Legal Definitions - compound

The term compound has several distinct meanings in a legal or financial context, often referring to combining elements, calculating interest, settling disputes, or making a situation worse.

• To put together, combine, or construct:

  In a general sense, this refers to bringing different parts or ideas together to form a unified whole.

  • Example: A legal team might compound their argument by integrating various statutes, previous court rulings, and expert testimonies into a comprehensive brief presented to the judge.

    Explanation: This illustrates the act of combining diverse legal components to build a single, cohesive case.

• To compute interest on the principal and the accrued interest:

  This meaning is specific to finance and refers to the calculation of interest not only on the initial amount of money (principal) but also on any interest that has already accumulated from previous periods.

  • Example: When a bank advertises a savings account with interest that compounds monthly, it means that each month, the interest earned is added to your principal balance, and the next month's interest is then calculated on that new, larger total.

    Explanation: This shows how interest is calculated on both the original deposit and the interest that has already been added, leading to faster growth.

  • Example: A credit card debt can quickly grow if interest compounds daily, as any unpaid interest from one day is added to the principal before the next day's interest is calculated, increasing the total amount owed rapidly.

    Explanation: This demonstrates how interest can accumulate on a debt, increasing the total amount due over time by adding interest to the principal before recalculating.

• To settle a matter, especially a debt, by a money payment, in lieu of other liability; to adjust by agreement:

  This refers to resolving a dispute or debt through a mutual agreement, often involving a payment, instead of pursuing further legal action or fulfilling other obligations.

  • Example: After a minor traffic collision, the at-fault driver's insurance company might offer to compound the claim by paying the other driver a specific sum for vehicle repairs and medical expenses, thereby settling the matter without going to court.

    Explanation: Here, a payment is made to resolve a potential liability and avoid further legal proceedings.

  • Example: A business facing a lawsuit for a breach of contract might agree to compound the issue by paying a negotiated settlement to the other party, rather than enduring a lengthy and expensive trial.

    Explanation: This illustrates settling a legal dispute through a monetary agreement to prevent prolonged litigation.

• To agree for consideration not to prosecute a crime:

  This is a specific legal offense where a person agrees, often in exchange for money or other benefits, not to report or prosecute a known crime. This act of "compounding a crime" is itself illegal.

  • Example: If a victim of theft accepts a payment from the thief in exchange for not reporting the crime to the police, the victim is engaging in compounding a crime, which is an illegal act.

    Explanation: This demonstrates an unlawful agreement to conceal a criminal act for personal gain.

  • Example: An employee who discovers a colleague embezzling funds but agrees to keep silent after receiving a payoff from the embezzler is compounding a felony.

    Explanation: This illustrates the illegal act of accepting consideration to suppress information about a serious criminal offense.

• Loosely, to aggravate; to make a crime or situation more serious by further bad conduct:

  In a less formal legal sense, this means to make an existing problem, offense, or situation worse through additional actions or misconduct.

  • Example: A person arrested for a minor offense who then attempts to destroy evidence or resist arrest would be compounding their initial charge, making the legal consequences far more severe.

    Explanation: The subsequent actions add new, more serious offenses to the original, lesser crime.

  • Example: A company that initially failed to comply with environmental regulations might compound the issue by actively trying to conceal evidence during a subsequent investigation, leading to harsher penalties and public distrust.

    Explanation: The attempt to hide information exacerbates the original failure, significantly increasing the severity of the legal repercussions and public perception.