Glossary

Prohibited transactions refer to two types of transactions (involving employee pension and welfare plan funds) that are prohibited under the Employee Retirement Income Security Act (ERISA). These are (1) self-dealing and (2) party-in-interest transactions. Under the first type, fiduciaries are barred from using employee benefit plan assets to profit personally, such as by investing pension plan monies in a company in which a fiduciary holds a majority interest. The second type, party-in-interest transactions, is what would otherwise be legitimate business transactions, yet are prohibited if they are conducted with a "party-in-interest." The Act defines a party-in-interest as any fiduciary, legal counsel, employee of an employer-sponsored benefit plan, or service provider to the plan. For example, pension plan funds cannot be used to buy or sell property to or from the family member of any trustee or anyone else who is a party-in-interest. In the event a fiduciary engages in a prohibited transaction, various monetary penalties will be levied against the employer-sponsor of the plan.

The prohibited transaction exemption (PTE) refers to a ruling by the US Department of Labor (DOL) based on specific facts and circumstances that a transaction is allowable under Employee Retirement Income Security Act (ERISA) regulations. It is required by pure captives insuring shareholders' employee benefit risks.

A prohibition of voluntary payments provision is a clause found in some liability policies barring coverage in the event that an insured makes a payment to a third party and then seeks reimbursement from the insurer. In the standard commercial general liability (CGL) coverage form, such a prohibition is included as one of the insured's "Duties in the Event of Occurrence, Claim, or Suit."

Project liability insurance is a form of architects and engineers (A&E) liability coverage in which coverage applies only to an insured's work on a single project rather than to the entire scope of an insured's practice. Such policies are advantageous because they provide coverage for all members of a project's design team, reduce the incidence of disputes in the event of a claim, ensure coverage continuity following completion of work, and facilitate the availability of high limits needed on large projects.

Project management professional liability (PMPL) insurance was developed to remedy some perceived problems with additional insured status and owners and contractors protective (OCP) liability insurance. It provides coverage for vicarious liability of the owner, primary architect and prime contractor as well as the contractor's general supervision of the project. The endorsement was intended to fill a need created by an optional requirement in the 1997 edition of the General Conditions for the Construction Contract published by the American Institute of Architects. The concept never gained traction and was withdrawn when the A201 standard contract form was updated in 2007. The standard PMPL endorsement was subsequently withdrawn.

A promisee is the party to which the promise is made in contract law.

A promisor is the party that makes the promise and has a duty to fulfill it in contract law.

Promissory estoppel is a legal doctrine under which courts will enforce an agreement, even where consideration does not exist, when it is necessary to do so to avoid injustice. Under the doctrine of promissory estoppel, a party may recover on the basis of a promise made when the party's reliance on that promise was reasonable, and the party attempting to recover detrimentally relied on the promise. The legal requirements to demonstrate promissory estoppel differ from state to state.

A promissory note is a financial instrument used to provide an insurer with financial security necessary to implement a collateralized cash flow program, such as a retrospectively rated insurance plan. Promissory notes provide an insurer with status as a senior creditor rather than a general creditor.

A proof of loss is a formal statement made by the insured to the insurer regarding a claim. This form is especially used in property insurance, so that the insurer may determine its liability under the policy.