MCA Glossary: 24 Terms for Reading Contracts, Collection Letters and Court Papers

The same dollar can appear as a purchase price, a receipt, or part of a damages claim, depending on the document in front of you. The terms below describe different roles in the transaction; they should not be treated as interchangeable labels for a balance owed.

1. Funding Amounts and Revenue Terms

The contract language examined in LG Funding v. United Senior Properties of Olathe shows why the basic amounts require separate names. The opinion described an advance in exchange for future receivables and examined the obligations attached to that exchange. Its procedural ruling concerned that agreement, not every product using similar labels.

Purchase price means the amount the provider pays for the receivables described in a purchase arrangement. Compare that contractual figure with the net deposit because fees or an earlier payoff may reduce the cash the business can use.

Purchased amount refers to the amount of receipts the agreement describes as purchased. It can exceed the purchase price. The distinction explains the transaction's dollar spread without establishing its annualized cost or deciding whether the arrangement is legally a loan.

Receivables are rights to payment arising from the business's transactions. The specific rights included in a financing arrangement depend on its terms. A reference to future receivables should lead the reader to the agreement's definition rather than an assumption that every asset is included.

Specified percentage describes a contractual share used in calculating collections from receipts. Compare it with any estimated debit. The percentage and the amount withdrawn can differ where the agreement uses an estimate that requires adjustment through another provision.

2. Adjustment and Default Terms

Reconciliation is the contractual process for comparing collections with actual receipts and addressing the difference. Its availability, required records, and consequences depend on the language and performance of the agreement. The existence of the heading does not answer those questions.

Finite term describes a defined period for performance or completion. A projected repayment period is not necessarily a contractual deadline. The distinction can matter when counsel examines whether repayment depends on future revenue or must occur regardless of receipts.

Event of default means an occurrence the contract identifies as triggering specified consequences. Failed payments, prohibited conduct, or a representation alleged to be false can raise different issues. Read the actual provision before accepting a collector's shorthand description.

Acceleration is a provision or demand making an amount due sooner than the ordinary schedule would require. Whether acceleration is authorized depends on the agreement and applicable law. A demand for the full balance does not prove that the triggering conditions occurred.

3. Guaranties and Legal Defenses

Guarantor identifies a person or entity that undertakes an obligation associated with another party's agreement. The signature and text establish the promise asserted against that person. The title owner does not by itself describe a guaranty.

Performance guaranty describes a promise tied to contractual performance obligations. It should not be read as a guarantee that the signer faces no payment claim. The conduct covered and the remedy sought require examination of the actual instrument.

Usury defense raises the contention that an asserted loan violates applicable interest restrictions. The cited New York decision allowed such a defense to remain while rejecting a criminal usury counterclaim. Product classification and procedural posture both mattered.

Counterclaim is a claim asserted by a defendant against the opposing party in the litigation. It differs from a defense to the plaintiff's recovery. A legal theory that may defeat a claim does not necessarily support an affirmative recovery under the same label.

4. Account Control, Assignment and Filing Records

New York UCC Section 9-104 addresses deposit account control. Section 9-406 on assignment notifications addresses specified circumstances in which an account debtor's payment obligations change after notice. These are separate mechanisms, and each has statutory qualifications.

Deposit account control is a legal status recognized under specified routes in Article 9. It does not necessarily mean the business has lost every ability to direct funds. Retained operating rights can coexist with another party's control.

Control agreement commonly refers to the signed arrangement through which the bank agrees to follow a secured party's disposition instructions without further debtor consent. The bank's actual duties must be read in the agreement rather than inferred from its label.

Assignment concerns a transfer of rights. A notice asserting an assignment should identify the rights involved and the payment direction requested. The assertion and the proof supporting it are different things.

Account debtor refers here to the party obligated on the relevant account, chattel paper, or payment intangible. It may be the business's customer rather than the business receiving financing. Confusing those roles can produce incorrect advice about where payments should go.

Financing statement is the public filing used to give notice of an asserted security interest under Article 9. The filing does not replace the underlying security agreement or decide every dispute about collateral. The debtor name and collateral description remain important.

Termination statement is a filing associated with ending the effectiveness of a financing statement under applicable rules. New York UCC Section 9-513 addresses specified termination requirements. It should not be confused with deleting every historical record from a commercial database.

Release is the agreement to relinquish the claims or obligations its text covers. The named parties, covered contracts, and exclusions determine its scope. A broad title cannot supply an omitted guarantor or resolve an unrelated account.

Zero-balance letter is a creditor's written acknowledgment of the account balance after the relevant payment or adjustment. It can support the closing record. It does not necessarily perform the separate functions of a release, termination filing, or court document.

5. Court Papers and the Next Conversation

Complaint is the pleading stating the plaintiff's claims and requested relief. It contains allegations, which should not be reported as judicial findings. The business needs counsel to assess the response and applicable deadline.

Summary judgment is a procedure asking the court to decide a claim or issue without a trial where the required showing is made. A motion is a request for that result, not proof that the requesting party has already prevailed.

Discontinuance ends an action through the applicable procedure. New York CPLR Rule 3217 generally makes it without prejudice unless otherwise stated, subject to exceptions. The settlement and the court filing should be read together.

With prejudice signals a disposition intended to prevent renewed pursuit of the disposed claim, subject to the governing rules and scope. Counsel should determine whether the document accomplishes the agreed result rather than relying on a docket's abbreviated label.

Delancey Street is a debt settlement company that can discuss business debt negotiation, while an attorney addresses litigation and enforceability. Bring the documents containing the terms you do not understand. A glossary can improve that conversation, but the signed language determines which questions the business must resolve.