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principal noun


the original sum of money loaned under a loan agreement
The proposed legislation will help investors recover principal money secured by a charge on land or personal property.
Banking and Finance, Business (Corporate) Law/Company Law

Hi, this is Peter and welcome to TransLegal’s Lesson of the Week.

Today I’m going to be talking about ‘principal’ and ‘principle’. As you can hear, they’re both pronounced the same way, but they’re entirely different terms - which leads to some confusion. And this is a mistake that’s made quite often, and my colleagues and I see it on a regular basis.

So, just to start with the nouns: the noun ‘principle’, with an ‘l e’ at the end, means a rule, doctrine, or standard. So an example sentence for that would be something like "A principle of management is that you should treat your employees like you want your employees to treat your customers".

‘Principal’, with an ‘a l’ at the end and as a noun, means a person with an important role or a high position, or a person on whose behalf an agent acts. So some sample sentences for ‘principal’ would be "On Saturday the principals to the contract had a meeting".

Another meaning of the noun, the person on whose behalf an agent acts, comes into play in Legal English when you’re talking about the law of principal and agent, or the law of agency. So you might say that "She serves as an agent for a principal who wishes to remain anonymous".

‘Principal’ with an ‘a l’ at the end can also be used as an adjective. When it’s used as an adjective it’s generally used to describe something as being primary or chief or the most important. So, for example, one sample sentence would be "A faulty fuel line was the principal cause of the engine’s explosion" - so it’s the primary cause in that example.

One final usage of the term ‘principal’ with an ‘a l’ at the end would be in the context of banking, which may come up if you work with financial transactions, and that is ‘principal’ as a sum, particularly the sum that has been borrowed from a bank or lent from a bank, and on which the borrower is making payments. So an example sentence in that regard would be "The borrower was able to make the minimum payment which covered the interest but did not reduce the principal".

That’s it for today. So, as always, if you have any questions about the difference between ‘principle’ and ‘principal’, please leave them in the comments section below and we’ll get back to you as soon as we can.

Thank you, and see you next week.

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jurisdiction consideration principal

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