1. What is due diligence?

Due diligence is the process of thoroughly examining a company, asset, or transaction before making a financial or legal decision. The goal is to identify risks, verify information, and make an informed choice.

*Imagine you’re buying an old car, and the seller swears it drives like a Ferrari. A smart buyer would take it to a mechanic before handing over the cash—just to make sure they’re not buying a pile of scrap metal. That’s due diligence in action: carefully checking a company, property, or deal before committing, so you don’t end up regretting it later.

2. What’s the Difference Between a Contract and an Agreement?

A contract is a formal document that sets out legally binding terms between parties, while an agreement can be a verbal or written arrangement that doesn’t necessarily require legal formalities.

*Think of a contract like a soup recipe: everything is clearly outlined—who provides what, who gets what, and who’s responsible if it turns out too salty. An agreement, on the other hand, is more of a general understanding without the paperwork hassle. For example, if you promise a friend to lend them 100$, that’s an agreement. But if you write an IOU, that’s a contract.

3. What does force majeure mean?

Force majeure is a legal term referring to unforeseeable and uncontrollable events that make it impossible to fulfill contractual obligations. These include natural disasters, wars, acts of terrorism, and other extraordinary events.

*In other words, force majeure isn’t just “not feeling like going to work.” It’s about truly unpredictable circumstances—an earthquake, a war, or a full-blown zombie apocalypse. However, rain on your wedding day? That’s not force majeure, just bad weather forecasting.

4. What is an offer?

An offer is a formal proposal to enter into a contract under specific terms, addressed to a particular person or an unlimited number of people. Accepting an offer creates a legal obligation between the parties.

*It’s an offer you can’t refuse… or shouldn’t. For example, if an online store advertises a “Smartphone for $1!” and you click “buy,” the seller is legally bound to sell it at that price—unless, of course, it turns out to be a marketing gimmick.

5. What’s the Difference Between an Advance Payment and a Deposit?

An advance payment is a prepayment made before fulfilling an obligation and is refundable if the obligation isn’t met. A deposit, on the other hand, also acts as a guarantee: if the contract falls through, the recipient may keep it if the other party backs out.

*An advance payment is like tipping a waiter upfront—if you change your mind, getting it back might be tricky. A deposit is more like reserving a table at a restaurant—if you cancel, you might get your money back, but if you don’t show up, the restaurant keeps it.

6. What is subsidiary liability?

Subsidiary liability is an additional type of liability imposed on another person if the primary debtor is unable to fulfill their obligations. It is most commonly used in corporate law.

*Imagine you start a business with a friend, and they take out a loan before vanishing into thin air. The bank will come after you because you’re also responsible for the debt. That’s subsidiary liability—when you’re left cleaning up someone else’s mess.

7. What’s the difference between a fine and a penalty?

A fine is a fixed monetary sanction for violating the terms of a contract. A penalty, on the other hand, is a financial sanction that accumulates for each day of delayed performance of an obligation.

*A fine is like getting a scolding from your boss for being late. A penalty is when they start deducting money from your paycheck for every extra minute you’re late. In short, a fine is a one-time punishment, while a penalty keeps piling up over time.

8. What is a null and void contract?

A null and void contract is an agreement that has no legal effect because it violates legal requirements. It is considered invalid from the moment it is made, without needing a court decision.

*It’s a contract that technically exists but is legally meaningless. For example, if someone sells you a piece of the Moon or their neighbor’s apartment, the deal is automatically invalid—no court would ever recognize it.

9. What is moral damage?

Moral damage refers to physical or emotional suffering caused by someone’s unlawful actions, for which compensation may be awarded.

*Legally speaking, it’s compensation for emotional distress—like if your reputation is ruined by false rumors or if you’re unfairly fired from your job.

10. What is Reputational Risk?

Reputational risk is the potential threat of losing a company’s or an individual’s good name due to negative events related to their activities.

*It’s when a business risks ruining its image because of a bad decision. For example, if a restaurant tries to cut costs by replacing real meat with cheap processed sausage, it might become famous one day—but for all the wrong reasons.

Now, if someone throws legal jargon your way — you’ll be able to take part in the discussion!

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