Every contract, statute, and legal document operates on precise definitions. When you assume a word means what it commonly means, you may be agreeing to something entirely different than what you believe. Definitions are the first battleground.
Foundational Terms
AGREEMENT
Contract LawAn arrangement or understanding between parties
A concord of understanding and intention between two or more parties with respect to the effect upon their relative rights and duties.
Key elements: Offer, Acceptance, Meeting of minds, Consideration, Capacity, and Lawful purpose. If any element is missing, the agreement may be void or voidable.
CONSIDERATION
Contract Law — CriticalThought, contemplation, or regard for something
Something of value exchanged between parties. The inducement to a contract — the cause, motive, price, or impelling influence which induces a contracting party to enter into a contract.
Always ask: "What did the other party give up of value in exchange for my obligation?" If the answer is nothing, the contract may be void.
CONSENT
Contract LawPermission, agreement
A concurrence of wills. Agreement to something proposed by another. Can be express (stated) or implied (from action or inaction).
Identity Terms
PERSON
Identity — CriticalA human being, an individual
A legal entity. May refer to a natural person (human being) OR an artificial person (corporation, trust, partnership, etc.). The term often refers to the legal fiction/status rather than the living man or woman.
Under 26 USC 7701(a)(1), "person" includes an individual, trust, estate, partnership, association, company, or corporation. When a statute uses "person," verify whether it means human being or legal entity.
See also: Individual
INDIVIDUAL
Identity — SurprisingA single human being
In federal tax law, may mean individual proprietorship (sole proprietorship) — a type of business entity, not necessarily a human being.
When you see "individual" on tax forms or federal documents, it may be referring to your sole proprietorship (identified by your SSN as an EIN), not you as a living man or woman.
CITIZEN
Identity / JurisdictionInhabitant, resident, member of a country
One who owes allegiance to a government and is entitled to its protection. Implies a reciprocal relationship with duties attached.
The Slaughter House Cases (83 US 36, 1872) established that there are TWO types of citizenship: citizenship of the United States (federal, post-14th Amendment) and citizenship of a State (original, pre-14th Amendment). These are distinct with different implications.
RESIDENT
Identity / JurisdictionWhere someone lives
One who has a residence in a place. Different from domicile. Implies certain jurisdictional connections and potentially tax status.
Jurisdiction & Authority
UNDERSTAND
Jurisdiction — Trap WordTo comprehend, to grasp the meaning
To "stand under" — can imply submission to authority or agreement to jurisdiction.
JURISDICTION
AuthorityArea, domain, territory
The authority to act; the power of a court or government entity to affect rights and obligations. Not merely geographic — must be properly established.
Jurisdiction must be established — it doesn't exist automatically. Three types: subject matter jurisdiction (authority over the type of case), personal jurisdiction (authority over the parties), and territorial jurisdiction (geographic limits).
MUST
Statutory LanguageMandatory, required, obligatory
Often means "may" — particularly in statutory language. Context determines whether mandatory or permissive.
Don't assume "must" means "must" in legal documents. Check the context and whether mandatory or directory.
INCLUDES / INCLUDING
Statutory Language — Trap WordContains, encompasses (expansive — "this and more")
Often limiting rather than expansive. In definitions, may mean "is limited to" what follows.
Commercial & UCC Terms
NEGOTIABLE INSTRUMENT
UCC Article 3Checks, money orders, financial documents
Under UCC 3-104: A written unconditional promise or order to pay a fixed amount of money, payable on demand or at a definite time, payable to order or to bearer.
Two primary types:
- NOTE: Unconditional promise to pay (e.g., promissory notes, Federal Reserve Notes)
- DRAFT: Unconditional order to pay (e.g., checks, traffic tickets, court orders)
Your signature on a promissory note creates a negotiable instrument. Under 18 USC 8, all negotiable instruments may be considered "obligations or other securities of the United States."
HOLDER
UCC Article 3Someone who has or holds something
Someone in possession of a note or draft that is payable to them specifically, or payable to bearer. Only a holder (or holder in due course) can enforce an instrument.
Under UCC 3-301, a person entitled to enforce an instrument is: (1) the holder, (2) a nonholder in possession with rights of a holder, or (3) a person entitled to enforce under specific UCC sections.
Key strategy: If the party attempting to collect cannot prove they are a proper holder of the original instrument, their standing to enforce is questionable.
MAKER
UCC Article 3One who makes something
Under UCC 3-103(7): A person who signs or is identified in a note as a person undertaking to pay.
The maker of a note is primarily liable for payment. However, under UCC 3-402(b)(1), you can sign as a representative of a represented person to avoid being the maker personally.
Example signature strategy:
By: [Your Name], representative
For: [YOUR NAME], represented person
INDORSEMENT
UCC Article 3Signing the back of a check, approval
A signature (other than that of a maker, drawer, or acceptor) made for the purpose of negotiating the instrument. How you indorse affects your liability.
Types of Indorsement:
- Blank: Just a signature — makes instrument payable to bearer (anyone)
- Special: "Pay to the order of [Name]" — limits to specific payee
- Qualified: "Without recourse" — limits your liability as indorser
Strategic indorsement example:
Without recourse
Pay to the order of: [ENTITY NAME]
By: [Your Name], agent
Using This Knowledge
- Never assume a word means what it commonly means in legal contexts
- Look up key terms in Black's Law Dictionary, 4th Edition
- Ask for clarification rather than stating you "understand"
- Notice capitalization — "Person" may differ from "person" or "PERSON"
- Consider context — the same term may mean different things in different statutes
- Check the definitions section of any statute or contract — it defines the terms for that document
These definitions are starting points for inquiry, not final answers. When a term matters in your specific situation, research its full definition in the applicable context.