SOLE TRADER OR SOLE PROPRIETOR
The situation that exists when a man or woman decides to carry on a business with that person as the only person actually running it and being responsible for the making of the contracts, provision of business, enjoying the profits or suffering the losses that flow from the business concern.

PARTNERSHIP
An arrangement that exists when one or more people agree to enter into an agreement for the running of a business where profits are shared between them as may be agreed from time to time.

LIMITED COMPANY
A separate legal entity which is formed in which people can hold shares and therefore own a stake in the company. The company is separate in law from its shareholders and directors. It is the company that enters into contracts, makes profits and losses and not its directors and share holders.

INCORPORATION
The process whereby a sole trader or partnership decide to convert their business into a limited company.

TERMS OF BUSINESS
These are standard clauses which will apply to every contract that a business enters into unless any of the terms are excluded or varied by the specific contents of a particular business contract. They apply to all the business affairs of that organisation unless varied in any way.

WHAT IS UNLIMITED LIABILITY?
It is a situation that exists when a sole trader or partnership is in existence. The sole trader or partners in the business are liable to the extent of their personal fortunes, however, large or small, for the debts of the business.

MEMORANDUM AND ARTICLES OF ASSOCIATION
This is a document governing the affairs of every limited company. It is a printed document, filed at Companies house and held with the company records setting out the powers of the company in terms of its business dealings and will also regulate the rights and responsibilities as between themselves of share holders and directors in the company.

PRE-EMPTION CLAUSES
Once again this term applies to the situation involving share holders in a limited company. Many limited companies have provisions that in the event of a share holder wanting to sell any shares then a right of pre-emption will apply so that the shares must first be offered to the other existing share holders in the proportions to which all shares are held. It means that company shares cannot be sold without existing share holders having the right to buy them first, it is a device for maintaining ownership and control of the company within existing shareholders.