Contract and document glossary for business paperwork

Four families of terms, one question each

The formation pages answer whether an agreement exists at all: offer and acceptance, consideration, deeds, binding and non binding heads of agreement, memoranda of understanding and term sheets. The money pages answer who owes what and when: quotations, proforma invoices, tax invoices, credit and debit notes, remittance advice, statements of account and payment schedules. The delivery pages cover the working life of a contract, from the statement of work and its deliverables through scope creep, variations, amendments and novation. The people and governance pages cover position descriptions, handbooks, policies, codes of conduct, registers and plans.

How to pick the right page

Start from the stage you are at. If nothing has been agreed yet, read the formation pages, because the difference between a term sheet and a contract is the difference between a conversation and an obligation. If the work is agreed and the argument is about billing, read the money pages, and read the tax invoice page first, since most of the others are defined against it. If the work is under way and the brief has moved, the variation, scope creep and deliverable pages are the ones that matter. If somebody has stopped paying, start at the statement of account and the letter of demand.

Why so many versus pages

Roughly a third of these pages compare two documents rather than defining one. That is deliberate, because the practical question is almost never what a memorandum of understanding is, it is whether to send one instead of a contract. Each comparison page carries a table that puts the two side by side on the points that decide it: whether it binds, who signs, what it costs to get wrong, and what a reader expects to see in it. Definitions of individual contract clauses live in the clause collections rather than here, so a page never repeats one of them.

Every page in this collection

• Amendment against addendum

  The two words are used interchangeably by almost everybody, and nothing terrible usually happens. Where it matters is in how the document is drafted, because changing text and adding text need different wording.

• Binding against non-binding agreements

  People assume the words non binding at the top of a page settle the question. They help, and a document whose contents read like promises will be read as promises.

• Business case against business plan

  The two documents get confused because both open with an executive summary and both end in numbers. They are read by different people looking for different things, and writing one when the reader wanted the other wastes everybody's time.

• Deed against agreement

  Most commercial paperwork is an agreement and should be. The deed exists for the awkward cases where one side promises and the other gives nothing back, which is more common than it sounds.

• Gift voucher expiry rules, and what the voucher has to show

  The three year rule has been national law since late 2019, and it changed the economics of gift cards for small retailers who used to rely on unredeemed balances. Getting the printing right is now part of getting the compliance right.

• Letter of intent against MOU

  The two are used almost interchangeably in practice, and the choice still says something. One is a proposal on letterhead; the other is a joint statement that both names sit under.

• Meeting minutes against meeting notes

  The distinction sounds pedantic until a decision is questioned a year later. One of these documents settles the question and the other is somebody's recollection typed up.

• MOU against contract

  The heading on the page decides nothing. What decides it is whether a reader can find complete terms, a real exchange and language that sounds like a promise rather than a plan.

• Novation against assignment

  The difference decides who is left holding the work when something goes wrong. Businesses discover it during a sale, usually in the week the buyer's lawyer asks whether the customer contracts actually transfer.

• Policy against procedure, and where a guideline fits

  Almost every organisation writes these three into one document and then wonders why nobody can find anything. Keeping them apart is less about tidiness and more about how often each one has to be rewritten.

• Privacy policy against privacy notice

  Australian privacy law treats these as two separate obligations, and satisfying one does not satisfy the other. A link to the policy at the bottom of a form is not a collection notice.

• Reference letter against recommendation letter

  Many employers now issue only the first kind, and candidates are often surprised when a warm manager produces a letter that reads like a payroll extract. The reason is legal rather than personal.

• Room rental agreement against a lease

  The name on the document decides nothing. Whether the law treats somebody as a tenant depends on the arrangement, and the answer changes by state, which is why two nearly identical share houses can sit under different rules.

• What a tax deductible donation receipt must say

  Most receipting problems are not about generosity or record keeping, they are about a template that was set up once and never checked against what the tax office actually asks for. The fix costs nothing and takes an afternoon.

• What is a 30-60-90 day plan?

  The plan is less about the new person proving themselves and more about making the manager commit, in writing, to what a good first quarter looks like. Without that the review at ninety days becomes a matter of impressions.

• What is a bill of sale?

  For anything worth more than a few hundred dollars, it is the difference between owning something and being able to prove it. Private vehicle and equipment sales are where its absence is felt most.

• What is a capability statement?

  It is the document most often asked for at the worst possible moment, when a buyer says send something through by close of business. Having a current one is the difference between being on a list and being remembered next time.

• What is a code of conduct?

  Codes get written after an incident far more often than before one, which is why so many of them read as a list of things one particular person once did. A good code is useful before anything has gone wrong.

• What is a credit note?

  The instinct when an invoice is wrong is to delete it and send a better one. That works until somebody asks what happened to invoice four one seven, and by then the answer is nowhere in the system.

• What is a debit note?

  Ask five finance teams what a debit note is and you will get three answers, because the term is used for two different documents travelling in opposite directions. Both are claims, and knowing which one is on your desk decides what you do next.

• What is a deliverable?

  Projects fail on this word more often than on any other in a contract. Two people agree a deliverable and mean different objects, and nobody finds out until one of them refuses to sign.

• What is a founders agreement?

  Almost every founder dispute traces back to a conversation that happened and was never written down. The agreement is cheap insurance against the version of your co founder you have not met yet.

• What is a heads of agreement?

  In Australia and the United Kingdom this is the document that stops a transaction dying in the drafting. It exists because agreeing the shape of a deal and agreeing its two hundred clauses are different jobs, and doing them at once takes twice as long.

• What is a letter of demand?

  Most debts are paid at this step, which is the whole reason it exists. Its power comes from being specific enough that the recipient can see exactly what a court would be asked to decide.

• What is a master services agreement?

  Signing one takes weeks and saves months. The value is not in the first project it covers but in the eleventh, which starts on a Monday instead of going to legal review.

• What is a payment schedule?

  Disputes about money on long jobs are rarely about the total. They are about whether the third payment was due yet, which is a question a properly written schedule answers before anybody has to ask it.

• What is a PO number?

  It is a short string of characters that decides whether an invoice is paid in fourteen days or sits in a queue for two months. Suppliers who learn that early stop treating it as the customer's paperwork problem.

• What is a position description?

  It is written once during recruitment and then relied on for years, in performance reviews, in restructures and occasionally in a dismissal. Very few organisations revisit it as often as they use it.

• What is a proforma invoice?

  It exists because buyers frequently need a formal document before there is anything to invoice for. Customs officers, finance teams and banks all want paper first, and a quote on letterhead will not satisfy any of them.

• What is a project charter?

  A charter is one of the few documents whose value comes almost entirely from being signed rather than from being read. Its job is to end an argument before the argument happens.

• What is a promissory note?

  It is the shortest useful document in lending, which is both the appeal and the limitation. Two pages will get the money back from a cooperative borrower and will not help much with an uncooperative one.

• What is a quotation in business?

  Tradespeople and agencies use the two words interchangeably in conversation and then discover, six weeks in, that only one of them allows a price to change. The distinction costs nothing to get right at the point of writing.

• What is a rate card?

  Agencies, studios, media owners and consultancies all publish one, and the good ones do more selling than the pitch deck. A buyer who can build their own rough number is a buyer who keeps talking.

• What is a recipient created tax invoice?

  It looks upside down until you meet an industry where only the buyer knows the number. A grain handler weighs and grades the load; the farmer cannot invoice for a value nobody has measured yet.

• What is a remittance advice?

  A payment with no explanation is a small problem for the payer and a genuine one for the supplier. Somebody has to work out what a single deposit of nine thousand four hundred dollars was for, and it is never the person who sent it.

• What is a retainer agreement?

  Both sides usually want one for different reasons, which is why so many of them quietly stop working after four months. The supplier wants predictable revenue and the client wants priority, and those are not the same product.

• What is a risk register?

  A register is only worth the time it takes if somebody reopens it. Most of them are built in week one, presented at the kick off, and never touched again, which turns a control into decoration.

• What is a service agreement?

  It is the document most small businesses actually need and most often replace with an email and an invoice. Nothing goes wrong until the first disagreement about what was included.

• What is a sponsorship agreement?

  Community organisations often treat sponsorship as a generous donation with a logo attached, and that framing causes trouble at both ends: the tax treatment and the moment a sponsor feels they did not get what they paid for.

• What is a standard form contract?

  Almost every business both issues and signs them, usually without noticing which side of the transaction they are on. The rules changed materially in November 2023, and the change had teeth.

• What is a statement of account?

  Nobody pays from a statement, and that is not what it is for. It exists so that two ledgers can be compared before anybody starts arguing about a single invoice.

• What is a statement of work?

  It is written by the people who will actually do the work, which is both its strength and the reason it so often omits the clauses that decide whether they get paid. Scope is the easy part.

• What is a SWMS?

  A SWMS is one of very few workplace documents whose absence is itself an offence, which is why they get produced even where they are not read. A statement written for a regulator rather than for a crew protects nobody.

• What is a tax invoice?

  An ordinary invoice asks to be paid. A tax invoice does that and also carries the evidence a buyer needs to recover the tax, which is why the required fields are not a matter of house style.

• What is a term sheet?

  Two pages decide most of what matters in a funding round, and the sixty pages that follow largely implement them. Founders who skim the summary and read the contracts have it exactly the wrong way round.

• What is a timesheet, and who approves it?

  The timesheet is the document that turns work into money, which is why it attracts more argument per page than almost anything else in a business. Most of that argument comes from unclear rules rather than from dishonesty.

• What is a variation in a contract?

  Every long job produces them, and the paperwork is done properly on roughly half. The other half becomes the dispute, because two people remember a corridor conversation differently a year later.

• What is a written warning at work?

  Employers reach for it when they have already run out of patience, which is usually too late for it to do its job. Its real value is as evidence that somebody was given a fair chance to improve.

• What is an employee handbook?

  Most workplace disputes start with somebody saying they were never told. A handbook is the cheapest proof that they were, which is why the document earns its place even in a business of twelve people.

• What is an expense report?

  Expense processes generate more small friction than almost any other finance workflow, and the cause is nearly always an unwritten rule that everybody discovers by breaking it. Writing the rules down is cheaper than enforcing them one rejection at a time.

• What is an influencer agreement?

  Most brand and creator disputes come down to two clauses nobody read carefully: how long the brand may keep running the content, and who is responsible if the post was not properly labelled as advertising.

• What is consideration in a contract?

  It is the reason a gift promised in an email cannot be sued on and the same promise in a properly executed deed can. Most people meet the doctrine only when a document turns out not to work.

• What is offer and acceptance?

  Businesses rarely think about the moment a contract forms until they need to know whether one did. By then the answer sits in an exchange of emails nobody wrote carefully.

• What is scope creep?

  No single request causes it. A dozen reasonable ones do, each too small to argue about, and the total arrives as a surprise to the supplier and as a normal expectation to the client.

• What must a payslip include?

  Payslips are one of the few workplace documents with a legislated content list and a legislated deadline, and the penalties for getting them wrong are separate from any underpayment. They are also the first thing anybody looks at when a pay dispute starts.