Hearsay
Under normal rules, a witness giving testimony must confine him/herself to what they know to be true on a direct basis - in other words, a witness' testimony must be based on personal, first-hand knowledge.
When a witness gives testimony based not on what s/he knows personally, but on second-hand information gathered from a third party (normally not present in the courtroom), it is considered hearsay.
Hearsay is usually (but not always) disallowed in court proceedings, particularly when the opposing counsel raises an objection.
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Hearsay rules and definitions vary from one jurisdiction to another, but generally follow Federal Rules of Evidence, Article VII, Rule 801, 28 U.S. Code:
"'Hearsay' is a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted."
According to early 20th century legal scholar and jurist John Henry Wigmore, assertions - third party statements - are by nature unreliable, and must therefore be subject to "... scrutiny or analysis calculated to discover and expose in detail its possible weaknesses, and thus to enable the tribunal (judge or jury) to estimate it at no more than its actual value" (Wigmore On Evidence, Sec. 1360).
Any statement admitted into evidence must (A) be made under oath, (B) made before a judge, and (C) subject to cross examination. For reasons that should be obvious, these criteria preclude the use of hearsay testimony.
Rules governing hearsay can be complex. Even a person's own prior statements or statement can be considered hearsay, i.e., "I was telling the supervisor the floor was wet." If the supervisor is not available to corroborate the statement under oath and cross-examination, such a statement constitutes hearsay.