocabulary for dealing with contracts.


20 Business English Words for Negotiating Contracts

1. Party

The person or company involved in a legal agreement is referred to as the party. For example, if you’re renting an office, you and your landlord would be parties to the rental contract.

If you have a business partner, she’d have to be a party in the rental contract as well.

2. Agreement

An arrangement between two or more parties (people or companies). If you put what’s been agreed on into a legal document, you’re creating a legal agreement with them.

It seems that after months of negotiation, we’ve yet to write up an agreement for this deal.

3. Terms

The conditions relating to what the parties in a contract agreed on. In your rental contract, for example, the terms would include the period of time you’ll be renting for, the agreed rental amount, etc.

Be sure to read the terms of any contract carefully before you sign so you’re not surprised later on.

4. Clause

A condition based on the local law or company rules that defines what the parties must, can or can’t do. For example, your rental contract might include a disturbance clause that follows the neighborhood rules to ensure you don’t bother your neighbors with loud music. Often, the clauses are numbered to make them easier to read and reference.

We need to include a penalty clause in the event that the supplier fails to deliver on time.

5. Offer

An offer is an opportunity, service or item that’s presented to you to consider and think about. For instance, after viewing several offices, you might offer to rent the one in the main financial district.

Wouldn’t it be great if you got a job offer from the company you interviewed with last week?

6. Acceptance

Acceptance is the act of agreeing and saying yes to an offer that’s been made to you.

I’ve issued an acceptance to our equipment supplier to begin shipping our order.

7. Legally binding

In common legal practice, once a contract has been signed by all parties it becomes legally binding or enforceable by law (that is, able to be punished by law).

This contract won’t be legally binding until your manager signs it.

8. Legal expert

Someone with a deep knowledge of the law and whose job is to advise on legal matters and conduct lawsuits in court, such as a lawyer. In the US, a lawyer is also called an attorney.

You’d have to consult a legal expert for advice on how to solve that customer complaint.

9. Appendix

An extra page (or pages) usually found at the end of a contract. It’s used to list any additional information or explanations to the main contract.

Look in the appendix for a list of things you need to know about storing heavy equipment.

10. Fine print

The words written in small lettering or font on either the side or end of a contract. The fine print usually includes additional information, usually about limitations, that’s not important enough (but still relevant) for inclusion in the main body of the contract.

Since he didn’t read the fine print, he didn’t realize that his alligator wasn’t allowed in his new pet-friendly apartment.

11. Bargaining power

The influence one party has over another in a negotiation. Having more bargaining power puts you in a better position to win a deal.

You have more years of experience in sales than him so you should have more bargaining power when negotiating your pay package.

12. Standard form contract

A standard form contract, sometimes called a standardized contract  is a contract that contains common or pre-set terms. Businesses within certain industries often use such a contract with small changes to suit their specific purposes.

I’m sure you’ve noticed many mobile phone, hotel and car rental contracts look similar. That’s because they use standard form contracts.

13. Breach of contract

The breaking of a contract’s terms. If your supplier fails to deliver your goods by the date stated in your contract, that would be a breach of contract.

I hope you can meet tomorrow’s deadline for completing the repairs, otherwise your company will be in breach of contract.

14. In your best interest

If something is done in your best interest, that something will be an advantage or benefit to you.

I think it’d be in your company’s best interest to find a reliable supplier with a good delivery record.

15. Terminate a contract

To terminate a contract is to cancel or end it before it expires. When a contract is terminated, the parties in the contract will no longer need to perform or fulfill the terms of the contract.

Since I’m going overseas to work, I plan to terminate my mobile phone contract.

16. Point of negotiation

Any clause or part of a contract that’s open for discussion and negotiation.

Always remember that your salary is a valid point of negotiation to address at your yearly review.

17. Fail to comply

To not fulfill the terms of a contract. Failure to comply with a contract could result in penalties, legal action and even jail time.

If they fail to comply with the contract one more time, we’ll have to take legal action.

18. File a lawsuit

To file a lawsuit means to sue a party of the contract and bring them to a court of law. Lawsuits may be filed against a company for many reasons including breach of contract or if a worker’s been injured because the company failed to ensure safety standards.

We could file a lawsuit against the factory for poor ventilation but it might take months before the case goes to court.

19. Legal dispute

A disagreement on a legal matter that needs to be settled in a court of law.

We’re going to court over a legal dispute regarding how the goods were damaged on the way to the warehouse.

20. Null and void

If a contract is null and void, it becomes invalid and no longer binding on any of the parties of the contract.

Since our company has stopped selling headphones, our contract with this supplier has become null and void.

Why You Should Learn Business English Words for Contracts

If you’re planning a career in law, knowledge of Business English for negotiating contracts is very important. Even if you’re not, here are some benefits of knowing business English for contracts:

  • You’ll understand what you’re agreeing to in a contract. When you get hired, your company makes you sign offer letters and employment contracts. In your job, you may need to negotiate contracts with clients and suppliers at some point. In your everyday life, you’ll also find contracts on every service, website and program you sign up for. 
  • You’ll build a knowledge of English for negotiating contracts. In order to negotiate contracts, you must be able to use contractual English, or English used in law and contracts. You also need to know the language and vocabulary for the specific purposes of law and legal applications  (usages). 
  • You’ll protect yourself and your organization from legal risks. Often, people sign contracts blindly without understanding what they’re signing. Learning contract vocabulary will ensure that you don’t sign contracts that will put you at a disadvantage or that you can’t fulfill.


So, there you have it: The English vocabulary that’ll start you off on the path to negotiating a successful contract. Remember that practice makes perfect so keep working on these words until you remember them. Good luck!

Enter your e-mail address to get your free PDF!

We hate SPAM and promise to keep your email address safe