Business Law 9e by Cheeseman

Business Law 9e by Cheeseman is the ninth edition of the Business Law: Legal Environment, Online Commerce, Business Ethics, and International Issues textbook authored by Henry R. Cheeseman, Professor Emeritus, Marshall School of Business, University of Southern California and published by Pearson Education, Inc. in 2016.

.com. A top-level extension for domain names that represents the word commercial that is a highly used by businesses.
.edu. A top-level extension for domain names that is used by educational institutions.
.mobi. A top-level extension for domain names that is reserved for websites that are viewable on mobile devices.
.name. A top-level extension for domain names for individuals.
.net. A top-level extension for domain names that represents the word network that is highly used by businesses involved in the infrastructure of the Internet.
.org. A top-level extension for domain names that represents the word organization that is used primarily by nonprofit and trade organizations.
©. A symbol that provides notification that the work to which it is attached is copyrighted. The symbol should be accompanied by the author's name and the year of publication.
®. A symbol that designates marks that have been registered with the U.S. Patent and Trademark Office.
Abandoned property. Property that an owner has discarded with the intent to relinquish his or her rights in it and mislaid or lost property that the owner has given up any further attempts to locate. Anyone who finds abandoned property acquires title to it.
Abatement. A rule that says if the property a testator leaves is not sufficient to satisfy all the beneficiaries named in a will and there are both general and residuary bequests, the residuary bequest is abated first (i.e., paid last).
Abnormal misuse. A defense that relieves a seller of product liability if the user abnormally misused the product.
Abnormally dangerous activities. Dangerous activities for which strict liability is imposed.
Abstract of title. A chronological history of the chain of title and encumbrances affecting real property that an attorney examines in order to render an opinion concerning the status of the title.
Abusive homestead exemption. A bankruptcy rule that stipulates that a debtor may not exempt more that a specified dollar amount as a homestead exemption.
Acceleration clause. A clause in an instrument that allows the payee or holder to accelerate the payment of the principal amount of an instrument, plus accrued interest, on the occurrence of an event (e.g., default).
Acceptance. A manifestation of assent by the offeree to the terms of the offer in a manner invited or required by the offer as measured by the objective theory of contracts.
Acceptance method. A method whereby the court confirms a plan of reorganization if the creditors accept the plan and if other requirements are met.
Acceptance-upon-dispatch rule. A rule that states that an acceptance is effective when it is dispatched, even if it is lost in transmission; also known as the mailbox rule.
Accession. An increase in the value of personal property because it is added to or improved by natural or manufactured means.
Accommodation. A shipment of goods that is offered to a buyer as a replacement for the original shipment when the original shipment cannot be filled.
Accommodation indorser. An accommodation party who signs an instrument guaranteeing collection of the instrument.
Accommodation maker. An accommodation party who signs an instrument guaranteeing payment of the instrument and who is primarily liable on the instrument.
Accommodation party (Co-signer). A party who signs an instrument and lends his or her name (and credit) to another party to the instrument.
Accommodation party (Surety or Codebtor). A party who promises to be liable for the payment of another person's debt and is principally liable with the debtor for paying the debt.
Accord. An agreement whereby the parties agree to accept something different in satisfaction of the original contract.
Accord and satisfaction. The settlement of a contract dispute. Also called compromise.
Accountant. A term that denotes persons who perform a variety of services, including bookkeepers, tax preparers, and so on.
Accountant–client privilege. A state law that provides that an accountant cannot be called as a witness against a client in a court action. Federal courts do not recognize this privilege.
Accountant's work papers. Internal work papers generated by accountants while performing services for their clients. These papers often include notes regarding the collection of data, evidence about the testing of accounts, memorandums, opinions, information regarding the affairs of the client, and so on.
Accounting malpractice (negligence). Negligence in which the accountant breaches the duty of reasonable care, knowledge, skill, and judgment that he or she owes to a client when providing auditing and other accounting services to the client.
Accounts. Intangible personal property that includes the right to payment of monetary obligations for personal or real property sold or leased, services rendered, and policies of insurance.
Accredited investor. A person, a corporation, a company, an institution, or an organization that meets the net worth, income, asset, position, and other requirements established by the Securities and Exchange Commission (SEC) to qualify as an accredited investor.
Act of state doctrine. A doctrine that states that judges of one country cannot question the validity of an act committed by another country within that other country's borders. It is based on the principle that a country has absolute authority over what transpires within its own territory.
Act of the parties. The act of the parties to an agreement including an agency agreement to terminate their agreement.
Action for an accounting. A formal judicial proceeding in which the court is authorized to (1) review the partnership and the partners' transactions and (2) award each partner his or her share of the partnership assets.
Actual and exclusive. A requirement that must be proven by a person to obtain real property by adverse possession. It requires that the adverse possessor has physically occupied the premises.
Actual cause. The actual cause of negligence. A person who commits a negligent act is not liable unless actual cause can be proven; also called causation in fact.
Actual contract. A contract that is either express or implied-in-fact.
Actual fraud. An intentional misrepresentation or omission of a material fact that is relied on by the client and causes the client damage.
Actual notice. Giving an express notice verbally or in writing.
Actus reus. Guilty act -- the actual performance of a criminal act.
Additional terms. Additional terms that an offeree can include in his or her acceptance of a sales contract where the acceptance, including the additional terms, acts as an acceptance rather than a counteroffer.
Ademption. A rule that says if a testator leaves a specific devise of property to a beneficiary but the property is no longer in the estate when the testator dies, the beneficiary receives nothing.
Adequate assurance of performance. Adequate assurance of performance from the other party if there is an indication that a contract will be breached by that party.
Adjudged insane. Declared legally insane by a proper court or administrative agency. A contract entered into by a person adjudged insane is void.
Adjudicated mentally incompetent. A situation where a court or administrative agency has declared a person to be mentally incompetent. Contracts and negotiable instruments entered into by the person are void.
Administrative agencies. Agencies that the legislative and executive branches of federal and state governments establish.
Administrative dissolution. Involuntary dissolution of a corporation that is ordered by the secretary of state if a corporation has failed to comply with certain procedures required by law.
Administrative employee exemption. An exemption from federal minimum wage and overtime pay requirements that applies to employees who are compensated on a salary or fee basis, whose primary duty is the performance of office or nonmanual work, and whose work includes the exercise of discretion and independent judgment with respect to matters of significance.
Administrative law. Substantive and procedural law that governs the operation of administrative agencies.
Administrative law judge (ALJ). A judge who presides over administrative proceedings and decides questions of law and fact concerning a case.
Administrative order. A decision made by an administrative law judge.
Administrative Procedure Act (APA). A federal statute that establishes certain administrative procedures that federal administrative agencies must follow in conducting their affairs.
Administrative rules and regulations. Directives issued by federal and state administrative agencies that interpret the statutes that the agency is authorized to enforce.
Administrative search. A search of business or other premises conducted by an administrative agency.
Administrative subpoena. A subpoena issued to an administrative agency to conduct a search of business or other premises.
Administrator (male) or Administratrix (female]]). A person who is appointed by the probate court to administer the estate of a testator's or testatrix's will if no one is named in the will or if the decedent dies intestate without a will.
Adulterated food. Food that consists in whole or in part of any filthy, putrid, or decomposed substance or is otherwise unfit for food.
Adverse opinion. An auditor's opinion that states that a company's financial statements do not fairly represent the company's financial position, results of operations, or change in cash flows, in conformity with generally accepted accounting principles (GAAPs).
Adverse possession. A situation in which a person who wrongfully possesses someone else's real property obtains title to that property if certain statutory requirements are met.
Advertisement. An invitation to make an offer, or an actual offer.
Affirmative action. A policy that provides that certain job preferences will be given to minority or other protected-class applicants when an employer makes an employment decision.
Affirmative action plan. A plan adopted by an employer that provides that certain job preferences will be given to members of minority racial and ethnic groups, females, and other protected-class applicants when an employer makes an employment decision.
Affirmative defense. Defenses that are asserted in a defendant's answer to allegations contained in a plaintiff's complaint.
Affirmative defense. A defense that an employer may raise against a charge of sexual, racial, or other harassment.
AFL-CIO. A labor organization formed in 1955 by the combination of the American Federation of Labor (AFL) and the Congress of Industrial Organizations (CIO).
After-acquired property. Property that a debtor acquires after a security agreement is executed.
Age discrimination. Discrimination in employment based on a person's age. Federal law prohibits age discrimination against employees who are 40 and older. State and local laws can establish younger ages for protection against age discrimination.
Age Discrimination in Employment Act (ADEA). A federal statute that prohibits age discrimination practices against employees who are 40 and older.
Age of majority. The legal age, as set by state law, for a person to have the capacity to enter into a contract. The most prevalent age of majority is 18 years for both males and females.
Agency. A fiduciary relationship that results from the manifestation of consent by one person to act on behalf of another person, with that person's consent.
Agency by ratification. An agency that occurs when (1) a person misrepresents him- or herself as another's agent when in fact he or she is not and (2) the purported principal ratifies the unauthorized act.
Agency law. The large body of common law that governs agency; a mixture of contract law and tort law.
Agency shop. A workplace where an employer may hire anyone whether he or she belongs to a union or not. After an employee has been hired, he or she does not have to join an existing labor union, but if he or she does not join the union, he or she must pay an agency fee to the union.
Agent. A party who agrees to act on behalf of another.
Agents' contracts. Real estate agents' contracts to sell real property for another party that are covered by the Statute of Frauds and must be in writing to be enforceable.
Agent's signature. An agent's signature on a contract entered into on the principal's behalf that determines the agent's status and his or her liability on the contract.
Agreement. The manifestation by two or more persons of the substance of a contract.
Aiders and abettors. Individuals who knowingly provide assistance to parties who have committed securities fraud.
Air pollution. Pollution caused by factories, homes, vehicles, and the like that affects the air.
Air quality control regions (AQCRs). Regions of each state that the Environmental Protection Agency (EPA) has designated to measure compliance with air quality standards.
Air rights. The owners of land own air rights above the real property they own.
Air space parcel. Property rights owned by the owner of real property above the land they own. The owners of air space parcels often sell or lease them to other parties.
Alien corporation. A corporation that is incorporated in another country.
Alimony. Payments made by one divorced spouse to the other divorced spouse; also called spousal support.
Allonge. A separate piece of paper attached to an instrument on which an indorsement is written.
Alter ego doctrine. A doctrine that says if a shareholder dominates a corporation and uses it for improper purposes, a court of equity can disregard the corporate entity and hold the shareholder personally liable for the corporation's debts and obligations; also called piercing the corporate veil.
Altered check. A check that has been altered without authorization and thus modifies the legal obligation of a party.
Alternative dispute resolution (ADR). Methods of resolving disputes other than litigation.
Amendments to the U.S. Constitution. Amendments that have been added to the U.S. Constitution.
American Federation of Labor (AFL). A labor organization that was formed in 1886 to which only skilled craft workers such as silversmiths and artisans were allowed to belong.
American Institute of Certified Public Accountants (AICPA). An organization that has promulgated the generally accepted auditing standards (GAASs).
American rule. A rule that stipulates that where there has been successive assignments of the same contract right, the first assignment in time prevails regardless of when notice was given to the obligor; also known as the New York Rule.
Americans with Disabilities Act Amendments Act of 2008 (ADAAA). A federal statute that amends the Americans with Disabilities Act of 1990 (ADA) by expanding the definition of disability, requiring that the definition of disability be broadly construed, and requiring commonsense assessments in applying certain provisions of the ADA.
Americans with Disabilities Act of 1990 (ADA). A federal statute that imposes obligations on employers and providers of public transportation, telecommunications, and public accommodations to accommodate individuals with disabilities.
Analytical School of Jurisprudence. A school of thought that maintains that law is shaped by logic.
Annual percentage rate (APR). The annual interest rate that a debtor will pay on a debt, which includes in its calculation many of the fees charged by the lender.
Annual report (Form 10-K). A report that must be filed on an annual basis with the Securities and Exchange Commission (SEC) by reporting companies that sets forth their financial condition.
Annual shareholders' meeting. A meeting of the shareholders of a corporation that must be held by the corporation to elect directors and to vote on other matters.
Annulment. A court order that declares that a marriage did not exist.
Answer. The defendant's written response to a plaintiff's complaint that is filed with the court and served on the plaintiff.
Antecedent debt. Existing debt of a partnership when an new partner joins the partnership.
Anti-assignment clause. A clause that prohibits the assignment of rights under the contract.
Anticipatory breach. A breach that occurs when one contracting party informs the other that he or she will not perform his or her contractual duties when due; also known as anticipatory repudiation.
Anticybersquatting Consumer Protection Act (ACPA). A federal statute that permits trademark owners and famous persons to recover domain names that use their names where the domain name has been registered by another person or business in bad faith.
Antideficiency statute. A statute that prohibits deficiency judgments regarding certain types of mortgages, such as those on residential property.
Anti-delegation clause. A clause that prohibits the delegation of duties under the contract.
Antifraud provision. Section 14(a) of the Securities Exchange Act of 1934, which prohibits misrepresentations or omissions of a material fact in the proxy materials.
Antitakeover statutes. Statutes enacted by a state legislature that protect against the hostile takeover of corporations incorporated in or doing business in the state.
Antitrust Division of the Department of Justice. A division within the U.S. Department of Justice that is authorized to investigate suspected antitrust violations and to prosecute criminal antitrust lawsuits on behalf of the federal government.
Antitrust injuries. Injuries suffered by a person or business to his or her "business or property" caused by an antitrust violation.
Antitrust laws. A series of laws enacted to limit anticompetitive behavior in almost all industries, businesses, and professions operating in the United States.
Apparent agency. (1) Agency that arises when a principal creates the appearance of an agency that in actuality does not exist. Also known as agency by estoppels. (2) In a franchise arrangement, an agency that arises when a franchisor creates the appearance that a franchisee is its agent when in fact an actual agency does not exist.
Apparent authority. Authority that an agent possess by implication beyond the express authority granted to the agent by a principal.
Appeal. The act of asking an appellate court to overturn a decision after the trial court's final judgment has been entered.
Appellant. The appealing party in an appeal; also known as the petitioner.
Appellee. The responding party in an appeal; also known as the respondent.
Appropriate bargaining unit. A group of employees that a union seeks to represent; also referred to as a bargaining unit.
Approval clause. A clause that permits the assignment of a contract only on receipt of an obligor's approval.
Arbitration. A form of alternative dispute resolution in which the parties choose an impartial third party to hear and decide their dispute.
Arbitration agreement. An agreement that requires disputes arising out of the contract to be submitted to arbitration.
Arbitration clause. A clause in a contract that requires disputes arising out of the contract to be submitted to arbitration.
Arbitrator. A neutral third party who hears and decides a dispute in arbitration.
Area franchise. A franchise in which a franchisor authorizes a franchisee to negotiate and sell franchises on its behalf in designated areas. The area franchisee is called a subfranchisor.
Arraignment. A hearing during which the accused is brought before a court and is (1) informed of the charges against him or her and (2) asked to enter a plea.
Arrearages. The amount of unpaid cumulative dividends.
Arrest. A situation in which a person is taken into custody for the alleged commission of a crime.
Arrest warrant. A document for a person's detainment based on a showing of probable cause that the person committed a crime.
Arson. The willful or malicious burning of a building.
Article I of the U.S. Constitution. The part of the U.S. Constitution that establishes the legislative branch of the federal government.
Article I, section 8, clause 4, of the U.S. Constitution. The part of the U.S. Constitution that provides that "The Congress shall have the power . . . to establish . . . uniform laws on the subject of bankruptcies throughout the United States."
Article II of the U.S. Constitution. The part of the U.S. Constitution that establishes the executive branch of the federal government.
Article 2 (Sales) of the Uniform Commercial Code. An article of the Uniform Commercial Code (UCC) that governs sale of goods.
Article 2A (Leases) of the Uniform Commercial Code. An article of the Uniform Commercial Code (UCC) that governs leases of goods.
Article III of the U.S. Constitution. The part of the U.S. Constitution that establishes the judicial branch of the federal government.
Article 3 (Commercial Paper) of the Uniform Commercial Code. A model act promulgated in 1952 that established rules for the creation of, transfer of, enforcement of, and liability on negotiable instruments.
Article 4 (Bank Deposits and Collections) of the Uniform Commercial Code. An article of the Uniform Commercial Code (UCC) that establishes the rules and principles that regulate bank deposits and collection procedures.
Article 4A (Funds Transfers) of the Uniform Commercial Code. An article of the Uniform Commercial Code (UCC) that establishes rules regulating the creation and collection of and liability for commercial wire transfers.
Article 5 (Letters of Credit) of the Uniform Commercial Code. An article of the Uniform Commercial Code (UCC) that governs letters of credit.
Article 9 (Secured Transactions) of the Uniform Commercial Code. An article of the Uniform Commercial Code (UCC) that governs secured transactions in personal property.
Articles of amendment. A document filed with the secretary of state's office that amends to the articles of organization of a limited liability company (LLC).
Articles of Confederation. A document adopted in 1778 that created a federal Congress composed of representatives of the 13 new states.
Articles of dissolution. A document that must be filed with the secretary of state that makes the voluntary dissolution of a corporation effective.
Articles of incorporation. The basic governing documents of a corporation. It must be filed with the secretary of state of the state of incorporation; also known as a corporate charter.
Articles of limited liability limited partnership. The formal documents that must be filed at the secretary of state's office of the state of organization of a limited liability limited partnership (LLLP) to form the LLLP.
Articles of limited liability partnership. The formal documents that must be filed at the secretary of state's office of the state of organization of a limited liability partnership (LLP) to form the LLP.
Articles of merger. A document that must be filed with the secretary of state by the surviving corporation of a merger.
Articles of organization. A document that must be filed at the secretary of state's office of the state of organization of an LLC to form the LLC.
Articles of share exchange. A document that must be filed with the secretary of state by the surviving corporation after a share exchange.
Articles of termination. A document that is filed with the secretary of state to terminate a limited liability company (LLC) as of the date of filing or on a later effective date specified in the articles.
Artisan's lien. A statutory lien given to workers on personal property to which they furnish services or materials in the ordinary course of business that usually prevails over all other security interests in the goods. Also called a super-priority lien.
As is disclaimer. A term that makes it clear to the buyer of a good that no implied warranties attach to the sale of the good.
ASEAN (Association of Southeast Asian Nations). An agreement among nations of Southeast Asia that reduces tariffs on products traded among the signatory counties and provides economic and other coordination among member nations.
ASEAN Plus Three (APT). An agreement among the member nations of the Association of Southeast Asian Nations (ASEAN) plus China, Japan, and South Korea to hold informal relations to discuss regional issues.
ASEAN-China Free Trade Area (ACFTA). An agreement between China and the member nations of the Association of Southeast Asian Nations (ASEAN) that reduces tariffs on products traded among signatory countries and provides for other economic coordination.
ASEAN-India Free Trade Area (AIFTA). An agreement between India and the member nations of the Association of Southeast Asian Nations (ASEAN) that reduces tariffs on products traded among signatory countries and provides for other economic coordination.
ASEAN-Japan Comprehensive Economic Partnership. An agreement between Japan and the member nations of the Association of Southeast Asian Nations (ASEAN) that reduces tariffs on products traded among signatory countries and provides for other economic coordination.
ASEAN-Korea Free Trade Area (AKFTA). An agreement between Korea and the member nations of the Association of Southeast Asian Nations (ASEAN) that reduces tariffs on products traded among signatory countries and provides for other economic coordination.
Assault. (1) The threat of immediate harm or offensive contact. (2) Any action that arouses reasonable apprehension of imminent harm. Actual physical contact is unnecessary.
Assessment fee. A fee paid by a franchisee to a franchisor for advertising, promotional campaigns, administrative costs, and the like.
Assignee. A party to whom a right to receive performance under a contract has been transferred.
Assignee. The new tenant to whom a tenant has transferred all of his or her interests under a lease by assignment.
Assignment. The transfer of rights under a contract; also called assignment of a right.
Assignment and delegation. The transfer of contractual rights by the obligee to another party. The transfer of rights under a contract. A transfer by a tenant of his or her rights under a lease to another.
Assignment of a lease. A transfer by a tenant of his or her rights under a lease to another party.
Assignment of rights (Assignment). The transfer of rights under a contract.
Assignor. A party who transfers the right to receive performance under a contract.
Assignor. A tenant who transfers all of his or her interests under a lease to a new tenant by assignment.
Assisted suicide. Occurs when a person who has been diagnosed with a fatal disease and has less than an estimated period to live (e.g., six months) takes a prescribed lethal dose of medicine that ends his or her life.
Associate Justices of the U.S. Supreme Court. Justices of the U.S. Supreme Court other than the Chief Justice.
Association of Southeast Asian Nations (ASEAN). An agreement among nations of Southeast Asia that reduces tariffs on products traded among the signatory counties and provides economic and other coordination among member nations.
Assumption of duties. A situation in which a delegation of duties contains the term assumption, I assume the duties, or other similar language. In such a case, the delegatee is legally liable to the oblige for nonperformance.
Assumption of the risk. A defense a defendant can use against a plaintiff who knowingly and voluntarily enters into or participates in a risky activity that results in injury.
At-fault divorce. A divorce recognized by some states whereby one or both parties to a marriage is blamed for causing the divorce (e.g., adultery, physical or emotional abuse, abandonment, alcohol or other substance abuse, or insanity).
Attachment. A prejudgment court order that permits the seizure of a debtor's property while the lawsuit is pending.
Attachment in a secured transaction. A situation in which a creditor has an enforceable security interest against a debtor and can satisfy the debt out of the designated collateral.
Attempt or conspire to monopolize. Firms that attempt or conspire to monopolize a relevant market violate Section 2 of the Sherman Act.
Attestation. The action of a will being witnessed by two or three objective and competent people.
Attestation clause. A clause in a will that usually follows the signature of the testator or testatrix in which the witnesses sign certifying that they have witnessed the signing of the will by the testator or testatrix.
Attorney certification. A certification that an attorney who represents a client in bankruptcy must file certifying the accuracy of the information contained in the bankruptcy petition and the debtor's schedules, under penalty of perjury.
Attorney–client privilege. A rule that says a client can tell his or her lawyer anything about the case without fear that the attorney will be called as a witness against the client.
Attorney-in-fact. The agent named in a power of attorney. This agent does not have to be a lawyer.
Attorney's opinion. An opinion given by an attorney concerning the status of title to real property that is arrived at after examining a chronological history of the chain of title and encumbrances affecting the property.
Attractive nuisance doctrine. A special tort rule that imposes liability on a landowner to children who have trespassed onto the owner's property by an attractive nuisance with the intent to play and are injured or killed while doing so.
At-will LLC. A limited liability company (LLC) that has no specified term of duration.
Auction. A sale in which a seller of goods offers goods for sale through an auctioneer.
Auction with reserve. An auction in which the seller retains the right to refuse the highest bid and withdraw the goods from sale. Unless expressly stated otherwise, an auction is an auction with reserve.
Auction without reserve. An auction in which the seller expressly gives up his or her right to withdraw the goods from sale and must accept the highest bid.
Audit. A verification of a company's books and records, pursuant to federal securities laws, state laws, and stock exchange rules that must be performed by an independent CPA.
Audit committee. A committee of the board of directors of a corporation that is responsible for overseeing public audits of the company by certified public accountants and internal audits of the company. The audit committee must be composed of independent members of the board of directors.
Auditor's opinion. An opinion of an auditor about how fairly the financial statements of the client company represent the company's financial position, results of operations, and change in cash flows.
Authorized means of communication. A rule that states that an offeree must accept an offer by means expressly specified in the offer or, if there is no such requirement, than by any means customary in similar transactions, usage of trade, or prior dealings between the parties.
Authorized shares. The number of shares provided for in a corporation's articles of incorporation.
Automated teller machine (ATM). An electronic machine that is located either on a bank's premises or at some other location that is connected online to the bank's computers and permits the withdrawal of funds, deposit of funds, and the conduct of other banking transactions.
Automatic stay. The suspension of certain legal actions by creditors against a debtor or the debtor's property.
Automobile insurance. A type of insurance that covers automobiles and other vehicles.
Automobile liability insurance. Automobile insurance that covers damages that the insured causes to third parties.
Backward vertical merger. A vertical merger in which the customer acquires the supplier.
Bail. An amount of money established by a court that a person who has been arrested may post with the court in order to be released from custody, usually jail, pending the trial of his or her case.
Bail bond. An instrument that is purchased from a bail bonds person by a person who has been arrested and ordered to post a bond with the court in order to be released from custody, usually jail, pending the trial of his or her case. The bail bonds persons submits the bail bond to the court in substitution for the bail that the arrested person would be required to post.
Bailee. A holder of goods who is not a seller or a buyer (e.g., warehouse, common carrier).
Bailment. A transaction in which an owner transfers his or her personal property to another to be held, stored, or delivered, or for some other purpose. Title to the property does not transfer.
Bailment agreement. An agreement that creates a bailment. The agreement must be in writing if it is for more than one year.
Bailment at will. A bailment without a fixed term; can be terminated at any time by either party.
Bailment for a fixed term. A bailment that terminates at the end of the term or sooner, by mutual consent of the parties.
Bailment for the sole benefit of the bailee. A gratuitous bailment that benefits only the bailee. The bailee owes a duty of utmost care to protect the bailed property.
Bailment for the sole benefit of the bailor. A gratuitous bailment that benefits only the bailor. The bailee owes only a duty of slight care to protect the bailed property.
Bailment of personal property. The bailment of personal property includes the bailment of tangibles (e.g. automobiles, equipment, jewelry) and intangible property (e.g., stocks, bonds, notes).
Bailor. The owner of property in a bailment.
Bank check. A certified check or a cashier's check, the payment for which a bank is solely or primarily liable.
Bank Secrecy Act. A federal statute that requires financial institutions and other covered entities to file Currency Transaction Reports (CTR) with the Internal Revenue Service (IRS) reporting certain cash and other cash-like transactions.
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. A federal statute that substantially amended federal bankruptcy law. This act makes it more difficult for debtors to file for bankruptcy and have their unpaid debts discharged.
Bankruptcy Code. The name given to federal bankruptcy law, as amended.
Bankruptcy estate. The debtor's property and earnings that comprise the estate in a bankruptcy proceeding.
Bankruptcy law. Federal law that establishes procedures for filing for bankruptcy, resolving creditors' claims, and protecting debtors' rights.
Bankruptcy Reform Act of 1978. A federal statute that substantially changed federal bankruptcy law. The act made it easier for debtors to file for bankruptcy and have their unpaid debts discharged. This act was considered debtor friendly.
Bankruptcy trustee. The legal representative of a debtor's estate that is appointed in a Chapter 7 (liquidation), Chapter 12 (family farmer or family fisherman), or Chapter 13 (adjustment of debts) bankruptcy case. May be appointed in a Chapter 11 (reorganization) case on a showing of cause.
Bargained-for exchange. Exchange that parties engage in that leads to an enforceable contract.
Battery. Unauthorized and harmful or offensive direct or indirect physical contact with another person that causes injury.
Battle of the forms. A UCC rule that states that if both parties are merchants, then additional terms contained in the acceptance become part of the sales contract unless (1) the offer expressly limits the acceptance to the terms of the offer, (2) the additional terms materially alter the original contract, or (3) the offeror notifies the offeree that he or she objects to the additional terms within a reasonable time after receiving the offeree's modified acceptance. There is no contract if the additional terms so materially alter the terms of the original offer that the parties cannot agree on the contract.
Bearer. A person who is in possession of an instrument that is payable is to anyone in physical possession of the instrument.
Bearer instrument (Bearer paper). An instrument that is payable is to anyone in physical possession of the instrument who presents it for payment when it is due. The person in possession of the instrument is called the bearer. Bearer paper results when the drawer or maker does not make the instrument payable to a specific payee. An instrument that is negotiated by delivery; indorsement is not necessary.
Beneficiary of a deed of trust. The lender-creditor of a three-party deed of trust in a real estate financing arrangement.
Beneficiary of a will. A person or an organization designated in a will to receive all or a portion of the testator's property at the time of the testator's death.
Beneficiary of life insurance. The person who is to receive the life insurance proceeds when the insured dies. This is the person for whose benefit a trust is created.
Bequest. A gift of personal property by will; also known as a legacy.
Berne Convention. An international copyright treaty.
Best-efforts contract. A contract that contains a clause that requires one or both of the parties to use their best efforts to achieve the objective of the contract.
Best interests of the child. A standard applied by courts in determining which parent should receive custody of children of divorcing parents.
Beyond a reasonable doubt. A doctrine that requires that the government prove that the accused is guilty beyond a reasonable doubt in order to be found guilty of a crime.
Bicameral. Being composed of two chambers, as the legislative branch of the government is composed of the house and the senate.
Bilateral contract. A contract entered into by way of exchange of promises of the parties; "a promise for a promise."
Bilateral treaty. A treaty between two nations.
Bill. A document introduced in the U.S. Congress that begins the process whereby a bill can become a statute.
Bill of lading. A document of title issued by a common carrier that states that the bailor has title to the bailed goods.
Bill of Rights. The first 10 amendments to the U.S. Constitution that were added in 1791.
Binding arbitration. An agreement between the parties to a dispute whereby they agree that the decision and award of the arbitrator cannot be appealed to the courts.
Biosafety Protocol. Another name for the United Nations Biosafety Protocol for Genetically Altered Foods which is a United Nations–sponsored agreement that more than 150 countries have agreed to that requires all genetically engineered foods be clearly labeled with the phrase "May contain living modified organisms."
Blackmail. The name of a crime that consists of a threat to expose something about another person unless that other person gives money or property. Blackmail is often referred to as extortion.
Blank indorsement. An indorsement that does not specify a particular indorsee. It creates bearer paper.
Blue-sky laws. State laws that regulate the issuance and trading of securities.
Blurring. A situation that occurs when a party uses another party's famous mark to designate a product or service in another market so that the unique significance of the famous mark is weakened.
Board of directors. A panel of persons who are elected by the shareholders that makes policy decisions concerning the operation of a corporation.
Bona fide occupational qualification (BFOQ). A true job qualification. Employment discrimination based on a protected class (other than race or color) is lawful if it is job related and a business necessity. This exception is narrowly interpreted by the courts.
Bond. A long-term debt security that is secured by some form of collateral (e.g., real estate, personal property).
Booking. An administrative procedure that occurs at a police station after a person is arrested whereby the arrest is recorded, the suspect is fingerprinted, and a photograph is taken of the suspect.
Borrower. A party who borrows money or other asset; the debtor in a credit transaction.
BP oil spill. An oil spill that occurred in the Gulf of Mexico from an oil rig owned by BP p.l.c. (formerly British Petroleum) that spilled 5 million barrels of oil over a 5,000-mile area of the Gulf of Mexico killing thousands of marine animals, birds, fish and aquatic species and causing extensive damage to hundreds of miles of coastline, particularly in Louisiana, Florida, Mississippi, and other states. This was the largest oil spill in U.S. history.
Breach. A contracting party's failure to perform an absolute duty owed under a contract.
Breach of confidentiality. Disclosure of confidential information (e.g., trade secrets, formulas, customer lists) that agents, general partners, officers, directors and employees of corporations, employees of businesses, and others that is obtained from their principal to third parties other than their principal.
Breach of contract. A contracting party's failure to perform an absolute duty owed under a contract.
Breach of the duty of care. A failure to exercise care or to act as a reasonable person would act.
Bribery. A crime in which one person gives another person money, property, favors, or anything else of value for a favor in return. A bribe is often referred to as a payoff or kickback.
Brown v. Board of Education. A U.S. Supreme Court case decided in 1954 that held that the "separate but equal" doctrine for schools that was established by an earlier U.S. Supreme Court decision violated the Equal Protection Clause of the Fourteenth Amendment to the Constitution and was unconstitutional.
Building. A structure constructed on land.
Building codes. State and local statutes that impose specific standards on property owners to maintain and repair leased premises; also called housing codes.
Burden of proof. A burden a plaintiff bears to persuade the trier of fact of the merits of his or her case.
Burden of proof in a criminal trial. A principle that provides that the government bears the burden to prove that the accused is guilty of the crime charged.
Bureau of Competition of the Federal Trade Commission. A bureau within the Federal Trade Commission (FTC) that is authorized to investigate suspected antitrust violations and bring civil actions on behalf of the federal government.
Burglary. The taking of personal property from another's home, office, or commercial or other type of building.
Business interruption insurance. Insurance that reimburses a business for loss of revenue incurred when the business has been damaged or destroyed by some peril.
Business judgment rule. A rule that protects the decisions of a board of directors of a corporation where the board has acted on an informed basis, in good faith, and in the honest belief that the action taken was in the best interests of the corporation and its shareholders.
Buy-and-sell agreement. An agreement among shareholders of a corporation that requires a selling shareholder who is a signatory to the agreement to sell his or her shares to the other shareholders or to the corporation at the price specified in the agreement.
Buyer in the ordinary course of business. A person who in good faith and without knowledge of another's ownership or security interest in goods buys the goods in the ordinary course of business from a person in the business of selling goods of that kind.
buyer's or Lessee's cancellation. A right of a buyer or lessee to cancel a sales or lease contract if the seller or lessor fails to deliver conforming goods or repudiates the contract or if the buyer or lessee rightfully rejects the goods or justifiably revokes acceptance of the goods.
Bylaws. A detailed set of rules adopted by the board of directors after a corporation is incorporated that contains provisions for managing the business and the affairs of the corporation.
C corporation. A corporation that does not qualify for or has not elected to be taxed as an S corporation. Where there is a C corporation, there is double taxation -- that is, a C corporation pays taxes at the corporate level, and shareholders pay taxes on dividends paid by the corporation.
C.&F. (Cost and freight). A pricing term that means the price of goods includes the cost of the goods and the cost of freight.
Cabinet-level federal departments. Highest-level federal departments that advise the president and are responsible for enforcing specific laws enacted by Congress.
Cancellation of a negotiable instrument. Cancellation of a negotiable instrument that can be accomplished by (1) any manner apparent on the face of the instrument or the indorsement (e.g., writing canceled on the instrument) or (2) destruction or mutilation of a negotiable instrument with the intent of eliminating the obligation.
Canon law. Laws and regulations that have been adopted by Catholic and other Christian ecclesiastical authorities that relates to internal laws that govern the church and its members, definition of faith, rules of conduct, laws of marriage, and laws of inheritance.
Capital murder. A murder where the defendant could be executed if found guilty of committing the murder.
Capture. The right of a buyer or lessee to purchase or rent substitute goods if the seller or lessor fails to make delivery of the goods or repudiates the contract or if the buyer or lessee rightfully rejects the goods or justifiably revokes their acceptance.
Cashier's check. A check issued by a bank for which the customer has paid the bank the amount of the check and a fee. The bank guarantees payment of the check.
Caveat emptor. Let the buyer beware, the traditional guideline of sales transactions.
Celler-Kefauver Act. A federal statute, enacted in 1950, that widened Section 7 of the Clayton Act's scope to include asset acquisitions (previously only applied to stock mergers).
Central America Free Trade Agreement (CAFTA). An association composed of the United States and the Central American countries of Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua.
Centralized management of a corporation. The board of directors and the officers of a corporation manage the affairs of the corporation. The board of directors make policy decisions and the officers run the corporation's day-to-day operations.
CEO and CFO certification. A certification that the Sarbanes-Oxley Act requires that the chief executive officer (CEO) and chief financial officer (CFO) of a public company file with each annual and quarterly report of the company.
Certificate of authority. A formal document that must be issued by the secretary of state before a foreign corporation, foreign limited liability company (LLC), foreign limited partnership, foreign limited liability partnership (LLP), or foreign limited liability limited partnership (LLLP) may conduct business in that state.
Certificate of cancellation. A certificate that must be filed with the secretary of state on the dissolution and the commencement of the winding up of a limited partnership.
Certificate of deposit (CD). A two-party negotiable instrument that is a special form of note created when a depositor deposits money at a financial institution in exchange for the institution's promise to pay back the amount of the deposit plus an agreed-on rate of interest on the expiration of a set time period agreed on by the parties. The financial institution is the borrower (the maker of a certificate of deposit), and the depositor is the lender (the payee of a certificate of deposit).
Certificate of dissolution. A document issued by the secretary of state that dissolves a corporation.
Certificate of interest. A document that evidences a member's ownership interest in a limited liability company (LLC).
Certificate of limited liability limited partnership. A formal document that must be issued by the secretary of state before a limited liability limited partnership (LLLP) may conduct business in that state.
Certificate of limited partnership. A document that two or more persons must execute and sign that makes a limited partnership legal and binding and that must be filed with the secretary of state of the state organization.
Certificate of registration. A formal document that must be issued by the secretary of state before a foreign limited partnership may conduct business in that state.
Certificate of title. A document that is issued by a court after holding a judicial proceeding at which everyone claiming an interest in real property can appear and be heard that gives title to the person that the court deems has title to the property.
Certification mark. A mark that certifies that a seller of a product or service has met certain geographical location requirements, quality standards, material standards, or mode of manufacturing standards established by the owner of the mark.
Certified check. A type of check for which a bank agrees in advance (certifies) to accept the check when it is presented for payment.
Certified public accountant (CPA). An accountant who has met certain educational requirements, has passed the CPA examination, and has had a certain number of years of auditing experience.
Chain of distribution. The chain of manufacturers, distributors, wholesalers, retailers, lessors, subcomponent manufacturers, and others who distribute a defective product.
Chain-style franchise. A situation in which a franchisor licenses a franchisee to make and sell its products or distribute its services to the public from a retail outlet serving an exclusive territory.
Chamber. A portion of the legislative branch of government; refers to either the U.S. House of Representatives or the U.S. Senate.
Change of venue. Movement of a trial to a venue where a more impartial jury can be found in cases where pretrial publicity or other reason may prejudice jurors located in the proper venue.
Changing conditions defense. A defense to a Robinson-Patman Act Section 2(a) price discrimination action in which prices were lowered in response to changing conditions in the market for the goods.
Chapter 7 discharge. The termination of the legal duty of an individual debtor to pay unsecured debts that remain unpaid on the completion of a Chapter 7 proceeding.
Chapter 7 -- Liquidation. A form of bankruptcy in which the debtor's nonexempt property is sold for cash, the cash is distributed to the creditors, and any unpaid debts are discharged; also referred to as straight bankruptcy.
Chapter 11 plan of reorganization. A plan that sets forth a proposed new capital structure for a debtor to assume when it emerges from Chapter 11 reorganization bankruptcy.
Chapter 11 -- Reorganization. A bankruptcy method that allows the reorganization of the debtor's financial affairs under the supervision of the bankruptcy court.
Chapter 12 -- Adjustment of Debts of a Family Farmer or Fisherman with Regular Income. A special form of bankruptcy that provides for the reorganization bankruptcy of family farmers and fisherman.
Chapter 13 -- Adjustment of Debts of an Individual with Regular Income. A rehabilitation form of bankruptcy that permits bankruptcy courts to supervise the debtor's plan for the payment of unpaid debts in installments over the plan period.
Chapter 13 discharge. A discharge in a Chapter 13 case that is granted to the debtor after the debtor's plan of payment is completed (which could be up to three or up to five years).
Chapter 13 plan of payment. A plan set forth by a debtor in a Chapter 13 -- Adjustment of Debts of an Individual with Regular Income bankruptcy proceeding that lays out the debtor's plan for paying his or her disposable income to prepetition creditors during the plan period.
Characteristics of a corporation. Characteristics of a corporation include legal existence, free transferability of shares, perpetual existence, centralized management, and limited liability of shareholders.
Charitable trust. A trust that is created for the benefit of a segment of society or society in general.
Chattel paper. A record that evidences both a monetary obligation and a security interest in specific goods.
Check. A distinct form of draft that is an order by a drawer (i.e., checking account holder) to the drawer's financial institution (the drawee) to pay a specified sum of money from the drawer's checking account to the named payee (or holder).
Checks and balances. A system built into the U.S. Constitution to prevent any one of the three branches of the government from becoming too powerful.
Chief Justice of the U.S. Supreme Court. The justice who is responsible for the administration of the Supreme Court.
Child custody. The award of legal custody of a child to a parent in a divorce or annulment proceeding. This determination is made based on the best interests of the child.
Child labor. The use of children to work is restricted and regulated by the Fair Labor Standards Act (FLSA).
Child neglect. A parent's failure to provide a child with the necessities of life or other basic needs.
Child support. Payments made by a noncustodial parent to help financially support his or her children.
Choice of forum clause. A clause in an international contract that designates which nation's court has jurisdiction to hear a case arising out of the contract; also known as a forum-selection clause.
Choice of law clause. A contract provision that designates a certain state's law or country's law that will be applied in any dispute concerning nonperformance of the contract.
C.I.F. (Cost, insurance, and freight). A pricing term that means the price of goods includes the cost of the goods and the costs of insurance and freight.
Circuit. The geographical area served by a U.S. Circuit Court of Appeals.
Citizenship. A term that refers to being a citizen of the United States of America. A citizen is a person born in the United States and a person born from a foreign country who has met the qualification for obtaining citizenship in the United States.
Civil action. A lawsuit brought by a party to recover monetary damages or other remedies from a defendant.
Civil damages. Damages awarded for violations of antitrust laws, including treble damages.
Civil law. Law based on codes or statutes. In civil law, the adjudication of a case is based on the application of the code or statutes to a particular set of facts.
Civil penalty. A penalty that the Securities and Exchange Commission (SEC) can obtain against a defendant of up to three times (treble damages) the illegal profits gained or losses avoided on insider trading.
Civil RICO. A federal statute that permits a civil lawsuit to be brought by persons injured by a pattern of racketeering to recover treble damages from the racketeer for injury cause to the plaintiff's business or property.
Civil Rights Act of 1866. A federal statute enacted after the Civil War that says all persons "have the same right . . . to make and enforce contracts . . . as is enjoyed by white persons." It prohibits racial and color discrimination.
Civil Rights Act of 1964. A federal statute that makes it illegal to discriminate in employment, housing, transportation, and public accommodations based on race, national origin, color, gender, or religion.
Class action. A situation in which a group of plaintiffs collectively bring a lawsuit against a defendant.
Class action waiver. A clause in an arbitration agreement whereby a party agrees not to join a class action to pursue a defendant in an arbitration proceeding.
Clayton Act. A federal statute, enacted in 1914, that regulates mergers and prohibits certain exclusive dealing arrangements.
Clean Air Act. A federal statute that provides comprehensive regulation of air quality in the United States.
Clean Air Act Amendments. Amendments to the Clean Air Act that increase the protection of air quality.
Clean Water Act. A federal statute that establishes water quality standards and regulates water pollution.
Close corporation. A small corporation that has met specified requirements and may choose this designation under state law. As such, the corporation may dispense with some corporate formalities and operate without a board of directors, without bylaws, and without keeping minutes of meetings.
Closed shop. A business where an employer hires only employees who are already members of a labor union and cannot hire employees who are not members of a union. Closed shops are illegal in the United States.
Closely held corporation. A corporation owned by one or a few shareholders. Also called a privately held corporation.
Closing (Settlement). The finalization of a real estate sales transaction that passes title to the property from the seller to the buyer.
Closing arguments. Statements made by each party's attorney to the jury at the close of a trial.
Code books. Books that contain statutes enacted by the U.S. Congress and state legislatures and ordinances enacted by municipalities.
Code of ethics. A code adopted by a company wherein the company sets forth rules of ethics for the company's managers and employees to follow when dealing with customers, employees, suppliers, and others.
Codicil. A separate document that must be executed to amend a will. It must be executed with the same formalities as a will.
Codified law. Statutes enacted by the federal Congress and state legislatures and ordinances passed by municipalities and local government bodies.
Coinsurance clause. A clause in an insurance policy that requires the insured to pay a percentage of an insured loss; also known as a copay clause.
Colgate doctrine. A rule announced in the U.S. Supreme Court case United States v. Colgate & Co. that states that a unilateral choice by one party not to deal with another party does not violate Section 1 of the Sherman Act because there is not concerted action.
Collateral. Security against repayment of the debt that lenders sometimes require; can be a car, a house, or other property. The property that is subject to the security interest.
Collateral note. A note that is secured by personal property.
Collecting bank. The depository bank and other banks in the collection process (other than the payer bank).
Collection process. The process of collecting checks that are drawn on other banks.
Collection remedies. Procedures that can be used by plaintiffs to recover remedies against defendants.
Collective bargaining. The process of negotiating contract terms between an employer and the members of a union.
Collective bargaining agreement. The contract that results from a collective bargaining procedure.
Collective membership mark. A mark that indicates that a person has met the standards set by an organization and is a member of that organization.
Collision insurance. Insurance that a car owner purchases to insure his or her car against risk of loss or damage.
Color discrimination. Employment discrimination against a person because of his or her color, for example, where a light-skinned person of a race discriminates against a dark-skinned person of the same race.
Coming and going rule. A rule that says a principal is generally not liable for injuries caused by its agents and employees while they are on their way to or from work. Also known as the going and coming rule.
Command School of jurisprudence. A school of thought that postulates that law is a set of rules developed, communicated, and enforced by the ruling party.
Commerce Clause. A clause of the U.S. Constitution that grants Congress the power "to regulate commerce with foreign nations, and among the several states, and with Indian tribes."
Commercial activity exception. An exception that states that a foreign country is subject to lawsuit in the United States if it engages in commercial activity in the United States or if it carries on such activity outside the United States but causes a direct effect in the United States.
Commercial electronic funds transfer. An electronic transfer of funds from a bank to another party that is subject to Article 4A of the Uniform Commercial Code (UCC).
Commercial paper. Short-term notes issued by corporations that do not exceed nine months.
Commercial reasonableness. A term used in the Uniform Commercial Code that applies to merchants in the performance of their duties under sales and lease contracts.
Commercial speech. Speech used by businesses such as advertising. It is subject to time, place, and manner restrictions.
Commercial wire transfer. An electronic transfer of funds from a bank to another party that is often used to transfer funds between businesses and financial institutions; also known as a wholesale wire transfer.
Committee. A special group composed of members of the U.S. House of Representatives or U.S. Senate.
Common carrier. A company that offers transportation services to the public, such as an airline, a railroad, or a trucking firm; the bailee in a bailment situation.
Common crimes. Ordinary crimes that are committed against persons and property.
Common law marriage. A type of marriage some states recognize in which a marriage license has not been issued but certain requirements are met.
Common law of contracts. Contract law developed primarily by state courts.
Common securities. Interests or instruments that are commonly known as securities, such as common stock, preferred stock, bonds, debentures, and warrants.
Common stock. A type of equity security that represents the residual value of a corporation.
Common stock certificate. A document that represents a common shareholder's investment in the corporation.
Common stockholder. A person who owns common stock.
Communications Decency Act. A federal statute that states that Internet service providers (ISPs) are not liable for the content transmitted over their networks by e-mail users and websites.
Community property. A form of ownership in which each spouse owns an equal one-half share of the income of both spouses and the assets acquired during the marriage.
Comparative negligence (Comparative fault). A doctrine under which damages are apportioned according to fault.
Compensatory damages. An award of money intended to compensate a nonbreaching party for the loss of a bargain. Compensatory damages place the nonbreaching party in the same position as if the contract had been fully performed by restoring the "benefit of the bargain."
Competing with the corporation. A situation that occurs when a director or officer of a corporation engages in undisclosed and unauthorized competition with the corporation that has employed him or her.
Competing with the partnership. A situation that occurs when a general partner of a partnership engages in undisclosed and unauthorized competition with the partnership of which he or she is a partner.
Competing with the principal. A situation that occurs when an agent, a general partner, a director or officer of a corporation, a partner in a limited liability partnership, certain members of a limited liability company, and anyone else who owes a fiduciary duty to a principal engages in undisclosed and unauthorized competition with their principal.
Complaint. A document a plaintiff files with the court and serves on the defendant to initiate a lawsuit.
Complete integration. A concept that a written contract is a complete and final statement of the parties' agreement.
Complete performance. A situation in which a party to a contract renders performance exactly as required by the contract. Complete performance discharges that party's obligations under the contract; also known as strict performance.
Composition. An agreement that provides for the reduction of a debtor's debts.
Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund). A federal statute that authorizes the federal government to deal with hazardous wastes. The act creates a monetary fund to finance the cleanup of hazardous waste sites.
Comprehensive insurance. A form of property insurance that insures an automobile from loss or damage due to causes other than collision.
Compulsory subjects of collective bargaining. Subjects of collective bargaining that must be negotiated by an employer with a labor union, such as issues concerning wages, hours, and other terms and conditions of employment.
Computer employee exemption. An exemption from federal minimum wage and overtime pay requirements that applies to employees compensated either on a salary or fee basis; are employed as computer systems analysts, computer programmers, software engineers or other similarly skilled workers in the computer field; and are engaged in the design, development, documentation, analysis, creation, testing, or modification of computer systems or programs.
Concurrent condition. A condition that exists when the parties to a contract must render performance simultaneously; each party's absolute duty to perform is conditioned on the other party's absolute duty to perform.
Concurrent jurisdiction. Jurisdiction shared by two or more courts.
Concurrent ownership (Co-ownership). A situation in which two or more persons own a piece of real property. The following forms of co-ownership of real property are recognized: joint tenancy, tenancy in common, tenancy by the entirety, community property, condominiums, and cooperatives.
Concurring opinion. An opinion written by a justice who agrees with the outcome of a case reached by other justices but not the reason proffered by them, wherein the justice sets forth his or her reasons for deciding the case.
Condition. A qualification of a promise that becomes a covenant if it is met. There are three types of conditions: conditions precedent, conditions subsequent, and concurrent conditions.
Condition precedent. A condition that requires the occurrence of an event before a party is obligated to perform a duty under a contract.
Condition subsequent. A condition whose occurrence or nonoccurrence of a specific event automatically excuses the performance of an existing contractual duty to perform.
Conditional. A promise or an order that is conditional on another promise or event.
Conditional promise. A situation in which a promisor's duty to perform or not perform a contract arises only if a condition does or does not occur; also known as a qualified promise.
Conditional promise or order to pay. A situation that occurs where a promise to pay or an order to pay is conditional on another promise or event. A conditional promise to pay or order to pay does not create a negotiable because the risk of the other promise or event not occurring would fall on the person who held the instrument.
Conditional sale. A sale of goods that is subject to a condition of sale.
Condominium. A common form of ownership in a multiple-dwelling building where the purchaser has title to the individual unit and owns the common areas as a tenant in common with the other condominium owners.
Conference committee. A special group composed of members of both the U.S. House of Representatives and the U.S. Senate whose task is to try to reconcile the differences in bills passed by each chamber.
Confidential draft registration statement. A confidential draft of a proposed registration statement that may be filed by an emerging growth company (EGC) for review by the staff of the Securities and Exchange Commission (SEC) that the EGC may withdraw if it chooses to do so after such review.
Confirmation of a Chapter 11 plan of reorganization. The bankruptcy court's approval of a plan of reorganization.
Confusion. A situation in which fungible goods (i.e., goods that are exactly alike) are commingled and the owners share title to the commingled goods in proportion to the quantity of goods contributed.
Conglomerate merger. A merger that does not fit into any other category; a merger between firms in totally unrelated businesses.
Congress of Industrial Organizations (CIO). A labor organization formed in 1935 that permitted semiskilled and unskilled workers to become members.
Conscious parallelism. A situation in which if two or more firms act the same but no concerted action is shown, there is no violation of Section 1 of the Sherman Act.
Consent decree. A plea entered by a civil defendant who has been sued by the government whereby the accused agrees to the imposition of a penalty but does not admit liability.
Consent election. An election to establish a labor union that is not contested by the employer and may be held without National Labor Relations Board (NLRB) supervision.
Consequential damages. Foreseeable damages that arise from circumstances outside a contract. To be liable for these damages, the breaching party must know or have reason to know that the breach will cause special damages to the other party; also known as special damages.
Consideration. Something of legal value given in exchange for a promise.
Consignee. The party to whom a seller (the consignor) delivers goods to be sold on the seller's behalf.
Consignee of bailed goods. In a common carrier bailment arrangement, the person to whom the bailed goods are to be delivered.
Consignment. An arrangement in which a seller (the consignor) delivers goods to a buyer (the consignee) to sell.
Consignment of bailed goods. The delivery of goods by a consigner (shipper, bailor) to a common carrier (bailee) for delivery of the goods to another party (consignee).
Consignor. The party who delivers goods to a buyer (the consignee) to sell on his or her behalf.
Consignor of bailed goods. In a common carrier bailment arrangement, the person who is shipping goods; the bailor.
Consolidated Omnibus Budget Reconciliation Act (COBRA). A federal statute that permits employees and their beneficiaries to continue their group health insurance after an employee's employment has ended.
Consolidation. The act of a court to combine two or more separate lawsuits into one lawsuit.
Conspicuous disclaimer. A written disclaimer of an implied warranty associated with the sale of goods that must be noticeable to a reasonable person.
Constitution of the United States of America. The fundamental law of the United States of America. It was ratified by the states in 1788 and is the supreme law of the United States.
Constitutional Convention. A meeting convened by delegates of many states in 1787 with the primary purpose of strengthening the federal government.
Construction lien (Mechanic's lien). A contractor's, laborer's, and material person's statutory lien that makes the real property to which services or materials have been provided security for the payment of the services and materials.
Constructive delivery. A method used on some occasions in making gifts of personal property where the donor makes a symbolic delivery of the property to the donee instead making a physical delivery of the property.
Constructive eviction. A wrongful eviction that occurs if a landlord causes the leased premises to become unfit for the tenant's intended use (e.g., failing to provide electricity) and the tenant leaves the premises.
Constructive fraud. Fraud that occurs when an accountant acts with "reckless disregard" for the truth or the consequences of his or her actions; also known as gross negligence.
Constructive notice. Notice given by publishing the information in a newspaper of general circulation.
Constructive notice by recoding. Recording of a deed, mortgage, lien, or other document pertaining to an interest in real property gives constructive notice to the world of the owner's or other recorder's interest in the real property.
Constructive trust. An equitable trust that is implied by law to avoid fraud, unjust enrichment, and injustice.
Consulting fees. Fees paid by franchisees and other parties to obtain the services of experts in an area.
Consumer credit. Credit that is extended to natural persons for personal, family, or household purposes.
Consumer debt. For bankruptcy purposes, debts incurred by an individual for personal, family, or household purposes.
Consumer expectation test for product liability. A method for determining whether a product's design is defective by determining whether the product is more dangerous than the ordinary consumer would expect.
Consumer expectation test for warranty. A test to determine the merchantability of food products based on what the average consumer would expect to find in food products.
Consumer financial protection. A set of government laws that protect consumerdebtors in credit transactions.
Consumer Financial Protection Act of 2010. A federal statute that requires increased disclosure of credit information and terms to consumers and regulates consumer credit providers and others.
Consumer Financial Protection Bureau (CFPB). A federal regulatory agency that has broad authority to regulate consumer financial products and services.
Consumer goods. Goods that are purchased by consumers, such as furniture, television sets, home appliances, and other goods used primarily for personal, family, or household purposes.
Consumer Leasing Act (CLA). An amendment to the Truth-in-Lending Act (TILA) that extends the TILA's coverage to lease terms in consumer leases.
Consumer Product Safety Act (CPSA). A federal statute that regulates potentially dangerous consumer products and that created the Consumer Product Safety Commission.
Consumer Product Safety Commission (CPSC). A federal administrative agency empowered to adopt rules and regulations to interpret and enforce the Consumer Product Safety Act.
Consumer products. Products that are sold to consumers.
Consumer protection laws. Federal and state statutes and regulations that promote product safety and prohibit abusive, unfair, and deceptive business practices.
Contested election. An election to establish a labor union that is opposed and contested by the employer and must be supervised by the National Labor Relations Board (NLRB).
Contingency fee. A fee arrangement between a lawyer and client whereby the lawyer is paid a percentage of damages won through trial judgment or by settlement.
Continuation agreement. An agreement among the surviving or remaining general partners of a partnership to continue a partnership after its dissolution.
Continuation statement. A document that can be filed by a creditor up to six months prior to the expiration of a financing statement's term to continue the creditor's perfected interest in the collateral designated in the financing statement.
Continuous and peaceful. A requirement that must be proven by a person to obtain real property by adverse possession. It requires that the adverse possessor has occupied the property continuously and uninterrupted for the required statutory period. Any break in normal occupancy terminates the adverse possession.
Contract. An agreement that is enforceable by a court of law or equity. "A contract is a promise or a set of promises for the breach of which the law gives a remedy or the performance of which the law in some way recognizes a duty" (Restatement (Second) of Contracts).
Contract contrary to law. A contract to perform activities that are prohibited by law.
Contract contrary to public policy. A contract to perform activities that have a negative impact on society or interferes with the public's safety and welfare that constitutes an illegal contract.
Contract in restraint of trade. A contract that unreasonably restrains trade.
Contract liability. Liability of principals and agents for contracts entered into with third parties.
Contract of adhesion. A preprinted contract prepared by a provider of goods or services where the contract terms are set and the consumer or other party cannot negotiate the contract terms and must accept the terms of the contract in order to obtain the product or service.
Contractual capacity. The necessary capacity of parties to enter into the contract.
Contributory negligence. A doctrine that says a plaintiff who is partially at fault for his or her own injury cannot recover against the negligent defendant.
Control rule. A rule that provides that a limited partner who takes part in the management of the affairs of the limited partnership and who has not been expressly elected to office to do so loses his or her limited liability shield and become a general partner and is personally liable for the debts and obligations of the limited partnership.
Controlling the Assault of Non-Solicited Pornography and Marketing Act (CANSPAM Act). A federal statute that places certain restrictions on persons and businesses that send unsolicited commercial advertising (spam) to e-mail accounts, prohibits falsified headers, prohibits deceptive subject lines, and requires spammers to label sexually oriented e-mail as such.
Convention. A treaty that is sponsored by an international organization.
Convertible preferred stock. Stock that permits the preferred stockholders to convert their shares into common stock.
Cooling-off period. A mandatory 60 days' notice before a strike can commence.
Cooperative. A form of co-ownership of a multiple-dwelling building in which a corporation owns the building and the residents own shares in the corporation.
Copyright. A legal right that gives the author of qualifying subject matter and who meets other requirements established by
Copyright law. The exclusive right to publish, produce, sell, license, and distribute the work.
Copyright infringement. An infringement that occurs when a party copies a substantial and material part of a plaintiff's copyrighted work without permission. A copyright holder may recover damages and other remedies against the infringer.
Copyright registration certificate. A certificate that is issued to a copyright holder who has properly registered his or her copyright with the U.S. Copyright Office.
Copyright Revision Act. A federal statute that (1) establishes the requirements for obtaining a copyright and (2) protects copyrighted works from infringement.
Copyright Term Extension Act. A federal statute that established the time periods for copyright protection.
Corporate citizenship. A theory of responsibility that says a business has a responsibility to do good.
Corporate criminal liability. Criminal liability of corporations for actions of their officers, employees, or agents.
Corporate electronic communications (Corporate e-communications). The use of electronic communications (e-communication) by a corporation to communicate with shareholders and among directors.
Corporate management. Together, the directors and the officers of a corporation.
Corporate officers. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation.
Corporate seal. A design containing the name of the corporation and the date of incorporation that is imprinted by the corporate secretary using a metal stamp on certain legal documents.
Corporation. A fictitious legal entity that is created according to statutory requirements.
Corporation codes. State statutes that regulate the formation, operation, and dissolution of corporations.
Cost–benefit analysis. The examination of relevant factors to determine whether to bring or settle a lawsuit.
Cost justification defense. A defense to a Robinson-Patman Act Section 2(a) price discrimination action that provides that a seller's price discrimination is not unlawful if the price differential is due to "differences in the cost of manufacture, sale, or delivery" of the product.
Cost of supplies. Payments made by a franchisee to the franchisor for supplies purchased from the franchisor.
Council of Ministers. A council of the European Union (EU) that is composed of representatives from each member country who meet periodically to coordinate efforts to fulfill the objectives of the European Union.
Counterfeit Access Device and Computer Fraud and Abuse Act (CFAA). A federal statute that makes it a federal crime to access a computer knowingly to obtain (1) restricted federal government information, (2) financial records of financial institutions, or (3) consumer reports of consumer reporting agencies.
Counteroffer. A response by an offeree that contains terms and conditions different from or in addition to those of the offer. A counteroffer terminates an offer.
County recorder's office. An office where deeds, mortgages, and other documents pertaining to real property located in the county are recorded and security interests in personal property are often recorded.
Course of dealing. The conduct of contracting parties in prior transactions and contracts.
Course of performance. Previous conduct of contracting parties concerning the contract in question.
Court of chancery (Equity court). Court that granted relief based on fairness; also called equity court.
Covenant. An unconditional promise to perform.
Covenant not to compete. A contract that provides that a seller of a business, an employee, a franchisee, or another covered party will not engage in a similar business or occupation within a specified geographical area for a specified time following the sale of the business or termination of employment; also called a noncompete clause.
Covenant of good faith and fair dealing. An implied covenant under which the parties to a contract not only are held to the express terms of the contract but also are required to act in "good faith" and deal fairly in all respects in obtaining the objective of the contract.
Covenant of quiet enjoyment. An implied covenant that says a landlord may not interfere with the tenant's quiet and peaceful possession, use, and enjoyment of the leased premises.
Cover. The right of a buyer or lessee to purchase or lease substitute goods if a seller or lessor fails to make delivery of the goods or repudiates the contract or if the buyer or lessee rightfully rejects the goods or justifiably revokes their acceptance.
Coworker. An employee who is not a supervisor or manager.
Cram-down provision. A provision in bankruptcy law whereby the court can confirm a plan of reorganization over an objecting class of creditors if certain requirements are met.
Crashworthiness doctrine. A doctrine that says automobile manufacturers are under a duty to design automobiles so they take into account the possibility of harm from a person's body striking something inside the automobile in the case of a car accident.
Credit. A situation in which one party makes a loan to another party.
Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act). A federal statute that requires disclosures to consumers, adds transparency to the creditor–debtor relationship, and eliminates many of the abusive practices of credit-card issuers.
Credit report. Information about a person's credit history that can be secured from a credit bureau.
Creditor. The lender in a credit transaction.
Creditor beneficiary. An original creditor who becomes a beneficiary under the debtor's new contract with another party.
Creditor beneficiary contract. A contract that arises in the following situation: (1) A debtor borrows money, (2) the debtor signs an agreement to pay back the money plus interest, (3) the debtor sells the item to a third party before the loan is paid off, and (4) the third party promises the debtor that he or she will pay the remainder of the loan to the original creditor.
Creditor–debtor relationship. A relationship that is created when a customer deposits money into a bank; the customer is the creditor, and the bank is the debtor.
Creditors' committee. A committee of unsecured creditors that is appointed by the court to represent the class of unsecured claims. The court can also appoint committees for secured creditors and for equity holders.
Crime. A violation of a statute for which the government imposes a punishment.
Criminal act. The performance of a criminal act prohibited by law. Also called actus reus ("guilty act").
Criminal conspiracy. A crime in which two or more persons enter into an agreement to commit a crime and an overt act is taken to further the crime.
Criminal fraud. A crime that involves obtaining title to property through deception or trickery; also known as false pretenses or deceit.
Criminal intent. The requisite state of mind when an act was performed for an accused to be found guilty of an intent crime. Also called mens rea ("evil intent").
Criminal laws. Laws that prohibit certain conduct and provide an incentive for persons to act reasonably in society and imposes penalties on persons who violate them.
Criminal RICO. A federal statute that makes it a crime to acquire or maintain an interest in, use income from, or conduct or participate in the affairs of an enterprise through a pattern of racketeering activity.
Critical Legal Studies School of jurisprudence. A school of thought that maintains that legal rules are unnecessary and that legal disputes should be solved by applying arbitrary rules based on fairness.
Critical legal thinking. The process of investigating, analyzing, evaluating, and interpreting information to solve legal issues or cases.
Cross-complainant. A defendant who files a cross-complaint against a plaintiff.
Cross-complaint. A document filed by a defendant against a plaintiff to seek damages or some other remedy.
Cross-defendant. A plaintiff against whom a cross-complaint is filed by the defendant.
Cross-examination. Examination of the plaintiff's witness by the defendant and examination of the defendant's witnesses by the plaintiff.
Crossover workers. Individual members of a labor union that is on strike who choose not to strike and remain working or who return to work after joining the strikers for a time.
Crowdfunding. A funding mechanism that allows entrepreneurs and small business to raise up to $1 million in capital from public investors during a 12-month period by using an Internet website funding portal.
Crown jewel. A valuable asset of a target corporation that the tender offeror particularly wants to acquire in a tender offer.
Cruel and unusual punishment. A clause of the Eighth Amendment to the U.S. Constitution that protects criminal defendants from torture and other cruel and abusive punishment.
Cruzan v. Director, Missouri Department of Health. A U.S. Supreme Court decision acknowledged that the right to refuse medical treatment is a personal liberty protected by the Due Process Clause of the U.S. Constitution. Often called the "right to die."
Cumulative preferred stock. Stock for which any missed dividend payments must be paid in the future to the preferred shareholders before the common shareholders can receive any dividends.
Cumulative voting. A system of shareholder voting for the board of directors of a corporation whereby each shareholder can accumulate all of his or her votes (determined by the number of directors to be elected multiplied by the number of shares the shareholder owns) and vote them all for a single candidate or split them among several candidates.
Cure. The legal right of a seller or lessor who has delivered defective or nonconforming goods to repair or replace the defective or nonconforming goods if the time for performance has not expired and the seller or lessor notifies the buyer or lessee of his or her intention to make a conforming delivery within the contract time.
Currency Transaction Report (CTR). A form that must be filed with the Internal Revenue Service (IRS) by financial institutions and other entities regarding certain cash transactions and suspected criminal activities.
Custodial parent. The parent who is awarded custody of a child in a divorce or annulment proceeding.
Cyber crimes. Crimes that are committed using computers, e-mail, the Internet, and other electronic means.
Cyber insurance. Insurance that protects an insured against liability for losses suffered by themselves or by their customers whose data has been stolen because of a cyber attack or hacking.
Cybersquatting. A situation that occurs when a party registers a domain name that is the same as another party's trademarked name or a famous person's name.
Damages. Money a buyer or lessee recovers from a seller or lessor who fails to deliver the goods or repudiates the contract. Damages are measured as the difference between the contract price (or original rent) and the market price (or rent) at the time the buyer or lessee learned of the breach.
D.b.a. (Doing business as). A designation for a business that is operating under a trade name.
Debenture. A long-term (often 30 years or more) unsecured debt instrument that is based on a corporation's general credit standing.
Debit card. A card that is issued to a bank customer that can be used to purchase goods and services. No credit is extended. Instead, the customer's bank account is immediately debited for the amount of a purchase.
Debt collectors. An agent who collects debts for other parties.
Debt securities. Securities that establish a debtor–creditor relationship in which the corporation borrows money from the investor to whom a debt security is issued; also known as fixed income securities.
Debtor. The borrower in a credit transaction.
Debtor-in-possession. A debtor who is left in place to operate the business during the reorganization proceeding.
Decertification election. An election to decertify a labor union that is held if some employees no longer want to be represented by a union. Decertification elections must be supervised by the NLRB.
Declaration of duties. If the delegatee has not assumed the duties under a contract, the delegatee is not legally liable to the oblige for nonperformance.
Declaration of Independence. A document that declared the independence of the American colonies from England.
Decree of judicial dissolution. An order issued by a court when it judicially dissolves a partnership, corporation, or other business entity.
Decree of divorce. A court order that terminates a marriage.
Deductible clause. A clause in an insurance policy that provides that insurance proceeds are payable only after the insured has paid a specified amount toward the damage or loss.
Deed. A document that describes a person's ownership interest in a piece of real property.
Deed of trust. An instrument that gives a creditor a security interest in the debtor's property that is pledged as collateral.
Defamation of character. False statement(s) made by one person about another. In court, the plaintiff must prove that (1) the defendant made an untrue statement of fact about the plaintiff and (2) the statement was intentionally or accidentally published to a third party.
Default. A situation that occurs when a debtor that does not make the required payments on a debt.
Default judgment. A judgment that is entered against a defendant if he does not answer a plaintiff's complaint.
Defect in design. A defect that occurs when a product is improperly designed.
Defect in manufacture. A defect that occurs when a manufacturer fails to (1) properly assemble a product, (2) properly test a product, or (3) adequately check the quality of the product.
Defect in packaging. A defect that occurs when a product has been placed in packaging that is insufficiently tamperproof.
Defective formation. A situation that occurs when a certificate of limited partnership of a limited partnership, articles of organization of a limited liability company, articles of limited liability partnership of a limited liability partnership, or articles of incorporation of a corporation are not properly filed with the secretary of state or other required government agency, there are defects in the document that is filed, or some other statutory requirement for the creation of the entity is not met.
Defendant. A party who is being sued.
Defendant's case. The part of a trial that occurs after the plaintiff has put on his case, when the defendant calls and examines witnesses and introduces evidence supporting his or her case.
Defense attorney. The lawyer who represents the accused defendant in a criminal trial.
Deferred posting rule. A rule that allows banks to fix an afternoon hour of 2:00 p.m. or later as a cutoff hour for the purpose of processing bank instruments.
Deficiency judgment. A judgment of a court that permits a secured lender to recover other property or income from a defaulting debtor if the collateral is insufficient to repay the unpaid loan.
Degree of control. A crucial factor in determining whether someone is an independent contractor or an employee is the degree of control that the principal has over that party.
Delaware antitakeover statute. An antitakeover statute enacted by the state of Delaware.
Delaware Court of Chancery. A Delaware state court that hears and decides cases involving business and corporate matters.
Delaware General Corporation Law. A state statute that was enacted by the legislature of the state of Delaware that governs the formation, operation, and dissolution of corporations incorporated in the state of Delaware.
Delegate. A transfer of contractual duty by an obligor to another party for performance; also known as delegation.
Delegatee. A party to whom a duty of performance has been transferred by a delegator.
Delegation doctrine. A doctrine that says when an administrative agency is created, it is delegated certain powers; the agency can use only those legislative, judicial, and executive powers that are delegated to it.
Delegation of a duty. A transfer of contractual duty by an obligor to another party for performance; also known as delegation.
Delegator. An obligor who has transferred his or her duty of performance to another to complete.
Delivery. A donor of a gift must deliver the property to the donee.
Delivery of possession. An element for the creation of a bailment that requires that the bailee must have exclusive control over the personal property and that the bailee must knowingly accept the personal property.
Demand draft. A draft payable on sight; also called a sight draft.
Demand instrument. An instrument that is payable on demand.
Demand note. A note payable on demand.
Dental insurance. Insurance that may be purchased to help cover the costs of dental care.
Deponent. A party who gives his or her deposition.
Deposit. The placement of funds by a customer into his or her checking or savings account at a bank or other financial institution.
Deposit accounts. Intangible personal property that includes demand, time, savings, passbook, or similar accounts maintained at a bank or financial institution.
Deposition. Oral testimony given by a party or witness prior to trial. The testimony is given under oath and is transcribed.
Depository bank. The bank where a payee or holder has an account.
Derivative lawsuit. A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit; also called a derivative action.
Design patent. A patent that may be obtained for the ornamental nonfunctional design of an item.
Destination contract. A contract that requires the seller to deliver the goods either to the buyer's place of business or to another destination specified in the sales contract.
Devise. A gift of real estate by will.
Digital Millennium Copyright Act (DMCA). A federal statute that prohibits unauthorized access to copyrighted digital works by circumventing encryption technology or the manufacture and distribution of technologies designed for the purpose of circumventing encryption protection of digital works.
Dilution. The lessening of the capacity of a famous mark to identify and distinguish its holder's goods and services. The two most common forms of dilution are blurring and tarnishment.
Direct examination. Examination of the plaintiff's witness by the plaintiff.
Direct notice. Express notice of the termination of an agency that needs to be given to all persons with whom the agent dealt.
Direct price discrimination. Price discrimination in which (1) the defendant sold commodities of like grade and quality, (2) to two or more purchasers at different prices at approximately the same time, and (3) the plaintiff suffered injury because of the price discrimination.
Directors' and officers' liability insurance (D&O insurance). Insurance that protects directors and officers of a corporation from liability for actions taken on behalf of the corporation.
Disability insurance. Insurance that provides a monthly income to an insured who is disabled and cannot work.
Disaffirm. The act of a minor to rescind a contract under the infancy doctrine. Disaffirmance may be accomplished orally, in writing, or by the minor's conduct.
Discharge. Discharge from liability on negotiable instruments.
Discharge by agreement. Discharge of contractual duties under a contract by mutual assent of the parties.
Discharge in bankruptcy. A bankruptcy court order that relieves a debtor of the legal liability to pay his or her unpaid debts that were not required to be paid and remain unpaid in the bankruptcy proceeding.
Disclaimer of consequential damages. A contract provision that states that a breaching party is not responsible to pay consequential damages.
Disclaimer of opinion. A disclaimer issued by an auditor that states the auditor's inability to draw a conclusion about the accuracy of a company's financial records.
Disclaimer of the implied warranty of fitness for a particular purpose. The disclaimer of an implied warranty of particular purpose by language such as "as is" or general language that is in writing.
Disclaimer of the implied warranty of merchantability. The disclaimer of an implied warranty of merchantability by language such as "as is" or language that expressly mentions the term merchantability.
Discovery. A legal process during which each party engages in various activities to discover facts of the case from the other party and witnesses prior to trial.
Discrimination. Acts by employers, universities, public accommodations, and others that treats a person or a class of persons differently because of their race, color, national origin, gender, religion, age, disability, or other classes protected by law.
Dishonored instrument. An instrument that is presented for payment and payment is refused.
Disparagement. False statements about a competitor's products, services, property, or business reputation. Also known as trade libel, product disparagement, and slander of title.
Disparate-impact discrimination. A form of discrimination that occurs when an employer discriminates against an entire protected class. An example would be discrimination in which a racially neutral employment practice or rule causes an adverse impact on a protected class.
Disparate-treatment discrimination. A form of discrimination that occurs when an employer discriminates against a specific individual because of his or her race, color, national origin, sex, or religion.
Disposable income. For bankruptcy purposes, income that is determined by taking the debtor's actual income and subtracting expenses for a typical family the same size as the debtor's family, as determined by government tables.
Disposition of collateral. A secured creditor's repossession of collateral on a debtor's default and selling, leasing, or otherwise disposing of it in a commercially reasonable manner.
Dissenting opinion. An opinion written by a justice who does not agree with a decision of the majority of the justices wherein the justice sets forth the reasons for his or her dissent.
Dissenting shareholder appraisal rights. The rights of shareholders who object to a proposed merger, share exchange, or sale or lease of all or substantially all of the property of a corporation to have their shares valued by the court and receive cash payment of this value from the corporation; also called appraisal rights.
Dissolution of a corporation. The process of ending a corporation's existence.
Dissolution of a general partnership. The change in the relationship of partners caused by any general partner ceasing to be associated in the carrying on of the business.
Dissolution of a limited partnership. The change in the relationship of partners caused by any general partner ceasing to be associated in the carrying on of the business.
Distinctive. A word or a design that is unique and therefore qualifies as a trademark.
Distribution of assets. Rules that set forth the priority for the distribution of assets on the termination of legal entities such as general partnerships, limited partnerships, corporations, limited liability companies, and a limited liability partnerships.
Distributional interest. A member's ownership interest in a limited liability company (LLC) that entitles the member to receive distributions of money and property from the LLC.
Distributorship franchise. A business in which a franchisor manufactures a product and licenses a franchisee to distribute the product to the public.
District. The area served by a U.S. District Court.
Diversity of citizenship. A means for bringing a lawsuit in federal court that involves a nonfederal question but where the parties are (1) citizens of different states or (2) a citizen of a state and a citizen or subject of a foreign country.
Dividend. A distribution of profits of a corporation to shareholders.
Dividend preference. The right to receive a fixed dividend at stipulated periods during the year (e.g., quarterly).
Division of markets. A restraint of trade in which competitors agree that each will serve only a designated portion of the market; also known as market sharing. This is a per se violation of Section 1 of the Sherman Act as an unreasonable restraint of trade.
Divorce. A court order that terminates a marriage.
D.O.C. (Drive-other coverage). A clause that can be added to automobile insurance that protects the insured while driving other automobiles (e.g., rental cars).
Doctrine of sovereign immunity. A doctrine that states that countries are granted immunity from suits in courts of other countries.
Document of title. A document, such as a warehouse receipt or bill of lading, that is required in some transactions of pickup and delivery.
Dodd-Frank Wall Street Reform and Consumer Protection Act. A federal statute that reorganizes the federal government's supervision of the banking system, correct abuses in the banking system, regulates previous unregulated financial products and institutions, ends abusive practices in the securities industry, establishes new federal consumer-debtor financial protection laws, and adds a new federal consumer protection agency to protect consumers from abusive lending practices.
Doha Development Agenda. A round of trade negotiations among World Trade Organization (WTO) members to improve the trading prospects of developing countries.
Dollar damages. Monetary damages that are awarded for breach of contract.
Domain name. A unique name that identifies an individual's or company's website.
Domestic corporation. A corporation in the state in which it is organized.
Domestic limited liability company (Domestic LLC). A limited liability company (LLC) in the state in which it is organized.
Domestic limited liability partnership (Domestic LLP). A limited liability partnership (LLP) in the state in which it is organized.
Domestic limited partnership. A limited partnership in the state in which it is organized.
Dominant estate. The land that benefits from an easement.
Dominant party. A person who has a dominant position over another person who takes advantage of the other person's mental, emotional, or physical weakness and unduly influences that person to enter into a contract.
Dominican Republic–Central America Free Trade Agreement (DR-CAFTA). An association of the Dominican Republic, several Central American countries, and the United States designed to reduce tariffs and trade barriers among member nations.
Donative intent. The intent of a donor to make a gift.
Donee. A person who receives a gift.
Donee beneficiary. A third party on whom a benefit is to be conferred under a donee-beneficiary contract.
Donee beneficiary contract. A contract entered into with the intent to confer a benefit or gift on an intended third party.
Donor. A person who gives a gift.
Do-Not-Call Implementation Act. A federal statute that required the Federal Trade Commission (FTC) to create and administer the national do-not-call registry.
Do-Not-Call Registry. A federal registry on which consumers can place their names to free themselves from most unsolicited commercial telephone calls.
Dormant Commerce Clause. A name given to a situation that occurs when the federal government has chosen not to regulate an area of interstate commerce that it has the power to regulate under its Commerce Clause powers.
Double Jeopardy Clause. A clause of the Fifth Amendment to the U.S. Constitution that protects persons from being tried twice for the same crime.
Double net lease. A lease arrangement in which the tenant is responsible for paying rent, property taxes, and utilities.
Double taxation. Taxation that occurs where there is a C corporation because one tax is paid at the corporate level and another tax is paid on dividends received by shareholders on their personal income tax forms.
Draft. A three-party instrument that is an unconditional written order by one party (drawer) that orders a second party (drawee) to pay money to a third party (payee).
Drawee of a check. The financial institution where the drawer of a check has his or her account and who has been ordered to pay the check to a payee.
Drawee of a draft. The party who must pay the money stated in the draft; also called the acceptor of a draft.
Drawer of a check. The checking account holder and writer of a check.
Drawer of a draft. The party who writes the order for a draft.
Drug Amendment. An amendment to the Food, Drug, and Cosmetic Act (FDCA) that gives the Food and Drug Administration (FDA) broad powers to license new drugs in the United States.
Dual agency. A situation that occurs when an agent acts for two or more different principals in the same transaction. This practice is generally prohibited unless all the parties involved in the transaction agree to it.
Dual-class stock structure. Occurs where a corporation issues two types of equity securities that have different voting rights.
Dual-purpose mission. An errand or another act that a principal requests of an agent while the agent is on his or her own personal business.
Due diligence defense. A defense that accountants, lawyers, directors, managers, and others can assert, which, if proven, avoids liability under Section 11(a) of the Securities Act of 1933.
Due Process Clause. A clause that provides that no person shall be deprived of "life, liberty, or property" without due process of the law.
Dues checkoff. A situation in which, on proper notification by a labor union, employers are required to deduct union dues or agency fees from labor union employees' wages and forward these dues to the union.
Durable power of attorney. A power of attorney that remains effective even though the principal becomes incapacitated.
Duration. The length of time that is expressly stated in a contract or that is implied by the facts and circumstances of the case.
Duress. A situation in which one party threatens to do a wrongful act unless the other party enters into a contract.
Duty not to commit waste. A duty of a tenant not to commit waste to leased premises that causes substantial and permanent damage to the leased premises. Waste does not include ordinary wear and tear.
Duty not to disturb other tenants. A duty of a tenant not to disturb other tenants in the building. A landlord may evict a tenant who interferes with the use and quiet enjoyment of other tenants.
Duty not to interfere with a tenant's right to quiet enjoyment. A duty that a landlord owes to a tenant not to interfere with a tenant's right to quiet enjoyment of the leased premises.
Duty not to use leased premises for illegal or nonstipulated purposes. A duty of a tenant not to use leased premises for unlawful purposes (e.g., illegal gambling casino) or nonstipulated purposes (e.g., operating a restaurant in a residence).
Duty of care of corporate officers and directors. A duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation.
Duty of care of general partners. The obligation partners owe to use the same level of care and skill that a reasonable person in the same position would use in the same circumstances. A breach of the duty of care is negligence.
Duty of care of individuals. The obligation people owe each other not to cause any unreasonable harm or risk of harm.
Duty of care of members of a limited liability company (LLC). A duty owed by a member of a member-managed limited liability company (LLC) and a manager of a manager-managed LLC not to engage in (1) a known violation of law, (2) intentional conduct, (3) reckless conduct, or (4) grossly negligent conduct that injures the LLC.
Duty of great care. A duty owed by a bailee in a gratuitous bailment for the sole benefit of the bailee not to be slightly negligent in caring for the bailed goods; also called duty of utmost care.
Duty of loyalty of agents. A fiduciary duty owed by an agent not to act adversely to the interests of the principal.
Duty of loyalty of corporate officers and directors. A duty that directors and officers of a corporation owe not to act adversely to the interests of the corporation and to subordinate their personal interests to those of the corporation and its shareholders.
Duty of loyalty of general partners. A duty that a general partner owes not to act adversely to the interests of the partnership.
Duty of loyalty of members of a limited liability company (LLC). A duty owed by a member of a member-managed LLC and a manager of a manager-managed LLC to be honest in his or her dealings with the LLC and not act adversely to the interests of the LLC.
Duty of obedience of corporate officers and directors. A duty that directors and officers owe to their corporation to act within the authority conferred on them by state corporation codes, the articles of incorporation, the corporate bylaws, and the resolutions adopted by the board of directors.
Duty of obedience of general partners. A duty that requires partners to adhere to the provisions of the partnership agreement and the decisions of the partnership.
Duty of reasonable care. A duty owed by a bailee in a mutual benefit bailment for benefit both parties. This means that the bailee is liable for any goods that are lost, damaged, or destroyed because of his or her negligence; also known as the duty of ordinary care.
Duty of restitution. A duty of an adult when a minor has disaffirmed a contract to return any money, property, or other valuables received from the minor, or if the consideration has been sold or has depreciated in value, then to pay the minor the cash equivalent; a minor owes a duty of restitution if the minor's intentional, reckless, or grossly negligent conduct caused the loss of value to the adult's property or if the minor misrepresented his or her age when entering into a contract.
Duty of restoration. A duty of a minor who has disaffirmed a contract to return the goods or property he or she has received from the other party in the condition it is in at the time of disaffirmance.
Duty of slight care. A duty owed by a bailee in a gratuitous bailment for the sole benefit of the bailor not to be grossly negligent in caring for the bailed goods.
Duty of strict liability of a common carrier. In a common carrier bailment arrangement, the duty owed by a common carrier whereby if the bailed goods are lost, damaged, destroyed, or stolen, the common carrier is liable even if the loss or damage was not due to its fault.
Duty of strict liability of an innkeeper. In a situation involving an innkeeper, a common law rule that makes innkeepers strictly liable to guests for personal property that is lost or stolen from the innkeeper's premises even if the loss was not due to the innkeeper's fault.
Duty to account. A duty that an agent owes to maintain an accurate accounting of all transactions undertaken on the principal's behalf; also known as the duty of accountability.
Duty to compensate. A duty that a principal owes to pay an agreed-on amount to the agent either on the completion of the agency or at some other mutually agreeable time.
Duty to cooperate. Unless otherwise agreed, the duty of a principal to cooperate with and assist the agent in the performance of the agent's duties and the accomplishment of the agency.
Duty to defend. A duty of the insurer to defend the insured against lawsuits or legal proceedings that involve a claim within the coverage of the insurance policy.
Duty to deliver possession. A duty a landlord owes to deliver possession of the leased premises to the lessee.
Duty to indemnify. A duty of a principal to indemnify the agent for any losses the agent suffers because of the principal's conduct.
Duty to inform. A duty a general partner owes to inform his or her co-partners of all information he or she possesses that is relevant to the affairs of the partnership.
Duty to maintain the leased premises. A duty of a landlord to maintain the leased premises as provided in the lease, by express law, and as implied by law.
Duty to notify. A duty of an agent to notify the principal of important information concerning the agency.
Duty to pay. A duty of an insurer to pay legitimate claims up to the insurance policy limits.
Duty to pay rent. A duty of a commercial or residential tenant to pay the agreed-on amount of rent for the leased premises to the landlord at the agreed-on time and place.
Duty to perform. An agent's duty to a principal that includes (1) performing the lawful duties expressed in the contract and (2) meeting the standards of reasonable care, skill, and diligence implicit in all contracts.
Duty to reimburse. Unless otherwise agreed, the duty of a principal to reimburse the agent for expenses incurred by the agent if the expenses were (1) authorized by the principal, (2) within the scope of the agency, and (3) necessary to discharge the agent's duties in carrying out the agency.
Easement. A given or required right to make limited use of someone else's land without owning or leasing it.
Easement appurtenant. An easement that is created when the owner of one piece of land is given an easement over an adjacent piece of land.
Easement by grant. An easement that is created when the owner of land expressly grants another party an easement across his property.
Easement by implication. An easement that is created when an owner subdivides a piece of property that has a well, path, or road on it that serves the entire parcel and the purchasers of the subdivided pieces of property have an implied easement to use the well, path, or road.
Easement by necessity. An implied easement that gives a party who owns a piece of "landlocked" property that does not have any egress out of or ingress into the property an easement to cross a surrounding piece of property to reach a road so that the owner of the landlocked property can enter and exit their property.
Easement by prescription. An implied easement that is given to a property owner to use a road that crosses another person's property if the requirements for adverse possession are met.
Easement by reservation. An express easement that is created when an owner of land sells the property but retains an easement on the sold land.
Easement in gross. An easement that authorizes a person who does not own adjacent land the right to use another person's land.
EB-1 visa. A visa issued by the U.S. government that allows U.S. employers to employ foreign nationals in the United States who possess extraordinary ability for certain types of employment, such as having extraordinary ability in the sciences, arts, education, business, or athletics; outstanding professors and researchers; and multinational managers or executives employed by a firm outside the United States and who seek to continue to work for that firm in the United States.
Economic Espionage Act (EEA). A federal statute that makes it a crime for any person to convert a trade secret for his or her own or another's benefit, knowing or intending to cause injury to the owners of the trade secret.
Economic injury. Injury that is economic in nature that is usually compensated by monetary damages.
EDGAR. The electronic data and record system of the Securities and Exchange Commission (SEC).
Effect of illegality. A doctrine that states that the courts will refuse to enforce or rescind an illegal contract and will leave the parties where it finds them.
Effective date. The date on which a registration of securities filed with the Securities and Exchange Commission (SEC) becomes effective.
Effects on interstate commerce test. A test developed by the U.S. Supreme Court to determine whether commerce is interstate commerce that can be regulated by the federal government.
Eighth Amendment to the U.S. Constitution. An amendment to the U.S. Constitution that protects criminal defendants from cruel and unusual punishment.
Electoral College. A group of persons composed of representatives appointed by state delegations to vote for a presidential candidate.
Electronic. Relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.
Electronic agent. A computer program or an electronic or other automated means used independently to initiate an action or respond to electronic records or performances in whole or in part, without review or action by an individual.
Electronic arbitration (E-arbitration). The arbitration of a dispute using online arbitration services.
Electronic commerce (E-commerce). The sale of goods and services or the licensing of intellectual property by computer over the Internet.
Electronic Communications Privacy Act (ECPA). A federal statute that makes it a crime, without the victim's consent, to intercept an electronic communication at the point of transmission, while in transit, when stored by a router or server or after receipt by the intended recipient. There are some exceptions to this law.
Electronic contract (E-contract). A contract that is formed electronically.
Electronic contract law (E-contract law). Contract law that is based on electronic contracts (e-contracts) and electronic licenses (e-licenses).
Electronic court (E-court or Virtual court). A court that either mandates or permits the electronic filing of pleadings, briefs, and other documents related to a lawsuit; also called a virtual courthouse.
Electronic dispute resolution (E-dispute resolution). Use of online alternative dispute resolution services to resolve a dispute.
Electronic filing (E-filing). The electronic filing of pleadings, briefs, and other documents related to a lawsuit.
Electronic financing statement (E-financing statement). A financing statement in personal property that is electronic.
Electronic Fund Transfer Act (EFTA). A federal statute that regulates consumer electronic funds transfers.
Electronic funds transfer system (EFTS). Computer and electronic technology that makes it possible for banks to offer electronic payment and collection systems to bank customers.
Electronic initial public offering (E-public offering or E-IPOs). The process of an issuer selling shares of stock to the public over the Internet.
Electronic lease contract (E-lease contract). A contract for the lease of goods that is in electronic form.
Electronic license (E-license). A contract whereby the owner of software or a digital application grants limited rights to the owner of a computer or digital device to use the software or digital application for a limited period and under specified conditions.
Electronic licensee (E-licensee). The owner of a computer or digital device to whom an electronic license (e-license) is granted to use another's software program or digital application.
Electronic licensor (E-licensor). The owner of a software program or digital application that grants a license to someone to use the software program or digital application.
Electronic mail (E-mail). Electronic written communication between individuals and businesses using computers connected to the Internet.
Electronic mail contracts (E-mail contracts). Contracts that are formed using e-mail.
Electronic mediation (E-mediation). The mediation of a dispute using online mediation services.
Electronic record. A record that is created, generated, sent, communicated, received, or stored by electronic means.
Electronic sales contract (E-sales contract). A contract for the sale of goods that is in electronic form.
Electronic secured transaction (E-secured transaction). A secured transaction that is created electronically.
Electronic securities transactions (Esecurities transactions). The issuing of securities, trading in securities, disseminating information to investors, managing securities accounts online, and other securities activities are being conducted electronically.
Electronic signature (E-signature or Digital signature). A signature that is inscribed using an electronic means.
Electronic Signatures in Global and National Commerce Act (E-Sign Act). A federal statute that (1) recognizes electronic contracts as meeting the writing requirement of the Statute of Frauds and (2) recognizes and gives electronic signatures -- e-signatures -- the same force and effect as pen inscribed signatures on paper.
Emancipation. A minor's act of legally separating from his or her parents and providing for him- or herself.
Embezzlement. The fraudulent conversion of property by a person to whom that property was entrusted.
Emerging growth company (EGC). A class of public company used by entrepreneurs and high-tech companies that meet certain requirements who then can sell securities to the public without having to meet many of the issuer requirements of the the Securities and Exchange Commission (SEC) that would be applicable to larger companies.
Eminent domain. The government's power to take private property for public use, provided that just compensation is paid to the private property holder.
Employee Retirement Income Security Act (ERISA). A federal statute designed to prevent fraud and other abuses associated with private pension funds.
Employee stock ownership plan (ESOP). A plan that places a certain percentage of a corporation's securities in it for distribution to employees of the corporation.
Employer–employee relationship. A relationship that results when an employer hires an employee to perform some task or service but the employee has not been authorized to enter into contracts on behalf of his or her employer.
Employer lockout. An act of an employer to prevent employees from entering the work premises when the employer reasonably anticipates a strike.
Employment discrimination. Discrimination by an employer against a prospective employee or employee based on race, national origin, color, gender, religion, age, disability, veteran's status, and other protected classes.
Employment-related injury. A requirement that employees who are awarded workers' compensation benefits have suffered from injuries that have arisen out of and in the course of their employment.
En banc review. The review of a decision of a three-judge panel by the all of the justices of a U.S. courts of appeals.
Encryption technology. Technology and software that protect copyrighted works from unauthorized access.
Endangered Species Act. A federal statute that protects endangered and threatened species of wildlife.
Endorsement. A document that modifies an insurance policy and becomes part of the insurance policy; also called a rider.
Engagement. A period of time that begins when a person proposes marriage to another person, the other person accepts, and the person who proposed gives the other person an engagement ring (usually a diamond ring); the engagement period ends when the parties are married or if one or both of the parties terminate the engagement.
Engagement. Occurs when an accountant and client enter into a contract for the provision of accounting services by the accountant.
English common law. Law developed by judges who issued their opinions when deciding a case. The principles announced in these cases became precedent for deciding similar cases in the future.
English rule. A rule that stipulates that where there have been successive assignments of the same contract right, the first person to give notice to the obligor prevails.
Entrepreneur. A person who forms and operates a new business either by him- or herself or with others.
Entrustment rule. A rule that states that if the owner of goods entrusts the possession of these goods to a merchant who deals in goods of that kind (e.g., for repair or consignment), the merchant has the power to transfer all rights (including title) in the goods to a buyer in the ordinary course of business. The real owner cannot reclaim the goods from this buyer.
Enumerated powers. Certain powers delegated to the federal government.
Environmental impact statement (EIS). A document that must be prepared for any proposed legislation or major federal action that significantly affects the quality of the human environment.
Environmental protection. Actions and laws that protect the nation's and world's air and water from pollution, reduce the harm from hazardous wastes, and protect wildlife.
Environmental Protection Agency (EPA). A federal administrative agency created by Congress to coordinate the implementation and enforcement of the federal environmental protection laws.
Environmental protection laws. Laws enacted by federal and state governments to protect air and water from pollution, reduce the harm from hazardous wastes, and protect wildlife.
Equal Access to Justice Act. A federal statute that protects persons from harassment by federal administrative agencies and provides monetary penalties.
Equal Credit Opportunity Act (ECOA). A federal statute that prohibits discrimination in the extension of credit based on sex, marital status, race, color, national origin, religion, age, or receipt of income from public assistance programs.
Equal dignity rule. A rule that says that real estate agents' contracts to sell the real property of another are covered by the Statute of Frauds and must be in writing to be enforceable.
Equal Employment Opportunity Commission (EEOC). A federal administrative agency that is responsible for enforcing most federal antidiscrimination laws.
Equal opportunity in employment. The right of all employees and job applicants (1) to be treated without discrimination and (2) to be able to sue employers if they are discriminated against.
Equal Pay Act. A federal statute that protects both sexes from pay discrimination based on sex. It extends to jobs that require equal skill, equal effort, equal responsibility, and similar working conditions.
Equal Protection Clause. A clause that provides that a state cannot "deny to any person within its jurisdiction the equal protection of the laws."
Equipment. Tangible personal property such as trucks, cranes, assembly line equipment, and other equipment.
Equitable distribution. A law used by many states by which the court orders a fair distribution of marital property to the divorcing spouses.
Equitable remedy. A remedy that is available if there has been a breach of contract that cannot be adequately compensated through a legal remedy or to prevent unjust enrichment.
Equity. A doctrine that permits judges to make decisions based on fairness, equality, moral rights, and natural law.
Equity securities. Representation of ownership rights to a corporation; also called stocks.
Equivocal response. An offeree's response to an offer that is not clear, unambiguous, or has more than one possible meaning. An offeree's equivocal response to an offer does not create a contract.
Error of law. Error regarding law decisions made by a court during a trial.
Escheat. A rule of state law which provides that if the deceased dies intestate without a will or trust and there are no surviving relatives, then the deceased's property belongs to the state.
Escott v. BarChris Construction Corporation. A decision of a court that found certain defendants liable for material misrepresentations and omissions made by an issuer of securities in a registration statement that was filed with the Securities and Exchange Commission (SEC); the court rejected many of the defendants proffered due diligence defenses.
Establishment Clause. A clause of the First Amendment to the U.S. Constitution that prohibits the government from either establishing a state religion or promoting one religion over another.
Estate in land. Ownership rights in real property; the bundle of legal rights that the owner has to possess, use, and enjoy the property; also known as estate.
Estate pour autre vie. A life estate that is measured by the life of a third party.
Estop. A doctrine that prevents a promisor from revoking his or her promise even though there is lack of consideration.
Estopped. A doctrine that states that when an apparent agency has been established the principal is prevented from denying the agency relationship.
Estray statute. A statute that permits a finder of mislaid or lost property to clear title to the property if certain prescribed legal formalities are met.
Ethical fundamentalism. A theory of ethics that says a person looks to an outside source for ethical rules or commands.
Ethical relativism. A moral theory that holds that individuals must decide what is ethical, based on their own feelings about what is right and wrong.
Ethics. A set of moral principles or values that governs the conduct of an individual or a group.
Ethics and the law. The relationship between ethics and the law. Sometimes the rule of law and the rule of ethics demand the same response by a person confronted with a problem, while in some situations the law may permit an act that is ethically wrong.
Euro. A single monetary unit that has been adopted by many countries of the EU that comprise the eurozone.
European Union (EU). A regional international organization that comprises many countries of Western and Eastern Europe and was created to promote peace and security as well as economic, social, and cultural development.
European Union Commission. A commission that is independent of its member nations, that has been delegated substantial powers, including authority to enact legislation and to take enforcement actions to ensure member nations' compliance with the European Union treaty.
Eurozone. Countries of the European Union that use the euro as their currency.
Eviction proceeding. A legal process that a landlord must complete to evict a holdover tenant. Also known as an unlawful detainer action.
Exclusionary rule. A rule that says evidence obtained from an unreasonable search and seizure can generally be prohibited from introduction at a trial or an administrative proceeding against the person searched.
Exclusions from coverage. A clause in an insurance policy that expressly stipulates the risks that are not covered by the insurance policy.
Exclusive agency contract. A contract a principal and agent enter into that says the principal cannot employ any agent other than the exclusive agent.
Exclusive jurisdiction. Sole jurisdiction of a federal court to hear and decide cases involving specified subject matters.
Exclusive license. A license in which for the specified duration of the license, the licensor will not grant to any other person rights in the same information.
Exclusive possession. A lessee's exclusive right to leased premises for the term of the lease or until the tenant defaults on the obligations under the lease.
Exclusive remedy. A sole remedy for employees who are covered by workers' compensation and have been injured on the job. Thus, workers have given up their right to sue their employer for damages. There are several exceptions to this rule.
Exclusive territory. A geographical area assigned by a franchisor for a franchisee to serve which is exclusive to the franchisee; the franchisor cannot grant other franchises in this territory.
Exculpatory clause. A contractual provision that relieves one (or both) of the parties to a contract from tort liability for ordinary negligence; also known as a release of liability clause.
Executed contract. A contract that has been fully performed on both sides; a completed contract.
Execution. A postjudgment court order that permits the seizure of the debtor's property that is in the possession of the debtor.
Executive branch (President). The part of the government that consists of the president and vice president.
Executive exemption. An exemption from federal minimum wage and overtime pay requirements that applies to executives who are compensated on a salary basis, who engage in management, have authority to hire employees, and regularly direct two or more employees.
Executive order. An order issued by a member of the executive branch of the government.
Executive power. The power of an administrative agency to investigate and prosecute possible violations of statutes, administrative rules, and administrative orders.
Executor (male) or Executrix (female]]). A personal representative who is named in a testator's or testatrix's will who is appointed to administer the estate during the probate of a will.
Executory contract. A contract that has not been fully performed by either or both sides.
Executory contract. In bankruptcy law, a contract that has not been fully performed. With the bankruptcy court's approval, a debtor may reject executory contracts in bankruptcy.
Exempt property. Property that may be retained by a debtor pursuant to federal or state law that does not become part of the bankruptcy estate.
Exempt securities. Securities that are exempt from registration with the Securities and Exchange Commission (SEC).
Exempt transactions. Transactions in which securities are issued but are exempt from registration with the Securities and Exchange Commission (SEC) because they meet specified requirements. The most widely used exempt transactions include the non-issuer exemption, intrastate offering exemption, private placement exemption, and small offering exemption.
Exon-Florio Foreign Investment Provision. A federal law that mandates that the president of the United States suspend, prohibit, or dismantle the acquisition of a U.S. business by foreign investors if there is credible evidence that the foreign investor might take action that threatens to impair the national security.
Expertised portion. A portion of a registration statement that is filed with the Securities and Exchange Commission (SEC) that is prepared by accountants and other experts.
Express agency. An agency that occurs when a principal and an agent expressly agree to enter into an agency agreement with each other.
Express authorization. A means of communication for accepting an offer to enter into a contract that is specified in the offer (e.g., registered mail).
Express bailment. A bailment that is either written or oral.
Express condition. A condition in a contract that the parties have agreed on.
Express contract. An agreement that is expressed in written or oral words.
Express easement. An easement that is expressly created.
Express powers. Powers given to a corporation by (1) the U.S. Constitution, (2) state constitutions, (3) federal statutes, (4) state statutes, (5) articles of incorporation, (6) bylaws, and (7) resolutions of the board of directors.
Express terms. Terms in offers and contracts that expressly identify the parties, the subject matter of the offer or contract, the consideration to be paid by the parties, and the time of performance, as well as other terms of the offer and contract.
Express trust. A trust created voluntarily by the settlor.
Express warranty. A warranty that is created when a seller or lessor makes an affirmation that the goods he or she is selling or leasing meet certain standards of quality, description, performance, or condition.
Ex-ship (From the carrying vessel). A shipping term that requires the seller to bear the expense and risk of loss until the goods are unloaded from the ship at its port of destination.
Extension. A provision that allows a debtor a longer period of time to pay his or her debts.
Extension clause. A clause in an instrument that allows the date of maturity of an instrument to be extended to sometime in the future.
Extension of credit. Occurs where a lender loans money to a borrower.
Extortion. A threat to expose something about another person unless that other person gives money or property; often referred to as blackmail.
Extortion under color of official right. Extortion of a public official.
Extreme duress. A real (universal) defense that can be raised against holders and holders in due course (HDCs) to the enforcement of a negotiable instrument.
Failing company doctrine. A doctrine that permits a competitor to merge with another competitor that is failing company if there is no other reasonable alternative for the failing company.
Failure to provide adequate instructions. A defect that occurs when a manufacturer does not provide detailed directions for safe assembly and use of a product.
Failure to warn. A defect that occurs when a manufacturer does not place a warning on the packaging of products that could cause injury if the danger is unknown.
Fair and Accurate Credit Transactions Act. A federal statute that gives consumers the right to obtain one free credit report each year from the credit reporting agencies, permits consumers to purchase their credit score, and allows consumers to place fraud alerts in their credit files.
Fair Credit and Charge Card Disclosure Act. An amendment to the Truth-inLending Act (TILA) that requires disclosure of certain credit terms on credit- and charge-card solicitations and applications.
Fair Credit Billing Act (FCBA). A federal statute that regulates billing errors involving consumer credit and requires that creditors promptly acknowledge in writing consumer billing complaints and investigate billing errors.
Fair Credit Reporting Act (FCRA). An amendment to the Truth-in-Lending Act (TILA) that protects customers who are subjects of a credit report by setting out guidelines for credit bureaus.
Fair Debt Collection Practices Act (FDCPA). A federal statute that protects consumer debtors from abusive, deceptive, and unfair practices used by debt collectors.
Fair Employment Practice Agency (FEPA). A state agency that some states have where a complainant may file his or her employment discrimination claim instead of with the federal Equal Employment Opportunity Commission (EEOC).
Fair Housing Act. A federal statute that makes it unlawful for a party to refuse to rent or sell a dwelling to any person because of his or her race, color, national origin, sex, or religion.
Fair Labor Standards Act (FLSA). A federal statute enacted to protect workers. It prohibits child labor and sets minimum wage and overtime pay requirements.
Fair price rule. A rule that says any increase in price paid for shares tendered must be offered to all shareholders, even those who have previously tendered their shares.
Fair use doctrine. A doctrine that permits certain limited use of a copyright by someone other than the copyright holder without the permission of the copyright holder.
False and deceptive advertising. Advertising that contains misinformation or omits important information that is likely to mislead a reasonable consumer or that makes unsubstantiated claims.
False and misleading labeling. Labeling that contains misinformation or omits important information that is likely to mislead a reasonable consumer or that makes unsubstantiated claims. The Food, Drug, and Cosmetic Act (FDCA) prohibits false and misleading labeling of food products.
False Claims Act. A federal statute that permits private parties to sue companies for fraud on behalf of the government and share in any monetary recovery. Also known as the Whistleblower Statute.
False imprisonment. The intentional confinement or restraint of another person without authority or justification and without that person's consent.
False pretenses. A crime that involves obtaining title to property through deception or trickery; also known as criminal fraud or deceit.
Family and Medical Leave Act (FMLA). A federal statute that guarantees workers up to 12 weeks of unpaid leave in a 12-month period to attend to family and medical emergencies and other specified situations.
Family Smoking Prevention and Tobacco Control Act. A federal statute that requires graphic warnings to be placed on cigarette packages, cigarette cartons, and cigarette advertising that warn of the risks of smoking.
Family Support Act. A federal statute that provides for the automatic wage withholding of child support payments from a noncustodial parent's income.
[[F.A.S. port of shipment ((Free alongside ship port of shipment, or Vessel port of shipment. A shipping term that requires the seller to deliver and tender the goods alongside the named vessel or on the dock designated and provided by the buyer.
Farm products. Tangible personal property such as crops, livestock, aquatic goods, and supplies produced in farming operations.
Fault rule. In an engagement situation, a rule that states that if the person who gave the engagement ring breaks off the engagement, the other side gets to keep the engagement ring; if the person who has accepted an engagement ring breaks off the engagement, that person must return the engagement ring.
Federal administrative agencies. Administrative agencies that are created by the executive or legislative branch of federal government.
Federal antitrust statutes. Federal statutes that regulate anticompetitive behavior and monopoly business practices.
Federal Arbitration Act (FAA). A federal statute that provides for the enforcement of most arbitration agreements.
Federal Deposit Insurance Corporation (FDIC). A government agency that insures deposits at most banks and savings institutions ("insured banks") in the United States.
Federal government. The government of the United States of America.
Federal Insurance Contributions Act (FICA). A federal statute that requires certain employees to make contributions (pay taxes) into the Social Security fund.
Federal Patent Statute. A federal statute that establishes the requirements for obtaining a patent and protects patented inventions from infringement.
Federal question case. A means for bringing a lawsuit in federal court because it arises under the U.S. Constitution, treaties, federal statutes, federal regulations, or executive orders.
Federal Register. A public register in which federal administrative agencies must publish agency procedures, rules, regulations, interpretations, and other such information.
Federal Reserve System. A system of 12 regional Federal Reserve banks that assist other banks in the collection of checks.
Federal securities statutes. Federal statutes that regulate the issuance and trading in securities.
Federal statutes. Statutes enacted by the U.S. Congress.
Federal Trade Commission (FTC). A federal administrative agency empowered to enforce the Federal Trade Commission Act (FTC Act) and other federal consumer protection statutes.
Federal Trade Commission Act (FTC Act). A federal statute, enacted in 1914, that creates certain consumer protections, regulates business conduct, prohibits unfair and deceptive practices, and grants certain antitrust powers to the Federal Trade Commission (FTC).
Federal Trade Commission HDC rule (FTC HDC rule). A rule adopted by the Federal Trade Commission (FTC) that eliminates holder in due course (HDC) status with regard to negotiable instruments arising out of certain consumer credit transactions. This subjects the HDC of a consumer credit instrument to all the defenses and claims of the consumer.
Federal Trademark Dilution Act (FTDA). A federal statute that protects famous marks from dilution, erosion, blurring, or tarnishing.
Federal Unemployment Tax Act (FUTA). A federal statute that requires employers to pay unemployment taxes; unemployment compensation is paid to workers who are temporarily unemployed.
Federal Water Pollution Control Act (FWPCA). A federal statute that regulates water pollution.
Federalism. The U.S. form of government in which the federal government and the 50 state governments share powers.
Fee simple absolute. A type of ownership of real property that grants the owner the full bundle of legal rights that a person can hold in real property; also known as fee simple.
Fee simple defeasible. A type of ownership of real property that grants the owner all the incidents of a fee simple absolute except that it may be taken away if a specified condition occurs or does not occur; also known as qualified fee.
Felony. The most serious type of crime; inherently evil crime. Most crimes against persons and some business-related crimes are felonies.
Felony murder rule. A rule that stipulates that if a murder is committed during the commission of another crime, even though the perpetrator did not originally intend to commit murder, the perpetrator is liable for the crime of murder.
Fictitious business name statement. A document that is filed with the state that designates a trade name of the business, the name and address of the applicant, and the address of the business; also known as certificate of trade name.
Fictitious payee rule. A rule that states that a drawer or maker is liable on a forged or unauthorized indorsement of a fictitious payee.
Fiduciary duties of agents. Agents' fiduciary duties of loyalty and care when acting on behalf of their principals.
Fiduciary duties of directors and officers. Duties of loyalty, honesty, integrity, trust, and confidence owed by directors and officers to their corporate employers. The duties the directors and officers of a corporation owe to act carefully when acting on behalf of the corporation.
Fiduciary relationship. A relationship that exists among general partners where they owe each other a duty of loyalty.
Fifth Amendment to the U.S. Constitution. An amendment to the U.S. Constitution that provides that no person "shall be compelled in any criminal case to be a witness against himself." Thus, a person cannot be compelled to give testimony against him- or herself. The right is referred to as the privilege against self-incrimination. The Fifth Amendment also contains the Double Jeopardy Clause that protects persons from being tried twice for the same crime.
Final judgment. Judgment of a trial court entered after all post-trial motions are decided.
Final prospectus. A document that must be made available either in writing or electronically by the issuer of securities to purchasers of issued securities before or at the time of the purchase of the securities.
Final settlement. A situation in which a payer bank (1) pays a check in cash, (2) settles for a check without having a right to revoke the settlement, or (3) fails to dishonor a check within certain statutory time periods.
Finance lease. A three-party lease transaction of goods consisting of a lessor, a lessee, and a supplier.
Financial Stability Oversight Council. A council of federal regulators that monitors systemic risk in the financial system and is empowered to take steps to reduce systemic risk by raising capital requirements of financial institutions, restricting credit extension, and taking other authorized actions.
Financing statement. A document filed by a secured creditor with the appropriate government office that constructively notifies the world of his or her security interest in personal property.
Finding of fact. A decision regarding the facts of a case made by a jury, or if there is no jury, then by the judge.
Firm offer rule. A UCC rule that says that a merchant who (1) makes an offer to buy, sell, or lease goods and (2) assures the other party in a separate writing that the offer will be held open cannot revoke the offer for the time stated or, if no time is stated, for a reasonable time.
First Amendment to the U.S. Constitution. An amendment to the U.S. Constitution that guarantees freedom of speech, freedom to assemble, freedom of the press, and freedom of religion.
First-degree murder. The intentional unlawful killing of a human being by another person with premeditation, malice aforethought, and willful act.
First purchase money mortgage. A mortgage (or deed of trust and note) taken out to purchase a house.
First-to-file rule. A rule that stipulates that the first person to file a patent on an invention receives the patent even though some other party was the first to invent the invention. This rule superseded the first-to-invent rule.
First-to-invent rule. A rule that stipulates that the first person to invent an item or a process is given patent protection over a later inventor who was first to file a patent application. This rule has been superseded by the first-to-file rule.
FISA warrant. A warrant issued by the Foreign Intelligence Surveillance Court (FISA Court) that permit physical and electronic surveillance of Americans or foreigners in the United States who are deemed a threat to national security.
Fixed amount of money requirement. A requirement that a negotiable instrument contain a promise or an order to pay a fixed amount of money. A requirement of a negotiable instrument that ensures that the value of the instrument can be determined with certainty.
Fixed dividend. A preferred dividend that is paid at set periods during the year (e.g., quarterly).
Fixture. Personal property that is permanently affixed to land or buildings.
Flip-in rights plan. A defensive plan of a corporation that provide that existing shareholders of the corporation may convert their shares for a greater number (e.g., twice the value) of debt instruments of the corporation once a specified percent of its shares have been acquired by an acquiring corporation.
Flip-over rights plan. A defensive plan of a corporation that provide that existing shareholders of the corporation may convert their shares for a greater number (e.g., twice the value) of shares of an acquiring corporation once a specified percent of its shares have been acquired by the acquiring corporation.
Floating lien. A security interest in property that was not in the possession of the debtor when the security agreement was executed.
Flow-through taxation. A tax rule that provides that the income and losses of a sole proprietorship, general partnership, limited partnership, limited liability company, limited liability partnership, and S corporation are reported on the owner's personal income tax return.
F.O.B. (Free on board) place of destination. A shipping term that requires the seller to bear the expense and risk of loss of goods until the goods are tendered to the buyer at the place of destination.
F.O.B. (Free on board) point of shipment. A shipping term that requires the seller to arrange to ship the goods and put the goods in the carrier's possession.
Food and Drug Administration (FDA). A federal administrative agency that administers and enforces the federal Food, Drug, and Cosmetic Act and other federal consumer protection laws.
Food, Drug, and Cosmetic Act (FDCA). A federal statute that provides the basis for the regulation of much of the testing, manufacture, distribution, and sale of food, drugs, cosmetics, and medicinal products.
Force majeure clause. A clause in a contract in which the parties specify certain events that will excuse nonperformance.
Foreclosing competition. A situation that occurs in a vertical merger if competitors of the merged firms are prevented (foreclosed) from either selling goods or services to or buying goods or services from the merged firm.
Foreclosure. A legal procedure by which a secured creditor causes the judicial sale of the secured real estate to pay a defaulted loan.
Foreclosure sale. A legal procedure by which a secured creditor causes the judicial sale of the secured real estate to pay a defaulted loan.
Foreign commerce. Commerce with foreign nations.
Foreign Commerce Clause. A clause of the U.S. Constitution that vests Congress with the power "to regulate commerce with foreign nations."
Foreign corporation. A corporation in any state other than the one in which it is organized.
Foreign Corrupt Practices Act. A federal statute that makes it a crime for U.S. companies or their officers, directors, agents, or employees to bribe a foreign official, a foreign political party official, or a candidate for foreign political office, where the bribe is paid to influence the awarding of new business or for the retention of a continuing business activity.
Foreign guest worker. A person from a foreign country who is permitted to work in the United States pursuant to a visa issued by the U.S. government.
Foreign limited liability company (Foreign LLC). A limited liability company (LLC) in any state other than the one in which it is organized.
Foreign limited liability partnership (Foreign LLP). A limited liability partnership (LLP) in any state other than the one in which it is organized.
Foreign limited partnership. A limited partnership in any state other than the one in which it is organized.
Foreign Sovereign Immunities Act (FSIA). A federal statute that exclusively governs suits against foreign nations that are brought in federal or state courts in the United States. It codifies the principle of qualified, or restricted, immunity.
Foreign substance test. A test to determine merchantability based on foreign objects found in food.
Foreseeability standard. A rule that says that an accountant is liable for negligence to third parties who are foreseeable users of the client's financial statements. It provides the broadest standard for holding accountants liable to third parties for negligence.
Forged indorsement. The forged signature of a payee or holder on a negotiable instrument.
Forged instrument. A check with a forged drawer's signature on it.
Forgery. The fraudulent making or alteration of a written document that affects the legal liability of another person.
Form. Contract law that requires that certain contracts must be in a certain form to be enforceable.
Form 1040 U.S. Individual Income Tax Return. A personal income tax form that is filed by a sole proprietor with the federal government that reports his or her personal income.
Form 2553. A form that is filed with the Internal Revenue Service (IRS) to elect Subchapter S federal income tax status for a qualifying corporation.
Form I-9 Employment Eligibility Verification. A form that employers must obtain from every prospective employee, regardless of citizenship or national origin, with supporting documents, that demonstrates whether the prospective employee is either U.S. citizens or otherwise authorized to work in the country (e.g., have proper work visas).
Form S-1. A registration statement that must be filed with the Securities and Exchange Commission (SEC) by companies who intends to issue securities to the public in a public offering that must include information about the company, its business, the company's financial statements, and other relevant information.
Form U-7. A question-and-answer disclosure form that small businesses can complete and file with the Securities and Exchange Commission (SEC) if they plan on raising $1 million or less from a public issue of securities.
Form UCC-1 (UCC financing statement). A uniform financing statement form that is used in all states to perfect a security interest in personal property.
Formal contract. A contract that requires a special form, words, or method of creation.
Formal rule making. Rule making by an administrative agency that involves conducting a trial-like hearing at which parties may present evidence, engage in cross-examination, present rebuttal evidence, and such before the agency decides whether to adopt the proposed rule.
Formal will. A document that contains a declaration of how a person wants his or her property to be distributed on his or her death.
Forum-selection clause. A clause in a contract that designates that a certain court has jurisdiction to hear and decide a case arising out of the contract. Also called a choice of forum clause.
Forum shopping. A party's looking for a favorable court in which to bring a lawsuit without a valid reason for being in that court.
Forward vertical merger. A vertical merger in which the supplier acquires the customer.
Fourteenth Amendment to the U.S. Constitution. An 1868 amendment added to the U.S. Constitution that contains the Due Process, Equal Protection, and Privileges and Immunities clauses.
Fourth Amendment to the U.S. Constitution. An amendment to the U.S. Constitution that protects the rights of the people from unreasonable search and seizure by the government.
Franchise. An arrangement that is established when one party (the franchisor) licenses another party (the franchisee) to use the franchisor's trade name, trademarks, commercial symbols, patents, copyrights, and other property in the distribution and selling of goods and services.
Franchise agreement. An agreement that a franchisor and franchisee enter into that sets forth the terms and conditions of a franchise.
Franchise application. An application filed by a prospective franchisee to obtain a franchise from a franchisor. The application includes detailed financial and other information about the applicant.
Franchisee. A party who is granted a franchise and license by a franchisor in a franchise arrangement; also the licensee.
Franchisor. A party who grants a franchise and license to a franchisee in a franchise arrangement; also the licensor.
Fraud. An event that occurs when one person consciously decides to induce another person to rely and act on a misrepresentation; also called fraudulent misrepresentation.
Fraud by concealment. Fraud that occurs when one party takes specific action to conceal a material fact from another party.
Fraud in the inception. Fraud that occurs if a person is deceived as to the nature of his or her act and does not know what he or she is signing; also known as fraud in the factum or fraud in the execution.
Fraud in the inducement. Fraud that occurs when the party knows what he or she is signing but has been fraudulently induced to enter into the contract.
Fraudulent misrepresentation. An event that occurs when one person consciously decides to induce another person to rely and act on a misrepresentation; also called fraud.
Fraudulent transfer. A transfer of a debtor's property or an obligation incurred by a debtor within two years of the filing of a petition where (1) the debtor had actual intent to hinder, delay, or defraud a creditor or (2) the debtor received less than a reasonable equivalent in value.
Free Exercise Clause. A clause of the First Amendment to the U.S. Constitution that prohibits the government from interfering with the free exercise of religion in the United States.
Freedom of Information Act. A federal statute that gives the public the ability to obtain access to most documents in the possession of federal administrative agencies. Some documents are protected from disclosure because of national security and other reasons.
Freedom of religion. A right established in the First Amendment to the U.S. Constitution.
Freedom of speech. The right to engage in oral, written, and symbolic speech that is protected by the First Amendment to the U.S. Constitution.
Freehold estate. An estate in which the owner has a present possessory interest in the real property. There are three types of freehold estates: fee simple absolute (or fee simple), fee simple defeasible (or qualified fee), and life estate.
Freely transferable. Unless otherwise agreed, the shares of a corporation are freely transferable by a shareholder by sale, assignment, pledge, or gift.
French Civil Code of 1804 (The Napoleonic Code). A civil law based on a code of laws.
Fresh start. The goal of federal bankruptcy law to grant a debtor relief from some of his or her burdensome debts while protecting creditors by requiring the debtor to pay more of his or her debts than would otherwise have been required prior to the 2005 act.
Frolic and detour. A situation in which an agent does something during the course of his or her employment to further his or her own interests rather than the principal's.
FTC franchise notice. A statement required by the Federal Trade Commission (FTC) to appear in at least 12-point boldface type on the cover of a franchisor's required disclosure statement to prospective franchisees.
FTC franchise rule. A rule set out by the Federal Trade Commission (FTC) that requires franchisors to make full presale disclosures to prospective franchisees.
FTC HDC rule. A rule adopted by the Federal Trade Commission (FTC) that eliminates holder in due course (HDC) status with regard to negotiable instruments arising out of certain consumer credit transactions. This subjects the HDC of a consumer credit instrument to all the defenses and claims of the consumer.
Full Faith and Credit Clause. A clause in the U.S. Constitution (Article IV, Section 1) that states that a judgment of a court of one state must be given "full faith and credit" by the courts of another state.
Full warranty. An express warranty made by a seller or lessor of goods that guarantees free repair or replacement of a defective product.
Fully disclosed agency. An agency in which a contracting third party knows (1) that the agent is acting for a principal and (2) the identity of the principal.
Fully disclosed principal. The principal in a fully disclosed agency.
Fully protected speech. Speech that the government cannot prohibit or regulate.
Fundamental changes. Major changes to a corporation's structure, including proxy contests, mergers, sales of assets, hostile tender offers, and such.
Fundamental rights. Rights that are fundamental to citizens such as voting rights.
Funding portal. An Internet website through which an Emerging Growth Company (EGC) may issue securities to the public in a crowd funding offering.
Fungible goods. Goods that are exactly alike, such as the same grade of oil, grain, or cattle.
Future advances. Funds advanced to a debtor from a line of credit secured by collateral. Future advances are future withdrawals from a line of credit.
Future goods. Goods not yet in existence (e.g., ungrown crops, unborn stock animals).
Future interest. The interest in real property that a grantor retains for him- or herself or a third party. Two forms of future interests are reversion and remainder.
Future right. A currently nonexistent right that a person is expected to have in the future.
Gambling statutes. Statutes that make certain forms of gambling illegal.
Gap-filling rule. A rule that says an open term can be "read into" a sales or lease contract.
Garnishee. The third party in a garnishment situation who possesses property of the debtor who is subject to garnishment.
Garnishment. A postjudgment court order that permits the seizure of a debtor's property that is in the possession of third parties.
Garnishor. The creditor in a garnishment situation whose property in the hands of a third party is being garnished.
Gender. A term that is used to distinguish between persons who are male or female.
Gender discrimination (Sex discrimination). Discrimination against a person because of his or her gender.
Gender harassment (Sexual harassment). Lewd remarks, touching, intimidation, posting of indecent materials, or other verbal or physical conduct of a sexual nature that occurs on the job that creates a hostile work environment.
Gender identity discrimination. Discrimination against an individual because that person is transgender.
General Agreement on Tariffs and Trade (GATT). A multilateral treaty that establishes trade agreements and limits tariffs and trade restrictions among its member nations.
General Assembly. The legislative body of the United Nations that is composed of all member nations.
General corporation statutes. State statutes that permit corporations to be formed without the separate approval of the legislature.
General duty standard. An Occupational Safety and Health Administration (OSHA) standard that requires an employer to provide a work environment free from recognized hazards that are causing or are likely to cause death or serious physical harm to employees.
General gift. A gift in a will that does not identify the specific property from which the gift is to be made (e.g., a gift of a certain amount of money).
General government regulation. Laws that regulate businesses and industries collectively; most of the industries and businesses in the United States are subject to these laws (e.g., antidiscrimination laws).
General intent crime. A crime that requires that the perpetrator either knew or should have known that his or her actions would lead to harmful results.
General-jurisdiction trial courts. Courts that hear cases of a general nature that are not within the jurisdiction of limitedjurisdiction trial courts; often referred to as courts of record.
General partners of a general partnership. Partners of a general partnership who invest capital, manage the business, and are personally liable for the partnership's debts; also known simply as partners.
General partners of a limited partnership. Partners in a limited partnership who invest capital, manage the business, and are personally liable for partnership debts.
General partnership. An association of two or more persons to carry on as co-owners of a business for profit; also known as an ordinary partnership.
General partnership agreement. A written agreement that partners sign; also called articles of general partnership.
General power of attorney. A power of attorney where a principal confers broad powers on the agent to act in any matters on the principal's behalf.
General-purpose clause. A clause that can be included in the articles of incorporation that permits the corporation to engage in any activity permitted by law.
General warranty deed (Grant deed). A deed to real property that contains the greatest number of warranties and provides the highest level of protection to a grantee. The seller warrants that he or she owns the property and has the legal right to sell it and that the property is not subject to encumbrances other than those that are disclosed.
Generally Accepted Accounting Principles (GAAPs). Standards for the preparation and presentation of financial statements.
Generally Accepted Auditing Standards (GAASs). Standards promulgated by the American Institute of Certified Public Accountants (AICPA) that establish methods and procedures to be used in conducting audits.
Generally known danger. A defense that acknowledges that certain products are inherently dangerous and are known to the general population to be so.
Generic name. A term for a mark that has become a common term for a product line or type of service and therefore has lost its trademark protection.
Genetic information discrimination. Employment discrimination based on a person's propensity to be stricken by diseases.
Genetic Information Nondiscrimination Act (GINA). A federal statute that makes it illegal for an employer to discriminate against job applicants and employees based on genetic information.
Genuine. The requirement that the consent of a party to a contract not have been obtained by duress, undue influence, or fraud.
Genuineness of assent. The requirement that a party's assent to a contract be genuine.
Geographical market extension merger. A market extension merger between two firms that sell the same products or services but do not sell their products or services in the same geographical areas.
German Civil Code of 1896. A civil law based on a code of laws.
Gift. The voluntary transfer of title to property without payment of consideration by the donee. To be a valid gift, three elements must be shown: (1) donative intent, (2) delivery, and (3) acceptance.
Gift causa mortis. A gift that is made in contemplation of death.
Gift inter vivos. A gift made during a person's lifetime that is an irrevocable present transfer of ownership.
Gift promise. A promise that is unenforceable because it lacks consideration; also known as a gratuitous promise.
Glossary. A section in many contracts that defines many of the words and terms used in the contract.
Going public. A situation that occurs where a company sells securities to the public for the first time.
Good faith. Honesty in the conduct or transaction concerned.
Good faith in the Uniform Commercial Code. An obligation of good faith that every contract or duty within the UCC imposes in its performance or enforcement.
Good faith purchaser for value. A person to whom good title can be transferred from a person with voidable title. The real owner cannot reclaim goods from a good faith purchaser for value.
Good faith subsequent lessee. A person to whom a lease interest can be transferred from a person with voidable title. The real owner cannot reclaim the goods from the subsequent lessee until the lease expires.
Good Samaritan law. A statute that relieves medical professionals from liability for ordinary negligence when they stop and render aid to victims in emergency situations.
Goods. Tangible things that are movable at the time of their identification to a contract.
Government actions. Actions brought by the federal government to enforce federal antitrust laws.
Government contractor defense. A defense that says a contractor who was provided specifications by the government is not liable for any defect in the product that occurs as a result of those specifications.
Government in the Sunshine Act. A federal statute that requires most federal administrative agency meetings to be open to the public. There are some exceptions to this rule.
Government judgment. A government judgment obtained against a defendant for an antitrust violation may be used as prima facie evidence of liability in a private, civil treble-damages action.
Government-owned corporations. Corporations that are formed by government entities to meet specific government or political purposes; also known as public corporations.
Grace period. A period of time granted in an insurance policy during which an insured may pay an overdue premium. The insurance usually remains in effect during the grace period.
Grand jury. A special jury that hears evidence of serious crimes (e.g., murder) against an accused person, evaluates the evidence presented, and determines whether there is sufficient evidence to hold the accused for trial. The grand jury does not determine guilt. If the grand jury issues an indictment, the accused will be held for later trial.
Grantee. The party to whom an interest in real property is transferred.
Grantor. The party who transfers an ownership interest in real property.
Grantor. A person who creates a living trust; also called a trustor.
Greenmail. The purchase by a target corporation of its stock from an actual or perceived tender offeror at a premium.
Greenman v. Yuba Power Products, Inc.. A landmark case in which the court adopted the doctrine of strict liability in tort as a basis for product liability actions.
Gross lease. A lease in which the tenant pays a gross sum to the landlord and the landlord is responsible for paying the property taxes and assessments on the property.
Gross negligence. A finding that a person has engaged in willful misconduct or reckless behavior that causes injury or death to another person.
Group boycott. A restraint of trade in which two or more competitors at one level of distribution agree not to deal with others at another level of distribution; also known as refusal to deal.
Group boycott by purchasers. A restraint of trade in which two or more purchasers at the same level of distribution agree not to purchase a product from a specified seller.
Group boycott by sellers. A restraint of trade in which two or more sellers at the same level of distribution agree not to sell their product to a specified purchaser.
Guarantee of collection. A form of accommodation in which the accommodation party guarantees collection of a negotiable instrument; the accommodation party is secondarily liable on the instrument.
Guarantee of payment. A form of accommodation in which the accommodation party guarantees payment of a negotiable instrument; the accommodation party is primarily liable on the instrument.
Guarantor. A person who agrees to pay a debt if the primary debtor does not; a third person who agrees to be liable in a guaranty arrangement. The guarantor is secondarily liable on the debt.
Guaranty arrangement. An arrangement in which a third party promises to be secondarily liable for the payment of another's debt.
Guaranty contract. A promise in which one person agrees to answer for the debts or duties of another person. It is a contract between the guarantor and the original creditor.
Guilty. A plea that may be entered by an accused at his or her arraignment whereby the accused states that he or she committed the crime that he or she is charged with.
H-1B visa. A visa issued by the U.S. government that allows U.S. employers to employ foreign nationals in the United States who are skilled in specialty occupations.
H4 visa. A visa issued by the U.S. government that allows immediate family members (i.e., spouse and children under 21) into the United States as dependents of workers issued H-1B work visas.
Hart-Scott-Rodino Antitrust Improvement Act (HSR Act). A federal statute that requires certain firms to notify the Federal Trade Commission (FTC) and the U.S. Department of Justice in advance of a proposed merger. Unless the government challenges a proposed merger within 30 days, the merger may proceed.
Hazardous waste. Waste that may cause or significantly contribute to an increase in mortality or serious illness or pose a hazard to human health or the environment if improperly managed.
Health care agent. A person named in a health care directive to make all health care decisions in accordance with the wishes outlined in the maker's living will.
Health care directive (Health care proxy). A document in which the maker names someone to be his or her health care agent to make all health care decisions in accordance with his or her wishes, as outlined in the living will.
Health Care and Education Reconciliation Act. A federal statute that amended the Patient Protection and Affordable Care Act (PPACA) and created the Health Care Reform Act.
Health Care Reform Act of 2010. A federal statute composed of the Patient Protection and Affordable Care Act (PPACA), as amended by the Health Care and Education Reconciliation Act, that mandates that most U.S. citizens and legal residents purchase "minimal essential" health care insurance coverage, provides methods for accomplishing this goal, and provides new protection for insured persons from abusive practices of insurance companies.
Health insurance. Insurance that is purchased to help cover the costs of medical treatment, surgery, or hospital care.
Heart of Atlanta Motel v. United States. A U.S. Supreme Court decision that upheld the Civil Rights Act of 1964, a federal statute, as constitutionally regulating interstate commerce.
Heir. A person who receives property from a person who dies intestate, that is, without a will or trust. State intestacy statutes determine how the deceased person's property is distributed to heirs.
Helping Families Save Their Home Act. A federal statute that amends credit and bankruptcy law to help struggling borrowers keep their homes.
Highest state court. The highest court in a state court system, which hears appeals from intermediate appellate state courts and certain trial courts; often called the state supreme court.
Highly compensated employee exemption. An exemption from federal minimum wage and overtime pay requirements that applies to employees who are paid total annual compensation of $100,000 or more, perform office or nonmanual work, and regularly perform at least one of the duties of an exempt executive, administrative, or professional employee.
Hindu law. Called dharmasastra in Sanskrit ("the doctrine of proper behavior"), law that is linked to the divine revelation of Veda (the holy collection of Indian religious songs, prayers, hymns, and sayings written between 2000 and 1000 bce). Most Hindu law is concerned with family matters and the law of succession.
Historical School of jurisprudence. A school of thought that postulates that law is an aggregate of social traditions and customs.
Holder. A person who is in possession of a negotiable instrument that is drawn, issued, or indorsed to him or his order, or to bearer, or in blank.
Holder in due course (HDC). A holder who takes a negotiable instrument for value, in good faith, and without notice that it is defective or is overdue.
Holographic will. A will that is entirely handwritten and signed by the testator.
Home owners' policy. A comprehensive insurance policy that includes coverage for the risks covered by a fire insurance policy as well as personal liability insurance.
Homeland Security Act (HSA). A federal statute that created the cabinet-level U.S. Department of Homeland Security (DHS) and enacted laws to prevent domestic terrorist attacks and related criminal activities.
Homestead exemption. Equity in a debtor's home that the debtor is permitted to retain in bankruptcy.
Honor. To pay a drawer's properly drawn check.
Horizontal merger. A merger between two or more companies that compete in the same business and geographical market.
Horizontal restraint of trade. A restraint of trade that occurs when two or more competitors at the same level of distribution enter into a contract, combination, or conspiracy to restrain trade.
Hostile and adverse. A requirement that must be proven by a person to obtain real property by adverse possession. It requires that the adverse possessor has occupied the property without the express or implied permission of the owner.
Hostile tender offer. A tender offer that is made without the permission of the target company's management.
Hostile work environment. A work environment that involves sexual or racial harassment or harassment against other protected classes that creates a physically threatening or humiliating workplace, a workplace that negatively impacts an employee's ability to go to work, or unreasonably interferes with an employee's work performance.
Howey test. A test that states that an arrangement is an investment contract if there is an investment of money by an investor in a common enterprise and the investor expects to make profits based on the sole or substantial efforts of the promoter or others.
Hung jury. A jury that cannot come to a unanimous decision about the defendant's guilt. In the case of a hung jury, the government may choose to retry the case.
Identification of goods. Distinguishing the goods named in a contract from the seller's or lessor's other goods.
Identity theft (ID theft). A theft in which someone steals information about another person and poses as that person and takes the innocent person's money or property or to purchase goods and services using the victim's credit information. Identity theft is a crime.
Identity Theft and Assumption Deterrence Act. A federal statute that makes it a federal crime to knowingly transfer or use, without authority, the identity of another person with the intent to commit any unlawful activity as defined by federal law and state and local felony laws.
Illegal consideration. A promise to refrain from doing an illegal act. Such a promise will not support a contract.
Illegal contract. A contract that has an illegal object. Such contracts are void.
Illegal strikes. Strikes by employees that are illegal and not protected by federal labor law.
Illegal subjects of collective bargaining. Subjects of collective bargaining that cannot be discussed by management and labor unions and cannot be included in a collective bargaining agreement (e.g., discrimination).
Illegal transaction. A universal defense (real defense) that can be raised against both holders and holders-in-due courses to prevent the enforcement of a negotiable instrument.
Illusory promise. A contract into which both parties enter but one or both of the parties can choose not to perform their contractual obligations. Thus, the contract lacks consideration; also known as an illusory contract.
Immigration Reform and Control Act of 1986 (IRCA). A federal statute that makes it unlawful for employers to hire illegal immigrants.
Immoral contracts. Contracts whose objective is the commission of an act that society considers immoral. Immoral contracts may be found to be illegal as against public policy.
Immunity from prosecution. The government's agreement with a person not to use any evidence given by that person against that person.
Impairment of the right of recourse. A situation in which certain parties (i.e., holders, indorsers, accommodation parties) are discharged from liability on an instrument if the holder (1) releases an obligor from liability or (2) surrenders collateral without the consent of the parties who would benefit by it.
Impanel. The act of being sworn in as a juror to hear a case.
Implied agency. An agency that occurs when a principal and an agent do not expressly create an agency but is inferred from the conduct of the parties.
Implied authorization. A means of communication for accepting an offer to enter into a contract that is inferred from what is customary in similar transactions, usage of trade, or prior dealings between the parties.
Implied bailment. A bailment that occurs when someone finds and safeguards lost property.
Implied by law. A characteristic of warranties that are not expressly stated in a sales or lease contract.
Implied easement. An easement that is implied and has not been expressly created.
Implied exemptions. Exemptions from antitrust laws that are implied by the federal courts.
Implied integration. A doctrine that permits the formation of a contract if several documents are somehow physically attached to each other (e.g., in an envelope). The contract that is created consists of the terms the separate documents.
Implied powers. Powers beyond express powers that allow a corporation to accomplish its corporate purpose.
Implied term. A missing term that is not expressly stated in an offer or a contract that can reasonably be supplied by the courts if a reasonable term can be implied from other sources.
Implied warranties associated with negotiable instruments. Certain warranties that the law implies on transferors of negotiable instruments. There are two types of implied warranties: transfer and presentment warranties.
Implied warranty. A warranty that is not expressly stated in the sales or lease contract but instead is implied by law.
Implied warranty of authority. A warranty of an agent who enters into a contract on behalf of another party that he or she has the authority to do so.
Implied warranty of fitness for a particular purpose. A warranty that arises where a seller or lessor warrants that the goods will meet the buyer's or lessee's expressed needs.
Implied warranty of fitness for human consumption. A warranty that applies to food or drink consumed on or off the premises of restaurants, grocery stores, fast-food outlets, and vending machines.
Implied warranty of habitability. A implied warranty that provides that leased premises must be fit, safe, and suitable for ordinary residential use.
Implied warranty of merchantability. Unless properly disclosed, a warranty that is implied that sold or leased goods are fit for the ordinary purpose for which they are sold or leased, as well as other assurances.
Implied-in-fact condition. A condition that can be implied from the circumstances surrounding a contract and the parties' conduct.
Implied-in-fact contract. A contract in which agreement between parties has been inferred from their conduct.
Implied-in-law contract. An equitable doctrine whereby a court may award monetary damages to a plaintiff for providing work or services to a defendant even though no actual contract existed. The doctrine is intended to prevent unjust enrichment and unjust detriment. Also called quasi contract.
Impossibility of performance. Nonperformance that is excused if a contract becomes impossible to perform. It must be objective impossibility, not subjective. Also called objective impossibility.
Impossibility of performance. A legal rule that states that an agency terminates if a situation arises that makes its fulfillment impossible.
Imposter rule. A rule that states that if an imposter forges the indorsement of the named payee, the drawer or maker is liable on the instrument and bears the loss.
Imputed knowledge. Information that is learned by an agent that is attributed to the principal.
In pari delicto. A situation in which both parties are equally at fault in an illegal contract.
In personam jurisdiction. A court's jurisdiction over a party to a lawsuit. Also called personal jurisdiction.
In rem jurisdiction. Jurisdiction of a court to hear and decide a case because the property of the lawsuit is located in that state.
Inaccessibility exception. A rule that permits employees and union officials to engage in union solicitation on company property if the employees are beyond reach of reasonable union efforts to communicate with them.
Incidental beneficiary. A third party who is unintentionally benefited by other people's contracts.
Incidental damages. When goods are resold or released, damages that are reasonable expenses incurred in stopping delivery, transportation charges, storage charges, sales commissions, and so on.
Income beneficiary of a trust. A person or an entity to be paid income from a trust.
Incoming partner. A person who becomes a partner in an existing partnership.
Incomplete check. A check from which certain information has been omitted, such as the amount of the check or the payee's name, either on purpose or by mistake.
Incontestability clause. A clause that prevents insurers from contesting statements made by insureds in applications for insurance after the passage of a stipulated number of years.
Incorporating a corporation. To form a corporation the organizers must follow the requirements set forth by the corporation code of the state in which the corporation is to be incorporated.
Incorporation by reference. Integration made by express reference in one document that refers to and incorporates another document within it.
Incorporation doctrine. A doctrine applied by the U.S. Supreme Court that holds that most of the fundamental guarantees contained in the Bill of Rights are not only applicable to federal government action but also applicable to state and local government action.
Incorporator. The person or persons, partnerships, or corporations that are responsible for incorporation of a corporation.
Incumbent directors. Current directors of a corporation.
Indemnification. The right of an agent of a principal, partner of a partnership, member of a limited liability company, and an officer or employee of a corporation or other business entity to be reimbursed for expenditures incurred on behalf of the principal or organization.
Indenture agreement. A contract between a corporation and a holder that contains the terms of a debt security; also known as an indenture.
Independent contractor. A person who contracts with another to do something for him or her who is not controlled by the other nor subject to the other's right to control with respect to his or her physical conduct in the performance of the undertaking.
Indian Gaming Regulatory Act. A federal statute that sets the requirements for establishing casino gambling and other gaming activities on tribal land.
Indictment. The charge of having committed a crime (usually a felony), based on the judgment of a grand jury.
Indirect price discrimination. A form of price discrimination (e.g., favorable credit terms) that is less readily apparent than direct forms of price discrimination.
Individual with regular income. An individual whose income is sufficiently stable and regular to enable the individual to make payments under a Chapter 13 plan.
Indoor air pollution. Air pollution that occurs inside some buildings; also known as sick building syndrome.
Indorsee. The person to whom a negotiable instrument is indorsed. The party to whom a check is indorsed.
Indorsement. The signature of a signer (other than as a maker, a drawer, or an acceptor) that is placed on an instrument to negotiate it to another person. The signature (and other directions) written by or on behalf of the holder somewhere on an instrument.
Indorsement for deposit or collection. A restrictive indorsement that makes the indorsee the indorser's collecting agent (e.g., "for deposit only").
Indorsements in trust. A restrictive indorsement that states that it is for the benefit or use of the indorser or another person; also known as agency indorsement.
Indorser. The person who indorses a negotiable instrument; the payee who indorses a check to another party.
Infancy doctrine. A doctrine that allows minors to disaffirm (cancel) most contracts they have entered into with adults.
Inferior performance. A situation in which a party fails to perform express or implied contractual obligations and impairs or destroys the essence of a contract; there is a material breach.
Informal contract. A contract that is not formal. Valid informal contracts are fully enforceable and may be sued on if breached. Also called a simple contract.
Informal rule making. Rule making by an administrative agency where it notifies the public of a proposed rule, permits interested persons to comment on the proposed rule, and possibly holds an informal hearing before deciding on whether to adopt the proposed rule.
Information. The charge of having committed a crime (usually a misdemeanor), based on the judgment of a judge (magistrate).
Information Infrastructure Protection Act (IIP Act). A federal statute that makes it a federal crime for anyone to intentionally access and acquire information from a protected computer without authorization.
Inherently dangerous activities. Activities (e.g., use of explosives, clearing of land by fire) for which a principal is liable for the negligence of an independent contractor whom the principal has hired.
Inheritance. Occurs when a person dies without having a valid will or living trust and the deceased's property is distributed to the heirs of the deceased as provided in the state's inheritance statute.
Initial license fee. A lump-sum payment paid by a franchisee to a franchisor for the privilege of being granted a franchise.
Initial public offering (IPO). A situation in which a company or other issuer sells securities to the public for the first time.
Injunction. A court order that prohibits a person or business from doing a certain act.
Injury. A plaintiff's personal injury or damage to his or her property that enables him or her to recover monetary damages for the defendant's negligence.
Innkeeper. The owner of a facility that provides lodging to the public for compensation (e.g., hotel, motel).
Innkeepers' statutes. State statutes that limit an innkeeper's common law liability. An innkeeper can avoid liability for loss caused to a guest's property if (1) a safe is provided in which the guest's valuable property may be kept and (2) the guest is notified of this fact.
Innocent acquisition. The acquisition of a monopoly through innocent means, such as by superior business acumen, skill, foresight, or industry. This is a defense to a charge of committing an act of monopolization.
Innocent misrepresentation. Fraud that occurs when a person makes a statement of fact that he or she honestly and reasonably believes to be true even though it is not.
Insane but not adjudged insane. Being insane but not having been adjudged insane by a court or an administrative agency. A contract entered into by such person is generally voidable. Some states hold that such a contract is void.
Insecticide, Fungicide, and Rodenticide Act. A federal statute that requires pesticides, herbicides, fungicides, and rodenticides to be registered with the EPA; the EPA may deny, suspend, or cancel registration.
Inside director. A member of the board of directors of a corporation who is also an officer of the corporation.
Insider trading. A situation in which an insider makes a profit by personally purchasing shares of the corporation prior to public release of favorable information or by selling shares of the corporation prior to the public disclosure of unfavorable information.
Insider Trading Sanctions Act. A federal statute that permits the Securities and Exchange Commission (SEC) to obtain a civil penalty of up to three times (treble damages) the illegal benefits received from insider trading.
Insiders under Section 10(b). Parties include (1) officers, directors, and employees at all levels of a company; (2) lawyers, accountants, consultants, and agents and representatives who are hired by the company on a temporary and nonemployee basis to provide services or work to the company; and (3) others who owe a fiduciary duty to the company.
Insiders under Section 16. Any person who is an executive officer, a director, or a 10 percent shareholder of an equity security of a reporting company.
Installment contract. A contract that requires or authorizes goods to be delivered and accepted in separate lots.
Installment note. A note that is paid in installments.
Instrument. A special form of contract that satisfies the requirements established by Article 3 of the UCC; also called negotiable instrument or commercial paper.
Instruments. Intangible personal property such as checks, notes, stocks, bonds, and other investment securities.
Insufficient funds. A situation that occurs when a drawer does not have enough money in his or her checking account when a properly payable check is presented for payment.
Insurable interest. A requirement that a person who purchases insurance have a personal interest in the insured goods, property, or person.
Insurance. A means for persons and businesses to protect themselves against the risk of loss.
Insurance agent. An agent who sells insurance who usually works exclusively for one insurance company.
Insurance broker. A person who sells insurance who is an independent contractor who represents a number of insurance companies.
Insurance company. A company that sells various types of insurance to persons and businesses. Also called the insurer or underwriter.
Insurance policy. An insurance contract.
Insured. A party who pays a premium to a particular insurance company for insurance coverage.
Insurer. An insurance company that underwrites insurance coverage; also known as underwriter.
Insurgent directors. Persons who shareholders propose to replace incumbent directors.
Intangible personal property. Property that includes securities, patents, trademarks, and copyrights.
Integration clause. A clause in a contract that stipulates that it is a complete integration and the exclusive expression of the parties' agreement; also known as a merger clause.
Integration of several writings. The combination of several writings to form a single contract.
Intellectual property. Patents, copyrights, trademarks, and trade secrets. Federal and state laws protect intellectual property rights from misappropriation and infringement.
Intended third-party beneficiary. A third party who is not in privity of contract but who has rights under the contract and can enforce the contract against the promisor.
Intent crime. A crime that requires the defendant to be found guilty of committing a criminal act (actus reus) with criminal intent (mens rea).
Intent to deceive. An element of fraud that occurs when a person makes a misrepresentation of a material fact with knowledge that the representation is false or makes it without sufficient knowledge of the truth. This is called scienter ("guilty mind").
Intentional infliction of emotional distress. A tort that says a person whose extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another person is liable for that emotional distress; also known as the tort of outrage.
Intentional interference with contractual relations. A tort that arises when a third party induces a contracting party to breach the contract with another party.
Intentional misrepresentation. The intentional defrauding of a person out of money, property, or something else of value; also known as fraud or deceit.
Intentional tort. A category of torts that requires that the defendant possessed the intent to do the act that caused the plaintiff's injuries. Occurs when a person has intentionally committed a wrong against (1) another person or his or her character or (2) another person's property.
Inter vivos trust. A trust that is created while the settlor is alive.
Intermediary bank. A bank in the collection process that is not the depository bank or the payer bank.
Intermediate appellate court. A court that hears appeals from trial courts; also called appellate courts or courts of appeal.
Intermediate scrutiny test. A test that is applied to determine the constitutionality of classifications by the government based on protected classes other than race (e.g., gender, age).
Internal union rules. Rules adopted by a labor union that regulate the operation of the union.
International Accounting Standards Board (IASB). An organization located in London, England, that has promulgated the International Financial Reporting Standards (IFRS).
International branch office. An office opened by a multinational corporation to conduct business in another country. A branch office is not a separate legal entity but merely an office of the corporation.
International Court of Justice (ICJ). The judicial branch of the United Nations that is located in The Hague, the Netherlands; also called the World Court.
International Financial Reporting Standards (IFRS). Accounting principles that are promulgated by the International Accounting Standards Board (IASB) that are used by foreign companies, and some U.S. companies, in place of generally accepted accounting principles (GAAPs).
International law. Law that governs affairs between nations and that regulates transactions between individuals and businesses of different countries.
International Monetary Fund (IMF). An agency of the United Nations whose primary function is to promote sound monetary, fiscal, and macroeconomic policies worldwide by providing assistance to needy countries.
International Shoe Company v. State of Washington. A U.S. Supreme Court decision that established the "minimum contacts" and "traditional notions of fair play and substantial justice" tests to determine whether a defendant is subject to the jurisdiction of a court.
International subsidiary corporation. A corporation owned by a multinational corporation that conducts business in another country. This subsidiary corporation is a separate legal entity from the parent corporation.
Internet. A collection of millions of computers that provide a network of electronic connections between computers.
Internet Corporation for Assigned Names and Numbers (ICANN). The organization that oversees the registration and regulation of domain names.
Internet service provider (ISP). A company that operates servers on which websites and Web pages are stored.
Interpretive rule. A rule adopted by an administrative agency that interprets existing statutory language.
Interrogatories. Written questions submitted by one party to another party. The questions must be answered in writing within a stipulated time.
Interstate commerce. Commerce that moves between states or that affects commerce between states.
Intervention. The act of others to join as parties to an existing lawsuit.
Intestacy statute. A state statute that specifies how a deceased's property will be distributed if he or she dies without a will or trust or if the last will is declared void and there is no prior valid will.
Intestate. The state of having died without leaving a will or trust. The persons who receive the property as determined by state intestacy statutes are called heirs.
Intoxicated person. A person who is under contractual incapacity because of ingestion of alcohol or drugs to the point of incompetence.
Intrastate commerce. Commerce within a state.
Intrastate offering exemption. An exemption from registration that permits local businesses to raise capital from local investors to be used in the local economy without the need to register with the Securities and Exchange Commission (SEC).
Invasion of the right to privacy. The unwarranted and undesired publicity of a private fact about a person. The fact does not have to be untrue.
Inventory. Tangible personal property held for sale or lease, including work in progress and materials.
Investment bankers. Independent securities companies that sell issuer's securities to the public and perform other securitiesrelated functions.
Investment contract. A flexible standard for defining a security. An arrangement where there is an investment of money by an investor in a common enterprise in which the investor expects to make profits based on the sole or substantial efforts of the promoter or others.
Invitation to make an offer. A general rule that states that an advertisement for the sale of goods, even at a specific price, is treated as an invitation to make an offer and not an offer.
Involuntary manslaughter. A nonintent crime that occurs when the death of a person results from the reckless or grossly negligent conduct of another person.
Involuntary petition. A petition filed by creditors of a debtor to begin an involuntary bankruptcy proceeding against the debtor.
IPO on-ramp. Refers to the use by an emerging growth company (EGC) of an Internet website crowdfunding portal to issue shares to the public in an initial public offering (IPO).
IRAC method. A critical legal thinking method for analyzing court cases. The acronym IRAC stands for issue, rule, application, and conclusion.
Irreconcilable differences. A situation that exists between married persons that a married person may assert as a reason for getting a divorce where no-fault divorces are recognized.
Irrevocable trust. A trust that cannot be revoked by the trustor or settler who created the trust.
Islamic law (Shari'a). A law system that is derived from the Qur'an, the Sunnah (decisions and sayings of the prophet Muhammad), and reasonings by Islamic scholars and is the law of some countries, while in other countries it forms the basis of religious and family law.
Issued shares. Authorized shares that have been sold by a corporation.
Issuer. A business or party selling securities to the public.
Jewish law. Complex law based on the ideology and theology of the Torah, which prescribes comprehensive and integrated rules of religious, political, and legal life that together form Jewish thought.
Joint and several liability. A rule that holds that where there are multiple defendants who have been found liable for the same action, each defendant is personally liable for the entire judgment. The plaintiff can sue one, any, or all of the defendants to recover damages.
Joint and several liability. In a partnership situation, a rule that holds that partners are jointly and severally liable for tort liability of the partnership. This means that the plaintiff can sue one or more of the partners separately. If successful, the plaintiff can recover the entire amount of the judgment from any or all of the defendant-partners.
Joint custody. A custody arrangement that gives both parents responsibility for making major decisions concerning the child.
Joint liability. Liability of partners for contracts and debts of the partnership. A plaintiff must name the partnership and all of the partners as defendants in a lawsuit.
Joint marital debts. Debts incurred during the marriage for joint needs.
Joint physical custody. A custody arrangement whereby the child of divorcing parents spends a certain amount of time being raised by each parent.
Joint tenancy. A form of co-ownership of real property that includes the right of survivorship.
Joint tenants. Parties who co-own real property in a joint tenancy arrangement.
Joint venture. An arrangement in which two or more business entities combine their resources to pursue a single project or transaction.
Joint venture corporation. A corporation owned by two or more joint venturers that is created to operate a joint venture.
Joint venture partnership. A partnership owned by two or more joint venturers that is formed to operate a joint venture.
Joint venturers. The parties to a joint venture.
Joint will. A will that is executed by two or more testators.
Judgment. The decision of the judge in a trial usually based on the verdict of the jury; the judge may enter a judgment if there is no jury.
Judgment notwithstanding the verdict (Judgment n.o.v., j.n.o.v.). A judgment issued by a judge that overturns the verdict of the jury if the judge finds jury bias or misconduct.
Judgment proof. A situation in which a defendant does not have the money to pay a civil judgment.
Judicial authority. The power of an administrative agency to adjudicate cases through an administrative proceeding often conducted by an administrative law judge (ALJ).
Judicial branch (Courts). The branch of state and federal governments that is composed of courts of the relevant jurisdiction.
Judicial decision. A decision in a lawsuit made by a federal or state court.
Judicial dissolution. Dissolution of a corporation through a court proceeding instituted by the state.
Judicial review of administrative agency actions. The power of federal and state courts to review the actions of federal and state administrative agencies that are subject to their jurisdiction.
Jumbo certificate of deposit (Jumbo CD). A certificate of deposit that is commonly $100,000 or more.
Jumpstart Our Business Startups Act (JOBS Act). A federal statute that makes it easier for start-up companies to raise capital from the public through small initial public offerings of securities.
Jurisprudence. The philosophy or science of law.
Jury deliberation. A process whereby a jury retires to the jury room to consider the evidence.
Jury instructions. Instructions given by a judge to the jury to inform them of the law to be applied in the case.
Jury trial. A lawsuit decided by a jury.
Just Compensation Clause. A clause of the U.S. Constitution that requires the government to compensate the property owner, and possibly others, when the government takes property under its power of eminent domain.
Kantian ethics. A moral theory that says that people owe moral duties that are based on universal rules, such as the categorical imperative "Do unto others as you would have them do unto you"; also known as duty ethics.
Key-person life insurance. Life insurance purchased and paid for by a business that insures against the death of owners and other key executives and employees of the business.
Kickback (Payoff). The name of a crime in which one person gives another person money, property, favors, or anything else of value for a favor in return.
Kyoto Protocol. An international treaty that sets obligations on the industrialized countries that signed the treaty to reduce the emissions of greenhouse gases.
Labor law. The statutes, rules, and regulations adopted by administrative agencies and the court decisions interpreting and applying the statutes and rules and regulations that regulate labor relations.
Labor Management Relations Act (TaftHartley Act). A federal statute enacted in 1947 that expanded the activities that labor unions could engage in.
Labor Management Reporting and Disclosure Act (Landrum-Griffin Act). A federal statute enacted in 1959 that regulates internal union affairs and establishes the rights of union members.
Labor's "bill of rights". Title I of the Landrum-Griffin Act that gives each union member equal rights and privileges to nominate candidates for union office, vote in elections, and participate in membership meetings.
Land. The most common form of real property; includes the land and buildings and other structures permanently attached to the land.
Land pollution. Pollution of the land that is generally caused by hazardous waste being disposed of in an improper manner.
Land sales contract. An arrangement in which the owner of real property sells property to a purchaser and extends credit to the purchaser.
Landlord. An owner of real property who transfers a leasehold. Also known as a lessor.
Landlord–tenant relationship. A relationship that is created when the owner of a freehold estate transfers to another person the right to exclusively and temporarily possess the owner's real property.
Landrum-Griffin Act (Labor Management Reporting and Disclosure Act). A federal statute enacted in 1959 that regulates internal union affairs and establishes the rights of union members.
Lanham (Trademark) Act. A federal statute that (1) establishes the requirements for obtaining a federal mark and (2) protects marks from infringement. Also called the Lanham Act.
Lapse of time. A stated time period after which an offer terminates. If no time is stated, an offer terminates after a reasonable time.
Larceny. The taking of another's personal property other than from his or her person or building.
Law. That which must be obeyed and followed by citizens, subject to sanctions or legal consequences; a body of rules of action or conduct prescribed by controlling authority and having binding legal force.
Law and Economics School of jurisprudence. A school of thought that postulates that promoting market efficiency should be the central concern of legal decision making.
Law court. A court that developed and administered a uniform set of laws decreed by the kings and queens after William the Conqueror; legal procedure was emphasized over merits at this time.
Law Merchant. Rules developed in England to solve commercial disputes that were based on common trade practices and usage.
Lawful contract. A contract whose object is lawful.
Lawful object. An element of a contract that is met where the object of a contract is not illegal.
Leahy-Smith America Invents Act (AIA). A federal statute that established the firstto-file rule of patent law.
Learned professional exemption. An exemption from federal minimum wage and overtime pay requirements that applies to employees compensated on a salary or fee basis that perform work that is predominantly intellectual in character, who possess advanced knowledge in a field of science or learning, and whose advanced knowledge was acquired through a prolonged course of specialized intellectual instruction.
Lease. A term that is used to indicate a contract for the lease of goods and a contract for the rental of real property.
Lease contract. A contract for the lease of goods that is subject to Article 2A (Leases) of the Uniform Commercial Code (UCC).
Lease fee. Rent payments paid by a franchisee to a franchisor for land and premises leased from the franchisor.
Lease of real property. The transfer of the right to use real property for a specified period of time. The rental agreement between a landlord and a tenant is called a lease.
Leasehold estate. A tenant's interest in property; also known as a leasehold.
Legacy. A gift of personal property by will. Also called a bequest.
Legal custody. Custody that is given a custodial parent who is awarded custody of the child. This usually includes physical custody of the child and the right to make day-to-day decisions and major decisions concerning the child's education, religion, and other such matters.
Legal entity (Legal person). An artificial person, such as a corporation, a limited liability company (LLC), a general partnership, a limited partnership, and a limited liability partnership (LLP), that can own property, sue and be sued, enter into and enforce contracts, and such.
Legal insanity. A state of contractual incapacity, as determined by law.
Legal value. Support for a contract when either (1) the promisee suffers a legal detriment or (2) the promisor receives a legal benefit.
Legally enforceable contract. A contract in which if one party fails to perform as promised, the other party can use the court system to enforce the contract and recover damages or other remedy.
Legislative branch (Congress). The branch of the federal government that consists of the U.S. Congress (the U.S. Senate and the U.S. House of Representatives). The U.S. Congress enacts federal statutes.
Lender. A party who lends money or another asset. The creditor in a credit transaction.
Lessee of goods. A person who acquires the right to possession and use of goods under a lease of goods.
Lessee of real property. The party to whom a leasehold is transferred. Also known as a tenant.
Lessor of goods. A person who transfers the right of possession and use of goods under a lease of goods.
Lessor of real property. An owner of real property who transfers a leasehold. Also known as a landlord.
Letter of credit. A document that is issued by a bank on behalf of a buyer who purchases goods on credit from a seller that guarantees that if the buyer does not pay for the goods, then the bank will pay the seller.
Liability without fault. Liability that is imposed on a party even though he or she has exercised all possible care and has not been at fault for the injuries suffered by the plaintiff; also known as strict liability.
Libel. A false statement that appears in a letter, newspaper, magazine, book, photograph, movie, video, and so on.
License. In a licensing arrangement, a contract that permits one party (the licensee) to use the trademarks, service marks, trade names, and other intellectual property of another party (licensor) in the distribution of goods and services.
License granted by an administrative agency. A grant issued by an administrative agency that permits a person to enter certain types of industry (e.g., banks, television and radio stations) or profession (e.g., doctors, lawyers, contractors).
License of intellectual property. A contract that transfers limited rights in intellectual property and informational rights.
License of real property. A contract that grants a person the right to enter on another's property for a specified and usually short period of time.
Licensee. The party to whom a license is granted.
Licensing. A business arrangement that occurs when the owner of intellectual property (the licensor) contracts to permit another party (the licensee) to use the intellectual property.
Licensing agreement. A detailed and comprehensive written agreement between a licensor and a licensee that sets forth the express terms of their agreement.
Licensing statute. A statute that requires a person or business to obtain a license from the government prior to engaging in a specified occupation or activity.
Licensor. The party who grants a license.
Lien. A legal right given to a warehouse company in the bailor's goods in its possession for necessary expenses incurred in storing and handling the goods.
Lien release. A written document signed by a contractor, subcontractor, laborer, or material person, waiving his or her statutory lien against real property; also known as release of lien.
Life estate. An interest in real property for a person's lifetime; on that person's death, the interest will be transferred to another party.
Life insurance. A form of insurance in which the insurer is obligated to pay a specific sum of money on the death of the insured.
Life tenant. A person who is given a life estate.
Lilly Ledbetter Fair Pay Act of 2009. A federal statute that permits a complainant to file an employment discrimination claim against an employer within 180 days of the most recent paycheck violation and to recover back pay for up to two years preceding the filing of the claim if similar violations had occurred during the two-year period.
Limited-jurisdiction trial court. A court that hears matters of a specialized or limited nature; sometimes referred to as inferior trial courts.
Limited liability company (LLC). An unincorporated business entity that combines the most favorable attributes of general partnerships, limited partnerships, and corporations.
Limited liability company code. State statutes that regulate the formation, operation, and dissolution of limited liability companies (LLCs).
Limited liability of limited partners. The liability of limited partners of a limited partnership is limited to their capital contributions to the limited partnership; limited partners are not personally liable for the debts and obligations of the limited partnership.
Limited liability limited partnership (LLLP). A special type of limited partnership that has both general partners and limited partners where both the general and the limited partners have limited liability and are not personally liable for the debts of the LLLP.
Limited liability of members of LLCs. The liability of the members of a limited liability company (LLC) for the LLC's debts, obligations, and liabilities is limited to the extent of their capital contributions. Members of LLCs are not personally liable for the LLC's debts, obligations, and liabilities.
Limited liability of partners of LLPs. The liability of partners of a limited liability partnership (LLP) for the LLP's debts, obligations, and liabilities is limited only to the extent of their capital contributions. Partners of an LLP are not personally liable for the LLP's debts, obligations, and liabilities.
Limited liability of shareholders. A general rule of corporate law that provides that generally shareholders are liable only to the extent of their capital contributions for the debts and obligations of their corporation and are not personally liable for the debts and obligations of the corporation.
Limited liability partnership (LLP). A special form of partnership in which all partners are limited partners and there are no general partners.
Limited liability partnership codes. State statutes that regulate the formation, operation, and dissolution of limited liability partnerships (LLPs).
Limited partners of a limited partnership. Partners in a limited partnership who invest capital but do not participate in management and are not personally liable for partnership debts beyond their capital contributions.
Limited partners of an LLP. Partners in a limited liability partnership (LLP) who invest capital, participate in management, and are not personally liable for partnership debts beyond their capital contributions; also referred to as partners.
Limited partnership. A type of partnership that has two types of partners: (1) general partners and (2) limited partners; also known as special partnerships.
Limited partnership agreement. A document that sets forth the rights and duties of general and limited partners; the terms and conditions regarding the operation, termination, and dissolution of a partnership, and so on; also known as articles of limited partnership.
Limited protected speech. Speech that is subject to time, place, and manner restrictions.
Limited-purpose clause. A clause that can be included in the articles of incorporation that stipulates the activities that a corporation can engage in. The corporation can engage in no other purposes or activities.
Limited warranty. An express warranty made by a seller or lessor of goods that restricts or limits the remedy for the sale or lease of a defective product.
Line of commerce. The products or services that will be affected by a merger, including those that consumers use as substitutes. If an increase in the price of one product or service leads consumers to purchase another product or service, the two products are substitutes for each other.
Lineal descendants. Children, grandchildren, great-grandchildren, and so on of a testator.
Liquidated damage clause. A clause in a contract that provides that agreed-on liquidated damages will be paid on the breach of the contract.
Liquidated damages. Damages that parties to a contract agree in advance should be paid if the contract is breached.
Liquidation preference. The right to be paid a stated dollar amount if a corporation is dissolved and liquidated.
Litigation. The process of bringing, maintaining, and defending a lawsuit.
Living trust. A method for holding property during a person's lifetime and distributing the property on that person's death; also called a grantor's trust or a revocable trust.
Living wage laws. Local laws that set higher minimum wage rates than the federal level.
Living will. A document that states which lifesaving measures the signor does and does not want; can specify that he or she wants such treatments withdrawn if doctors determine that there is no hope of a meaningful recovery.
Local administrative agencies. Administrative agencies created by cities, municipalities, and counties to administer local regulatory laws.
Long-arm statute. A statute that extends a state's jurisdiction to nonresidents who were not served a summons within the state.
Lost property. Property that the owner leaves somewhere due to negligence, carelessness, or inadvertence. The finder obtains title to such property against the whole world except the true owner.
Lost volume seller. A seller who could have produced more of an item and sold it to a new buyer can sue a defaulting buyer to recover the profit it would have made from the defaulting buyer.
Magistrate. A judge who hears evidence of lesser crimes against an accused person, evaluates the evidence presented, and determines whether there is sufficient evidence to hold the accused for trial. The magistrate does not determine guilt. If the magistrate issues an information statement, the accused will be held for later trial.
Magnuson-Moss Warranty Act. A federal statute that regulates written warranties on consumer products.
Mail fraud. The use of mail to defraud another person.
Mailbox rule. A rule that states that an acceptance is effective when it is dispatched, even if it is lost in transmission; also known as the acceptance-upondispatch rule.
Main purpose exception. An exception to the Statute of Frauds that states that if the main purpose of a transaction and an oral collateral contract is to provide pecuniary benefit to the guarantor, the collateral contract does not have to be in writing to be enforced; also known as the leading object exception.
Majority decision. A decision in which a majority of the justices agree as to the outcome and reasoning used to decide a case. The decision becomes precedent.
Maker of a certificate of deposit. The financial institution that issues a certificate of deposit (borrower).
Maker of a note. The party who makes a promise to pay (borrower).
Mala in se. Crimes that are inherently evil.
Mala prohibita. Crimes that are not inherently evil but are prohibited by society.
Malicious prosecution. A lawsuit in which the original defendant sues the original plaintiff. In the second lawsuit, the defendant becomes the plaintiff and vice versa.
Manager-managed limited liability company (LLC). A limited liability company (LLC) that has designated in its articles of organization that it is a manager-managed LLC; the nonmanager members give their management rights over to designated managers. The managers have authority to bind the LLC to contracts, but nonmanager members cannot bind the LLC to contracts. Managers of a managermanaged LLC owe a duty of loyalty to the LLC; nonmanager members of a managermanaged LLC do not owe a duty of loyalty to the LLC. A manager of a managermanaged LLC owes a duty of care not to engage in intentional, reckless, or grossly negligent conduct that injures the LLC.
Managers of a limited liability company (LLC). Members or nonmembers of a manager-managed limited liability company (LLC) that have been designated as managers of the LLC.
Marine insurance. Insurance that owners of vessels purchase to insure against loss or damage to the vessel and its cargo caused by perils at sea.
Marine Protection, Research, and Sanctuaries Act. A federal statute that extends limited environmental protection to the oceans.
Marital property. Property acquired during the course of marriage using income earned during the marriage and separate property that has been converted to marital property.
Mark. Any trade name, symbol, word, logo, design, or device used to identify and distinguish goods of a manufacturer or seller or services of a provider from those of other manufacturers, sellers, or providers. Collectively refers to trademarks, service marks, certification marks, and collective marks.
Market extension merger. A merger between two companies in similar fields whose sales do not overlap.
Marketable title. Title to real property that is free from any encumbrances or other defects that are not disclosed but would affect the value of the property; also called good title.
Marriage. In most states, a legal union between a man and a woman that confers certain legal rights and duties on the spouses and on the children born of the marriage. Some states recognize marriage between persons of the same sex.
Marriage ceremony. A ceremony usually held in front of a justice of the peace or similar government officer or at a church, temple, synagogue, or mosque in front of a minister, priest, rabbi, or imam. At the ceremony, the parties make a public statement that they will take each other as wife and husband or, where permitted, as life partners.
Marriage license. A legal document issued by a state that certifies that two people are married.
Mass layoff. As defined in the Worker Adjustment and Retraining Notification (WARN) Act, it is the reduction of 33 percent of the employees or at least 50 employees during any 30-day period.
Master limited partnership (MLP). A limited partnership whose limited partnership interests are traded on an organized securities exchange.
Material alteration. A partial defense against enforcement of a negotiable instrument by a holder in due course (HDC). An HDC can enforce an altered instrument in the original amount for which the drawer wrote the check.
Material breach. A breach that occurs when a party renders inferior performance of his or her contractual duties.
Material fact. A fact that is important to the subject matter of a contract.
Matter of Cady, Roberts & Company. A decision wherein the Securities and Exchange Commission (SEC) announced the duty of an insider who possesses material nonpublic information to abstain from trading in the securities of the company or disclose the information to the person on the other side of the transaction.
Maximize profits. A theory of social responsibility that says a corporation owes a duty to take actions that maximize profits for shareholders.
Maximum resale price. A manufacturer's requirement that a retailer not sell a good it produces for more than a designated price. This arrangement is examined under the rule of reason to determine if it violates of Section 1 of the Sherman Act as an unreasonable restraint of trade.
Means test. A bankruptcy rule that applies to a debtor who has a median family income that exceeds the state's median family income for families the same size as the debtor's family. A debtor in this category qualifies for Chapter 7 bankruptcy if he or she has disposable income below an amount determined by bankruptcy law but does not qualify for Chapter 7 bankruptcy if he or she has disposable income above an amount determined by bankruptcy law.
Median income test. A bankruptcy rule that states that if a debtor's median family income is at or below the state's median family income for a family the same size as the debtor's family, the debtor can receive Chapter 7 relief.
Mediation. A form of alternative dispute resolution in which the parties use a mediator to assist to possibly reach a settlement of their dispute.
Mediator. A neutral third party that presides at a mediation proceeding.
Medical payment coverage. Insurance that covers medical expenses incurred by insured, other authorized drivers of the car, and passengers in the car who are injured in an automobile accident.
Medicinal Device Amendment. An amendment to the Food, Drug, and Cosmetic Act (FDCA) that gives the Food and Drug Administration (FDA) authority to regulate medicinal devices and equipment (e.g., heart pacemakers, surgical equipment).
Meeting of the creditors. A meeting of the creditors in a bankruptcy case that must occur within a reasonable time after an order for relief. The debtor must appear at this meeting. Also referred to as the first meeting of the creditors.
Meeting the competition defense. A defense to a Robinson-Patman Act Section 2(a) price discrimination action that provides that a seller's price discrimination is not unlawful if a seller lawfully engaged in the price discrimination to meet a competitor's price.
Member. An owner of a limited liability company (LLC).
Member-managed limited liability company (LLC). A limited liability company (LLC) that has not designated that it is a manager-managed LLC in its articles of organization and is managed by its members. All members have agency authority to bind the LLC to contracts. A member of a member-managed LLC owes a duty of loyalty to the LLC. A member of a member-managed LLC owes a duty of care to the LLC not to engage in an intentional, reckless, or grossly negligent conduct that injures the LLC.
Mens rea. Evil intent -- the possession of the requisite state of mind to commit a prohibited act.
mental or Psychological disorders. Under the Americans with Disabilities Act, as amended, a disability, such as intellectual disability (i.e., mental retardation), organic brain syndrome, emotional or mental illness, and specific learning disabilities.
Merchant. A person who (1) deals in the goods of the kind involved in a transaction or (2) by his or her occupation holds him- or herself out as having knowledge or skill peculiar to the goods involved in the transaction.
Merchant Court. A court in England that solved commercial disputes by applying common trade practices and usage.
Merchant protection statutes. Statutes that allow merchants to stop, detain, and investigate suspected shoplifters without being held liable for false imprisonment if (1) there are reasonable grounds for the suspicion, (2) suspects are detained for only a reasonable time, and (3) investigations are conducted in a reasonable manner. Also known as the shopkeeper's privilege.
Merged corporation. The corporation that is absorbed in a merger and ceases to exist after the merger.
Merger. A situation in which one corporation is absorbed into another corporation and ceases to exist.
Merger clause. A clause in a contract that stipulates that it is a complete integration and the exclusive expression of the parties' agreement; also known as an integration clause.
Midnight deadline. The midnight of the next banking day following the banking day on which the bank received an "on them" check for collection.
Miller v. California. A U.S. Supreme Court decision that set forth the elements for determining when speech is obscene speech.
Minimum contact. An amount of contact that a defendant must have with a state in order for that state's courts to have jurisdiction over that person or business.
Minimum resale price. A manufacturer's requirement that a retailer not sell a good it produces for less than a designated price. This is a per se violation of Section 1 of the Sherman Act as an unreasonable restraint of trade.
Minimum wage. A requirement of the Fair Labor Standards Act (FLSA), a federal statute, that workers be paid a minimum wage. The federal minimum wage is set by Congress and can be changed. States and local governments may set minimum wages that are higher than the federal minimum wage.
Minor. A person who has not reached the age of majority.
Minor breach. A breach that occurs when a party renders substantial performance of his or her contractual duties.
Minutes. Written record of actions taken by the board of directors at board of directors' meetings.
Miranda rights. Rights that a suspect must be informed of before being interrogated so that the suspect will not unwittingly give up his or her Fifth Amendment rights.
Mirror image rule. A rule that states that for an acceptance to exist, the offeree must accept the terms as stated in the offer.
Misappropriation of a trade secret. The unlawful misappropriation of another's trade secret.
Misappropriation of the right to publicity. An attempt by a person to appropriate another person's name or identity for commercial purposes. Also known as the tort of appropriation.
Misappropriation theory. A rule that imposes liability under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 on an outsider who misappropriates information about a company in violation of his or her fiduciary duty and then trades in the securities of that company.
Misdemeanor. A less serious crime; not inherently evil but prohibited by society. Many crimes against property are misdemeanors.
Mislaid property. Property that an owner voluntarily places somewhere and then inadvertently forgets. The owner of the premises where the property is mislaid is entitled to take possession of the property against all except the rightful owner.
Misrepresentation of a material fact. An element of fraud that occurs when a wrongdoer makes a false representation of material fact to another person.
Misrepresentation of law. A type of fraud that occurs when one party misrepresents the law to another party. Usually not actionable as fraud unless a professional who knows what the law is intentionally misrepresents the law to a less sophisticated contracting party.
Mistake. A situation that occurs where one or both of the parties to a contract have an erroneous belief about the subject matter, value, or some other aspect of the contract.
Misuse of confidential information. A duty of agents, general partners, officers, directors and employees of corporations, employees of businesses, and others not to disclose or misuse confidential information (e.g., trade secrets, formulas, customer lists) of the principal either during or after the course of the agency.
Misuse of property. A duty of agents, general partners, officers, directors and employees of corporations, employees of businesses, and others not to misuse the property of their principal for their own personal use.
Mitigation of damages. A nonbreaching party's legal duty to avoid or reduce damages caused by a breach of contract.
Mixed sale. A sale that involves the provision of a service and a good in the same transaction.
Mobile sources of air pollution. Sources of air pollution, such as automobiles, trucks, buses, motorcycles, and airplanes.
Model Business Corporation Act (MBCA). A model act, drafted in 1950, that was intended to provide a uniform law for the formation, operation, and termination of corporations.
Model Statutory Close Corporation Supplement (Supplement). A model act that is intended to provide a uniform law for the formation, operation, and dissolution of close corporations.
Monetary damages. An award of money; also known as dollar damages.
Money. A medium of exchange authorized or adopted by a domestic or foreign government as part of its currency.
Money laundering. The crime of running illegally obtained money through legitimate businesses to "wash" the money and make it look as though it was earned legitimately.
Money Laundering Control Act. A federal statute that makes it a crime to (1) knowingly engage in a money transaction through a financial institution involving property from an unlawful activity worth more than $10,000 and (2) knowingly engage in a financial transaction involving the proceeds of an unlawful activity.
Monopoly power. The power to control prices or exclude competition, measured by the market share the defendant possesses in the relevant market.
Monthly report (Form 8-K). A report that must be filed with the Securities and Exchange Commission (SEC) by a reporting company within 10 days of the end of the month in which a material event such as a merger occurs.
Month-to-month tenancy. A periodic tenancy of real property where length of the tenancy is one month.
Moral minimum. A theory of social responsibility that says a corporation's duty is to make a profit while avoiding causing harm to others.
Moral theory of law. A school of thought that emphasizes that law should be based on morality and ethics.
Mortgage. An interest in real property given to a lender as security for the repayment of a loan.
Mortgage note. A note that is secured by real estate.
Mortgage Reform and Anti-Predatory Lending Act. A federal statute that is designed to eliminate many abusive mortgage loan practices and mandates new duties and disclosure requirements on mortgage lenders and others.
Mortgagee. The creditor in a mortgage transaction.
Mortgagor. The owner-debtor in a mortgage transaction.
Motion for judgment on the pleadings. A motion that alleges that if all the facts presented in the pleadings are taken as true, the party making the motion would win the lawsuit when the proper law is applied to these asserted facts.
Motion for summary judgment. A motion that asserts that there are no factual disputes to be decided by the jury and that the judge can apply the proper law to the undisputed facts and decide the case without a jury. These motions are supported by affidavits, documents, and deposition testimony.
Motivation test. A test that determines whether an agent's motivation in committing an intentional tort is to promote the principal's business; if so, the principal is liable for any injury caused by the tort.
Multilateral treaty. A treaty involving more than two nations.
Multinational corporation. A corporation that operates in more than one country; also called a transnational corporation.
Municipal corporations. Local governmentowned corporations such as cities.
Murder. The unlawful killing of a human being by another with malice aforethought -- the element of mens rea (guilty mind).
Mutual assent. An assent by the parties -- a "meeting of the minds" -- to perform current or future contractual duties.
Mutual benefit bailment. A bailment for the mutual benefit of the bailor and bailee. The bailee owes a duty of ordinary care to protect the bailed property.
Mutual fund. An investment fund that sells shares to the public and invests in stocks and bonds for the long term and is restricted from investing in risky investments.
Mutual mistake of a material fact. A mistake made by both parties concerning a material fact that is important to the subject matter of a contract.
Mutual mistake of value. A mistake that occurs if both parties know the object of the contract but are mistaken as to its value.
Mutual rescission. Mutual termination of a contract that occurs when the parties to a contract enter into a second contract that expressly terminates the first one.
Mutual wills. A situation in which two or more testators execute separate wills that leave their property to each other on the condition that the survivor leave the remaining property on his or her death as agreed by the testators; also known as reciprocal wills.
National ambient air quality standards (NAAQS). Standards for certain pollutants set by the EPA that protect (1) human beings (primary level) and (2) vegetation, climate, visibility, and economic values (secondary level).
National Association of Securities Dealers Automated Quotation System (NASDAQ). An electronic stock market where more than 3,000 companies are traded.
National courts. The courts of individual nations.
National Environmental Policy Act (NEPA). A federal statute that mandates that the federal government consider the adverse impact a federal government action would have on the environment before the action is implemented.
National Labor Relations Act (NLRA) (Wagner Act). A federal statute enacted in 1935 that established the right of employees to form and join labor organizations, to bargain collectively with employers, and to engage in concerted activity to promote these rights.
National Labor Relations Board (NLRB). A federal administrative agency that oversees union elections, prevents employers and unions from engaging in illegal and unfair labor practices, and enforces and interprets certain federal labor laws.
National origin. The country or section of the world of a person's ancestors or a person's cultural characteristics.
National origin discrimination. Employment discrimination against a person because of his or her heritage, cultural characteristics, or country of the person's ancestors.
Natural Law School of jurisprudence. A school of thought that postulates that law is based on what is "correct." It emphasizes a moral theory of law -- that is, law should be based on morality and ethics.
Natural monopoly. A monopoly that exists because of the nature of the market (e.g., a small market that can support only one competitor, such as a small-town newspaper). This is a defense to a charge of committing an act of monopolization.
Necessaries of life. Food, clothing, shelter, medical care, and other items considered necessary to the maintenance of life. Minors must pay the reasonable value of necessaries of life for which they contract.
Negligence. The failure to do something that a reasonable person would do or doing something that a reasonable person would not do in like or similar circumstances.
Negligence per se. A tort in which the violation of a statute or an ordinance constitutes the breach of the duty of care.
Negligent infliction of emotional distress. A tort that permits a person to recover for emotional distress caused by the defendant's negligent conduct.
Negotiable instrument. A special form of contract that satisfies the requirements established by Article 3 of the UCC; also called commercial paper or instrument.
Negotiation. A term that describes the transfer of negotiable instruments to subsequent transferees.
Negotiation of a negotiable instrument. The transfer of a negotiable instrument by a person other than the issuer to a person who thereby becomes a holder.
Negotiation of a settlement. A procedure whereby the parties to a dispute engage in discussions and bargaining to try to reach a voluntary settlement of their dispute.
Net lease. A lease arrangement where the tenant is responsible for paying rent and property taxes.
Net, net, net lease (Triple net lease). A lease arrangement where the tenant is responsible for paying the rent, property taxes, utilities, and insurance.
New York Stock Exchange (NYSE). A primary stock exchange that lists the stocks and securities of approximately 3,000 of the world's largest companies for trading.
New York Times Co. v. Sullivan. U.S. Supreme Court decision that held that public officials cannot recover for defamation unless they can prove that the defendant acted with "actual malice."
No-arrival, no-sale contract. A shipping term that requires the seller of goods to bear the expense and risk of loss of the goods during transportation.
No Electronic Theft Act (NET Act). A federal statute that makes it a crime for a person to willfully infringe on a copyright.
No par value shares. Common stock on which the corporation has not set the lowest price at which the shares may be issued by the corporation.
Noerr doctrine. A doctrine that says that two or more persons can petition the executive, legislative, or judicial branch of the government or administrative agencies to enact laws or take other action without violating antitrust laws.
No-fault automobile insurance. An automobile insurance system used by some states in which the driver's insurance company pays for any injuries or death the driver suffers in an accident, no matter who caused the accident.
No-fault divorce. A divorce recognized by the law of a state whereby neither party is blamed for the divorce.
No-strike clause. A clause in a collective bargaining agreement between an employer and a labor union whereby the union agrees not strike during a particular period of time.
Nolo contendere. A plea entered by a criminal defendant who has been sued by the government whereby the accused agrees to the imposition of a penalty but does not admit guilt.
Nominal damages. Damages awarded when the nonbreaching party sues the breaching party even though no financial loss has resulted from the breach. Nominal damages are usually $1 or some other small amount.
Non-accredited investor. An investor who does not meet the net worth, income, asset, position, and other requirements established by the Securities and Exchange Commission (SEC) to qualify as an accredited investor.
Nonadjudicated mentally incompetent. A situation where a person is mentally incompetent but a court or administrative agency has not declared that person to be mentally incompetent. Contracts and negotiable instruments entered into by the person are voidable.
Nonattainment area. A geographical area that does not meet governmentestablished air quality standards.
Nonbinding arbitration. An agreement between the parties to a dispute whereby they agree that the decision and award of the arbitrator can be appealed to the courts.
Nonconforming use. Uses and buildings that already exist in a zoned area that are permitted to continue even though they do not fit within new zoning ordinances.
Nonconvertible preferred stock. Preferred stock that does not permit preferred stockholders to convert their shares into common stock.
Noncumulative preferred stock. Preferred stock that has no right of accumulation; that is, the corporation does not have to pay previously missed preferred stock dividends before common shareholders can be paid dividends.
Noncumulative voting. A system of shareholder voting for the board of directors of a corporation whereby each shareholder votes the number of shares he or she owns for his or her choices from the candidates running for the board of director positions that must be filed; also called straight voting.
Nonexempt property. Property of a debtor that is not exempt from the bankruptcy estate that is distributed to the debtor's secured and unsecured creditors pursuant to statutory priority established by the Bankruptcy Code.
Nonfreehold estate. An estate where the tenant has a right to possess the real property but does not own title to the property.
Nonintent crime. A crime that imposes criminal liability without a finding of mens rea (intent).
Nonissuer exemption. An exemption that says that securities transactions not performed by an issuer, an underwriter, or a dealer do not have to be registered with the Securities and Exchange Commission (SEC) (e.g., normal purchases of securities by investors).
Nonjudicial dispute resolution. An arraignment in which disputes are resolved outside of the court judicial system. This is often referred to as alternative dispute resolution (ADR).
Nonnegotiable contract. A contract that fails to meet the requirements of a negotiable instrument and, therefore, is not subject to the provisions of Revised Article 3 (Negotiable Instruments) of the Uniform Commercial Code (UCC). A nonnegotiable contract can be enforced under normal contract law.
Nonobvious. A patent requirement that an invention is nonobvious; if it is obvious, then it does not qualify for a patent.
Nonparticipating preferred stock. Preferred stock that does not give a preferred stockholder a right to participate in the profits of the corporation beyond the fixed dividend rate of the preferred stock.
Nonpossessory interest. A situation in which a person holds an interest in another person's property without actually owning any part of the property. Three types of nonpossessory interests are easements, licenses, and profits.
Nonprice vertical restraints. Restraints of trade that are unlawful under Section 1 of the Sherman Act if their anticompetitive effects outweigh their precompetitive effects.
Nonrecordation of a mortgage. A situation that occurs if a mortgage or deed of trust is not recorded in the county recorder's office in the county in which the real property is located.
Nonredeemable preferred stock. Preferred stock that does not permit a corporation to buy back the preferred stock at some future date.
Nonrestrictive indorsement. An indorsement that has no instructions or conditions attached to the payment of the funds.
Norris-LaGuardia Act. A federal statute enacted in 1932 that made it lawful for employees to organize labor unions.
North American Free Trade Agreement (NAFTA). A treaty that has removed or reduced tariffs, duties, quotas, and other trade barriers between the United States, Canada, and Mexico.
Not guilty. A plea that may be entered by an accused at his or her arraignment whereby the accused states that he or she did not commit the crime that he or she is charged with.
Note. An instrument that evidences the borrower's debt to the lender.
Note. (1). A debt security with a maturity of 5 years or less. Notes can be either unsecured or secured. (2) An instrument that evidences a borrower's debt to a lender where a deed of trust and note is used for the purchase of real property on credit.
Not-for-profit corporation. A corporation formed to operate charitable institutions, colleges, universities, and other not-for-profit entities. These corporations have no shareholders. Also known as nonprofit corporations.
Notice of a shareholders' meeting. Written notice required to be given to shareholders of a corporation of the place, day, and time of annual and special shareholders' meetings and the purpose of the meeting.
Notice of appeal. A document filed by a party within a prescribed time after judgment is entered to appeal the decision of a court.
Notice of assignment. Notice given by an assignee to an obligor under a contract that an assignment of the obligor's duty of performance has been made and that his or her performance must be rendered to the assignee.
Notice of dishonor. The formal act of letting the party with secondary liability to pay a negotiable instrument know that the instrument has been dishonored.
Notice of dissolution. Notice to be given to certain third parties when a general partner leaves a partnership.
Notice of lien. Notice filed by a lienholder with the county recorder's office in the county in which real property is located stating that a mechanic's lien has been filed against the property.
Notice of termination of an agency. A notice that must be given by a principal that notifies third parties that person is no longer his or her agent. Failure to give such notice may make the principal liable for the prior agent's acts under the doctrine of apparent agency.
Novation agreement. An agreement that substitutes a new party for one of the original contracting parties and relieves the exiting party of liability on the contract; also simply known as a novation.
Novel. A patent requirement that an invention is new and has not been invented and used in the past.
Nuclear Regulatory Commission (NRC). A federal administrative agency that licenses the construction and opening of commercial nuclear power plants.
Nuclear Waste Policy Act. A federal statute that mandates that the federal government select permanent sites for the disposal of nuclear wastes.
Nuclear wastes. Consists of pollution from nuclear power plants and emissions from uranium mines and mills.
Nuncupative will. An oral will that is made before a witness during the testator's last illness; also known as a dying declaration or deathbed will.
Nutrition Labeling and Education Act (NLEA). A federal statute that requires food manufacturers to place on food labels that disclose nutritional information about the food.
NYSE Euronext. The organization that operates the New York Stock Exchange (NYSE) and Euronext electronic stock exchange.
Objective rule. In an engagement situation, a rule that states that if the engagement is broken off, the person who was given the ring must return the engagement ring, regardless of who broke off the engagement.
Objective theory of contracts. A theory that says the intent to contract is judged by the reasonable person standard and not by the subjective intent of the parties.
Obligation. An action a party to a sales or lease contract is required by law to carry out.
Obligee. The party who is owed a right under a contract.
Obligor. The party who owes a duty of performance under a contract.
Obscene speech. Speech that (1) appeals to the prurient interest, (2) depicts sexual conduct in a patently offensive way, and (3) lacks serious literary, artistic, political, or scientific value.
Occupational Safety and Health Act. A federal statute that promotes safety in the workplace.
Occupational Safety and Health Administration (OSHA). A federal administrative agency that is empowered to enforce the Occupational Safety and Health Act.
Offensive speech. Speech that is offensive to many members of society. It is subject to time, place, and manner restrictions.
Offer. The manifestation of willingness to enter into a bargain, so made as to justify another person in understanding that his or her assent to that bargain is invited and will conclude it.
Offeree. The party to whom an offer to enter into a contract is made.
Offering circular. A document that must be provided by an issuer of securities to investors who are purchasing securities issued pursuant to Regulation A of the Securities Act of 1933.
Offering statement. A document that must be filed by an issuer with the Securities and Exchange Commission (SEC) prior to selling most securities pursuant to Regulation A of the Securities Act of 1933.
Offeror. The party who makes an offer to enter into a contract.
Officers. Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation.
Oil Pollution Act. A federal statute that requires the oil industry to take measures to prevent oil spills and to readily respond to and clean up oil spills.
Older Workers Benefit Protection Act (OWBPA). A federal statute that prohibits age discrimination in regard to employee benefits.
Omnibus clause. A clause that can be added to automobile insurance that protects the owner of the vehicle when someone else drives the car with his or her permission; also known as other-driver clause.
On them item. A check presented for payment by a payee or holder where the depository bank and the payer bank are not the same bank.
On us item. A check presented for payment where the depository bank is also the payer bank. That is, the drawer and payee or holder have accounts at the same bank.
One-year rule. A rule that states that an executory contract that cannot be performed by its own terms within one year of its formation must be in writing.
One-year rule. A rule that stipulates that if a drawer fails to report a forged or altered check to the bank within one year of receiving the bank statement and canceled checks containing it relieves the bank of any liability for paying the instrument.
Online banking. A system in which bank customers can check their bank statements online, pay bills from their bank accounts, transfer funds between accounts, and conduct other banking services using the Internet.
Open assortment term. A term in a sales contract that says that if the assortment of goods to a sales contract is left open, the buyer is given the option of choosing those goods but must make the selection in good faith and within limits set by commercial reasonableness.
Open delivery term. A term in a sales contract that says that if the parties do not agree to the time, place, and manner of delivery of the goods, the place for delivery is the seller's place of business. If the seller does not have a place of business, delivery is to be made at the seller's residence.
Open payment term. A term in a sales contract that says that if the parties do not agree as to the time and place of payment, then payment is due at the time and place at which the buyer is to receive the goods.
Open price term. A term in a sales contract that says that if the contract does not contain a specific price then a "reasonable price" is implied at the time of delivery.
Open terms. Terms left open in a sales or lease contract that are permitted to be "read into" the sales or lease contract.
Open time term. A term in a sales contract that says that if the parties do not set a specific time of performance for any obligation under the contract, the contract must be performed within a reasonable time.
Open, visible, and notorious. A requirement that must be proven by a person to obtain real property by adverse possession. It requires that the adverse possessor has occupied the property so as to put the owner on notice of the possession.
Opening brief. A written document prepared by an appellant and filed with an appellate court that sets forth legal research and other information that supports the appellant's contentions on appeal.
Opening statements. Statements made by each party's attorney to the jury at the beginning of a trial.
Operating agreement. An agreement entered into among members that governs the affairs and business of the limited liability company (LLC) and the relations among members, managers, and the LLC.
Operation of law. The termination of an agency agreement by the operation of law.
Option contract. A contract that is created when an offeree pays an offeror compensation to keep an offer open for an agreed-on period of time. An option contract prevents the offeror from revoking his or her offer during the option period.
Order. A decision of an administrative law judge (ALJ) that is issued in the form of an administrative order.
Order for relief. An order that occurs on the filing of either a voluntary petition or an unchallenged involuntary petition or an order that is granted after a trial of a challenged involuntary petition.
Order instrument (Order paper). An instrument that is payable (1) to the order of an identified person or (2) to an identified person or order. An instrument that is negotiated by (1) delivery and (2) indorsement.
Order to pay. A drawer's unconditional order to a drawee to pay a draft or check to a payee.
Ordinance. Law enacted by local government bodies, such as cities and municipalities, counties, school districts, and water districts.
Ordinary bailments. Bailments such as a bailment for the sole benefit of the bailor, a bailment for the sole benefit of the bailee, and a mutual benefit bailment.
Ordinary check. An order by a drawer to a drawee bank to pay a specified sum of money from the drawer's checking account to the named payee (or holder).
Ordinary duress or Undue influence. Duress or undue influence that is not extreme.
Ordinary lease. Under the Uniform Commercial Code (UCC), a lease of goods by a lessor to a lessee.
Ordinary negligence. A doctrine that says a person is liable for harm that is the foreseeable consequences of his or her actions; also known as unintentional tort.
Organization of the Petroleum Exporting Countries (OPEC). An association composed of many of the oil-producing countries of the world.
Organizational meeting. A meeting that must be held by the initial directors of a corporation after the articles of incorporation are filed.
Original contract. In a guarantee situation, the contract between the debtor and the creditor which the guarantor has guaranteed to pay; also known as the primary contract.
Original tenor. The original amount for which the drawer wrote a check.
Outgoing partner. A partner who leaves a partnership.
Output contract. A contract in which a seller agrees to sell all of its production to a single buyer.
Outside director. A member of a board of directors of a corporation who is not an officer of the corporation.
Outside sales representative exemption. An exemption from federal minimum wage and overtime pay requirements that applies to employees who will be paid by the client or customer, whose primary duty is making sales or obtaining orders or contracts for services, and who are customarily and regularly engaged away from the employer's place of business.
Outstanding shares. Shares that are in shareholder hands, whether originally issued shares or reissued treasury shares. Only outstanding shares have the right to vote.
Overdraft. The amount of money a drawer owes a bank after it has paid a check despite the drawer's account having insufficient funds.
Overdue time instrument. A time instrument that has not been paid on its expressed due date; it becomes overdue the next day.
Oversecured creditor. A secured creditor in a bankruptcy proceeding where the value of the collateral securing the secured loan exceeds the creditor's secured interest.
Overtime pay. A requirement of the Fair Labor Standards Act (FLSA), a federal statute, that workers be paid overtime pay of one-and-a-half times their regular pay for each hour worked in excess of 40 hours per week with each week being treated separately.
Owner. A person who contracts with the insurance company for life insurance coverage.
Ownership interest. The interest that a partner owns of a partnership.
Palsgraf v.. The Long Island Railroad Company A landmark case that established the doctrine of proximate cause.
Par value shares. Common stock on which the corporation has set the lowest price at which the shares may be issued by the corporation.
Parent corporation. A multinational corporation that owns the shares of a subsidiary corporation located in another country.
Parent corporation in a share exchange. A corporation that owns the shares of a subsidiary corporation in a share exchange.
Parent–child privilege. A privilege granted to an accused through the Fifth Amendment to the U.S. Constitution to keep his or her child or his or her parent from testifying against him or her; a child or parent may testify against his or her parent or child where the accused is charged with harming his or her child or parent.
Parol evidence. Any oral or written words outside the four corners of a written contract.
Parol evidence rule. A rule that says if a written contract is a complete and final statement of the parties' agreement, any prior or contemporaneous oral or written statements that alter, contradict, or are in addition to the terms of the written contract are inadmissible in court regarding a dispute over the contract. There are several exceptions to this rule.
Part performance. An equitable doctrine that allows the court to order an oral contract for the sale of land or transfer of another interest in real property to be specifically performed if it has been partially performed and performance is necessary to avoid injustice.
Partial comparative negligence. A rule that provides that a plaintiff must be less than 50 percent responsible for causing his or her own injuries to recover under comparative negligence; otherwise, contributory negligence applies.
Partial strike. A labor strike where the striking employees strike part of the day or workweek and work the other part. Such strikes are illegal because they deny the employer's statutory right to continue its operations during a strike; also known as intermittent strike.
Partially disclosed agency. An agency in which a contracting third party knows that the agent is acting for a principal but does not know the identity of the principal.
Partially disclosed principal. The principal in a partially disclosed agency.
Participating preferred stock. Stock that allows the preferred stockholder to participate in the profits of the corporation along with the common stockholders.
Partnership at will. A partnership with no fixed duration.
Partnership for a term. A partnership with a fixed duration.
Passage of title in sales contracts. Precise rules in Article 2 of the Uniform Commercial Code (UCC) for determining how title passes in sales contracts.
Past consideration. A prior act or performance. Past consideration (e.g., prior acts) will not support a new contract. New consideration must be given.
Patent. A grant by the federal government on the inventor of an invention for the exclusive right to use, sell, or license the patent for a limited amount of time.
Patent application. An application that is filed with the U.S. Patent and Trademark Office (PTO) that must contain a written description of the invention sought to be patented.
Patent infringement. Unauthorized use of another's patent. A patent holder may recover damages and other remedies against a patent infringer.
Patent number. A number that is assigned to a patent if a patent is granted.
Patent pending. A designation that an applicant can use on an article if a patent application has been filed but a patent has not yet been issued.
Patent Trial and Appeal Board (PTAB). A government body within the U.S. Patent and Trademark Office that reviews adverse decisions by patent examiners, reviews reexaminations, conducts postgrant reviews, and conducts other patent challenge proceedings.
Patient Protection and Affordable Care Act (PPACA). A federal statute, as amended by the Health Care and Education Reconciliation Act, that is referred to as the Health Care Reform Act. These combined acts mandate that most U.S. citizens and legal residents purchase "minimal essential" health care insurance coverage and provides methods for accomplishing this goal.
Payable in foreign currency. A provision of Revised Article 3 (Negotiable Instruments) of the Uniform Commercial Code (UCC) that an instrument may state that it is payable in a foreign currency.
Payable in money. A requirement that a negotiable instrument be payable in a fixed amount of money defined as a medium of exchange authorized or adopted by a domestic or foreign government as part of its currency.
Payable in the alternative. An instrument that is payable to two or more payees or indorsees because it uses the word or; either person's indorsement signature alone is sufficient to negotiate the instrument.
Payable jointly. An instrument that is payable to two or more payees or indorsees because it uses the word and; both persons' indorsements are necessary to negotiate the instrument.
payable on demand or at a definite time requirement. A requirement that a negotiable instrument be payable either on demand or at a definite time.
Payable to order or Payable to bearer. A requirement of Revised Article 3 (Negotiable Instruments) of Uniform Commercial Code that negotiable instruments be either payable to order or payable to bearer. Documents without one of these terms do not qualify as negotiable instruments.
Payee of a certificate of deposit. A depositor who lends a financial institution money and is issued a certificate of deposit (borrower).
Payee of a check. A party to whom a check is written.
Payee of a draft. A party who receives the money from a draft.
Payee of a note. A party to whom a promise to pay is made (lender).
Payer bank. A bank where a drawer has a checking account and on which a check is drawn.
Payment. Unless the parties agree otherwise, payment is due from a buyer when and where the goods or property is delivered.
Penal code. A collection of criminal statutes.
Penalty. A fine that is imposed if liquidated damages are excessive or unconscionable or if actual damages are clearly determinable in advance and makes the liquidated damage clause unenforceable.
Per capita distribution. A distribution of an estate in which each grandchild and great-grandchild of the deceased inherits equally with the children of the deceased.
Per se rule. A rule that is applicable to restraints of trade considered inherently anticompetitive (e.g., price fixing). Once this determination is made about a restraint of trade, the court will not permit any defenses or justifications to save it.
Per stirpes distribution. A distribution of an estate in which grandchildren and great-grandchildren of the deceased inherit by representation of their parent.
Perfect tender rule. A rule that says if the goods or tender of a delivery fail in any respect to conform to the contract, the buyer may opt either (1) to reject the whole shipment, (2) to accept the whole shipment, or (3) to reject part and accept part of the shipment.
Perfection by a purchase money security interest in consumer goods. A creditor who extends credit to a consumer to purchase a consumer good under a written security agreement obtains a security interest in the consumer good that automatically perfects the creditor's security interest at the time of the sale. Also known as perfection by attachment or the automatic perfection rule.
Perfection by attachment (Automatic perfection rule). A rule that stipulates that a creditor who extends credit to a consumer to purchase a consumer good under a written security agreement has an automatically perfected security interest in the goods at the time of the sale without having to file a financing statement.
Perfection by filing a financing statement. In a secured transaction, perfecting a creditor's security interest in collateral by filing a financing statement in the appropriate government office.
Perfection by possession of collateral. A rule that says if a secured creditor has physical possession of the collateral, no financing statement has to be filed; the creditor's possession is sufficient to put other potential creditors on notice of the creditor's secured interest in the property.
Perfection of a security interest. A process that establishes the right of a secured creditor against other creditors who claim an interest in the collateral.
Period of minority. The period below the statutory age of majority, as set by state law for a person to have the capacity to enter into contracts.
Period of redemption. The period of time during which a mortgagor may redeem real property after default and before foreclosure.
Periodic tenancy. A tenancy of real property created when a lease specifies intervals at which payments are due but does not specify how long the lease is for.
Permanency requirement. A requirement that a negotiable instrument be in a permanent state, such as written on paper.
Permanent alimony. Alimony that is ordered by the court to be paid by one divorcing spouse to the other divorcing spouse until the receiving spouse dies or remarries; also called lifetime alimony.
Permissive subjects of collective bargaining. Subjects of collective bargaining that are not compulsory subjects of bargaining but are employment issues that the company and union agree bargain over.
Perpetuity. Corporations may exist in perpetuity unless a specific duration is stated in the corporation's articles of corporation.
Personal articles floater. An addition to a home owners' policy that covers specific valuable items. An insured usually purchases a personal liability floater to obtain insurance for specific valuable items (e.g., jewelry, works of art, furs).
Personal defense. A defense that can be raised against enforcement of a negotiable instrument by an ordinary holder but not against a holder in due course (HDC).
Personal guarantee. A guarantee given by a limited partner of a limited partnership, a partner of a limited liability partnership, a member of a limited liability company, a shareholder of a corporation, and others whereby they guarantee that if the business does not repay a loan or debt or obligation then they will pay the unpaid amount.
Personal liability. Liability imposed on individuals whereby they are personally liable for their own debts and are sometimes held liable for other party's debts and obligations, such as being a guarantor of another person's debt or a general partner of a general or limited partnership.
Personal liability coverage. Insurance coverage that provides comprehensive personal liability insurance for the insured and members of his or her family.
Personal property. Tangible property, such as equipment, vehicles, furniture, and jewelry, as well as intangible property, such as securities, patents, trademarks, and copyrights.
Personal representative. A personal representative who is named in a testator's or testatrix's will who is appointed to administer the estate during the probate of a will. Also called an executor (male) or executrix (female).
Personal satisfaction test. A subjective test that is used to determine if contracts involving personal taste and comfort meet a condition precedent.
Personal service contract. A contract for the provision of personal services.
Petition for bankruptcy. A document filed with a bankruptcy court that starts a bankruptcy proceeding.
Petition for certiorari. A petition asking the Supreme Court to hear a case.
Petition for divorce. A document filed with the proper state court that commences a divorce proceeding.
Petitioner. The party appealing the decision of an administrative agency.
Physical delivery. The usual method of transferring personal property
physical or Mental examination. A court-ordered examination of a party to a lawsuit before trial to determine the extent of the alleged injuries.
Physiological impairment. Under the Americans with Disabilities Act, as amended, a disability such as a physical disorder or condition, cosmetic disfigurement, or anatomical loss affecting one or more of the following body systems: neurological, musculoskeletal, special sense organs, respiratory, cardiovascular, reproductive, digestive, genitourinary, hemic and lymphatic, skin, and endocrine.
Picketing. The action of strikers walking in front of an employer's premises, carrying signs announcing their strike.
Piercing the corporate veil. A doctrine that says if a shareholder dominates a corporation and uses it for improper purposes, a court of equity can disregard the corporate entity and hold the shareholder personally liable for the corporation's debts and obligations; also called the alter ego doctrine.
Place of delivery. The place where goods subject to a sales or lease contract are to be delivered to the buyer or lessee.
Places of public accommodation. Places of public accommodation, such as motels, hotels, restaurants, movie theaters, and such.
Plaintiff. The party who files a complaint that initiates a lawsuit.
Plaintiff's case. The case presented by the plaintiff, who bears the burden of proof and therefore proceeds before the defendant in calling and examining witnesses and introducing evidence supporting his or her case.
Plan of reorganization. A plan that sets forth a proposed new capital structure for a debtor to assume when it emerges from Chapter 11 reorganization bankruptcy.
Plant closing. As defined in the Worker Adjustment and Retraining Notification (WARN) Act, it is the permanent or temporary shutdown of a single site that results in a loss of employment of 50 or more employees during any 30-day period.
Plant life and vegetation. Plant life and vegetation that is growing on the surface of land and is considered part of the real property.
Plea. An accused's statement whether he or she is guilty or not guilty of the crime charged at his or her arraignment.
Plea bargain. Negotiations between an accused and the government with the intent of reaching an agreement between the parties to avoid a trial.
Plea bargain agreement. An agreement in which the accused admits to a lesser crime than charged. In return, the government agrees to impose a lesser sentence than might have been obtained had the case gone to trial.
Pleadings. The paperwork that is filed with the court to initiate and respond to a lawsuit.
Plurality decision. A decision in which a majority of the appellate or supreme court justices agree to the outcome of a case but not as to the reasoning for reaching the outcome. A plurality decision settles the case but is not precedent for later cases.
Point sources of water pollution. Sources of water pollution, such as paper mills, manufacturing plants, electric utility plants, and sewage plants.
Poison pill. Defensive strategies built into a corporation's articles of incorporation, corporate bylaws, or the corporation's contracts and leases that prevent the takeover of the corporation.
Police power. Power that permits states and local governments to enact laws to protect or promote the public health, safety, morals, and general welfare.
Policy. A contract between an insurance company and an insured that sets for the insurance coverage, exemptions from insurance coverage, and other terms and conditions of the contract. Also called an insurance policy.
Policy decisions. Decisions made by the board of directors of a corporation that affect the management, supervision, control, and operation of the corporation.
Portability requirement. A requirement that a negotiable instrument must be able to be easily transported.
Possession. Acquiring ownership to unowned personal property by taking possession of it, or capturing it. The most notable unowned objects are things in their natural state (e.g., hunting game).
Possession of tangible token rule. A rule that stipulates that where there have been successive assignments of a contract right that is represented by a tangible token (e.g., stock certificate, savings account passbook), the first assignee who receives delivery of the tangible token prevails over subsequent assignees.
Postdated check. A check that a drawer does not want cashed until sometime in the future.
Postjudgment court order. An order of a court that permits the seizure of a debtor's property that is in the debtor's possession or in the possession of third parties after a creditor has won a judgment against a debtor.
Postnuptial agreement. An agreement entered into by spouses during the marriage that sets forth the distribution of property on termination of the marriage and addresses other issues (e.g., alimony).
Postpetition counseling. Personal financial counseling that a debtor must receive before he or she receives a discharge in a Chapter 7 or Chapter 13 bankruptcy.
Power of attorney. An express agency agreement that is often used to give an agent the power to sign legal documents on behalf of the principal.
Power of sale. A power stated in a mortgage or deed that permits foreclosure without court proceedings and sale of the property through an auction.
Powers of a limited liability company (LLC). Powers that a limited liability company (LLC) possesses to do all things necessary or convenient to carry on its business or affairs.
Precedent. A rule of law established in a court decision. Lower courts must follow the precedent established by higher courts.
Predatory pricing. Pricing of a product or service below average or marginal cost that is intended to drive out competition.
Preemption doctrine. A doctrine that provides that federal law takes precedence over state or local law.
Preemptive rights. Rights that give existing shareholders of a corporation the option to purchase new shares issued by the corporation in proportion to their current ownership interests.
Preexisting duty. Something a person is already under an obligation to do. A promise lacks consideration if a person promises to perform a preexisting duty.
Preferred stock. A type of equity security that is given certain preferences and rights over common stock.
Preferred stock certificate. A document that represents a preferred shareholder's investment in the corporation.
Preferred stockholder. A person who owns preferred stock.
Pregnancy Discrimination Act. A federal statute that forbids employment discrimination because of pregnancy, childbirth, or related medical conditions.
Prejudgment court order. An order of a court that permits the seizure of a debtor's property that is in the debtor's possession while a lawsuit against the debtor is pending.
Preliminary prospectus. A written disclosure document that must be submitted by an issuer of securities to the Securities and Exchange Commission (SEC) with the registration statement and is provided to potential investors to enable them to evaluate the financial risk of an investment.
Premium. Money paid to an insurance company by an insured to purchase insurance.
Prenuptial agreement. A contract entered into prior to marriage that specifies how property will be distributed on the termination of the marriage or death of a spouse; also called a premarital agreement.
Prepayment clause. A clause in an instrument that permits the maker to pay the amount due prior to the due date of the instrument.
Prepetition counseling. Counseling that a debtor must receive within 180 days prior to filing his or her petition for bankruptcy.
Present possessory interest. A principle that states that an owner of real property may use and enjoy the property as he or she sees fit, subject to any applicable government regulation or private restraint.
Presentment. A demand for acceptance or payment of an instrument made on the maker, acceptor, drawee, or other payer by or on behalf of the holder.
Presentment across the counter. A depositor's physically presenting a check for payment at the payor bank instead of depositing an "on them" check for collection.
Presentment warranties. Three warranties that a person who presents a draft or check for payment or acceptance makes to a drawee or an acceptor who pays or accepts the instrument in good faith: (1) The presenter has good title to the instrument or is authorized to obtain payment or acceptance of the person who has good title; (2) the instrument has not been materially altered; and (3) the presenter has no knowledge that the signature of the maker or drawer is unauthorized.
Presumed innocent until proven guilty. A legal rule that provides that a person charged with a crime in the United States is presumed innocent until proven guilty.
Pretrial motion. A motion a party can make to try to dispose of all or part of a lawsuit prior to trial.
Price discrimination. Discrimination that occurs when a seller sells goods of like grade and quality to different buyers at different prices contemporaneously in time. There are several exceptions to this rule.
Price fixing. A restraint of trade that occurs when competitors in the same line of business agree to set the price of the goods or services they sell, raising, depressing, fixing, pegging, or stabilizing the price of a commodity or service. This is a per se violation of Section 1 of the Sherman Act as an unreasonable restraint of trade.
Priest/rabbi/minister/imam–penitent privilege. A privilege granted to an accused through the Fifth Amendment to the U.S. Constitution to keep his or her psychiatrist or psychologist from testifying against him or her. There are exceptions to this privilege.
Primarily liable. Liability of a surety (codebtor) where the surety has co-signed another's person's debt and promises to be liable for paying the debt.
Primary liability. Absolute liability to pay a negotiable instrument, subject to certain universal (real) defenses. Makers of promissory notes and certificates of deposit have primary liability for paying the instrument.
Principal. A party who employs another person to act on his or her behalf.
Principal–agent relationship. A relationship formed when an employer hires an employee and gives that employee authority to act and enter into contracts on his or her behalf.
Principal–agent relationship. A relationship that is created if a bank customer writes a check against his or her account or deposits a check that the bank must collect. The customer is the principal, and the bank is the agent.
Principal–independent contractor relationship. The relationship between a principal and an independent contractor who is not an employee of the principal but has been employed by the principal to perform a certain task on behalf of the principal.
Priority of claims. The order in which conflicting claims of creditors in the same collateral are solved.
Privacy Act. A federal statute that stipulates that federal administrative agencies can only maintain information about an individual that is relevant and necessary to accomplish a legitimate agency purpose. The act permits persons to have access to their records and to correct information.
Private civil action. A lawsuit that any person who suffers antitrust injury in his or her "business or property" may bring against offenders to recover monetary damages caused by the violation, including treble damages.
Private corporation. A corporation formed to conduct privately owned business.
Private placement exemption (SEC Rule 506). An exemption from registration that permits issuers to raise capital from an unlimited number of accredited investors and no more 35 nonaccredited investors without having to register the offering with the Securities and Exchange Commission (SEC).
Private Securities Litigation Reform Act of 1995. A federal statute that limits a defendant's liability to its proportionate degree of fault.
Privilege against self-incrimination. A provision of the Fifth Amendment to the U.S. Constitution that provides that a person need not be a witness against him- or herself in any criminal case. This is called the privilege against self-incrimination.
Privileges and Immunities Clause and the Privileges or Immunities Clause. Clauses contained in Article IV of the U.S. Constitution and the Fourteenth Amendment to the U.S. Constitution that prohibit states from enacting laws that unduly discriminate in favor of their residents.
Privity of contract. The state of two specified parties being in a contract.
Pro rata rule. A rule that says shares must be purchased on a pro rata basis if too many shares are tendered.
Pro se divorce. A divorce proceeding in which the parties represent themselves in the divorce action.
Probability of a substantial lessening of competition or Likelihood of creating a monopoly. A test that is used in determining a violation of Section 7 of the Clayton Act when examining the legality of mergers.
Probable cause. Evidence of the substantial likelihood that a person either committed or is about to commit a crime.
Probate. The process of a deceased's property being collected, debts and taxes being paid, and the remainder of the estate being distributed; also called settlement of the estate.
Probate court. A specialized state court that supervises the administration and settlement of estates.
Procedural administrative law. Law that establishes the procedures that must be followed by administrative agencies while enforcing substantive laws.
Procedural due process. A category of due process that requires that the government give a person proper notice and hearing of the legal action before that person is deprived of his or her life, liberty, or property.
Processing plant franchise. A franchise arrangement in which a franchisor provides a secret formula or process to a franchisee, and the franchisee manufactures the product and distributes it to retail dealers.
Product defect. Something wrong, inadequate, or improper in the manufacture, design, packaging, warning, or instructions about a product.
Product liability. The liability of manufacturers, sellers, and others for the injuries caused by defective products.
Product liability insurance. Insurance that protects sellers and manufacturers against injuries caused by defective products.
Product market extension merger. A market extension merger between two firms that sell similar but not the same products in the same geographical area (e.g., a soft drink manufacturer and an orange juice producer).
Product safety standards. Safety standards issued by the Consumer Product Safety Commission (CPSC) for consumer products that pose unreasonable risk of injury.
Production. A common method of acquiring ownership in personal property. A manufacturer that purchases raw materials and produces a finished product owns that product.
Production of documents. A request by one party to another party to produce all documents relevant to the case prior to the trial.
Professional association (P.A.). A corporation formed by lawyers, doctors, or other professionals.
Professional corporation. A corporation formed by lawyers, doctors, or other professionals.
Professional malpractice. The liability of a professional who breaches his or her duty of ordinary care.
Professional malpractice insurance. Insurance that insures professionals against liability for injuries caused by their negligence; also known as malpractice insurance.
Profit-a-prendre. A document that grants a person the right to remove something from another's real property; also known as profit.
Profit corporation. A corporation created to conduct a business for profit that can distribute profits to shareholders in the form of dividends.
Promise to marry. A promise of a person to marry another person.
Promise to pay. A maker's (borrower's) unconditional and affirmative undertaking to repay a debt to a payee (lender).
Promisee of a donee–beneficiary contract. A contracting party who directs that the benefit of his or her contract with another be conferred on a third party.
Promisor of a donee–beneficiary contract. A contracting party who agrees to confer the benefit of his or her contract with another on a third party.
Promissory estoppel and an oral contract. An equity doctrine that permits enforcement of oral contracts that should have been in writing. It is applied to avoid injustice; also known as equitable estoppel.
Promissory estoppel and consideration. An equity doctrine that permits a court to order enforcement of a contract that lacks consideration; also known as detrimental reliance.
Promissory note. A two-party negotiable instrument that is an unconditional written promise by one party (maker) to pay money to another party (payee); also known as a note.
Promoter. A person or persons who organize and start a corporation, negotiate and enter into contracts in advance of its formation, find the initial investors to finance the corporation, and so forth.
Promoters' contracts. A collective term for such things as leases, sales contracts, contracts to purchase property, and employment contracts entered into by promoters on behalf of the proposed corporation prior to its actual incorporation.
Promoters' liability. The liability of a person for the debts and obligations he or she has entered into on behalf of a proposed corporation prior to the formation of the corporation.
Proof of claim. A document required to be filed by a creditor that states the amount of his or her claim against the debtor.
Proof of interest. A document required to be filed by an equity security holder that states the amount of his or her interest against the debtor.
Properly dispatched. An acceptance of an offer being properly addressed, packaged, and posted.
Proportionate liability. A rule that limits a defendant's liability to its proportionate degree of fault.
Proposed additions. Additions to a sales contract proposed by an offeree where one or both parties are nonmerchants. If the offeree's proposed additions are accepted by the offeror they become part of the contract; If they are not accepted, the sales contract is formed on the basis of the terms of the original offer.
Prosecutor. The lawyer who represents the government in a criminal trial. Also called prosecuting attorney.
Protected class. A class of individuals distinguished by characteristics other than race and national origin, such as sex.
Provisional application. An application that an inventor may file with the Patent and Trademark Office that gives the inventor three months to prepare a final patent application.
Proximate cause. A point along a chain of events caused by a negligent party after which that party is no longer legally responsible for the consequences of his or her actions; also called legal cause.
Proxy. A written document signed by a shareholder that authorizes another person to vote the shareholder's shares; also called a proxy card.
Proxy contest. A contest in which opposing factions of shareholders and managers solicit proxies from other shareholders; the side that receives the greatest number of votes wins the proxy contest.
Proxy statement. A document that fully describes (1) the matter for which a proxy is being solicited, (2) who is soliciting the proxy, and (3) any other pertinent information.
Psychiatrist/psychologist–patient privilege. A privilege granted to an accused through the Fifth Amendment to the U.S. Constitution to keep his or her psychiatrist or psychologist from testifying against him or her. There are exceptions to this privilege.
Public accountant. A term that denotes persons who perform a variety of accounting services, including bookkeepers, tax preparers, and so on, who are not certified as a certified public accountant (CPA).
Public Company Accounting Oversight Board (PCAOB). A board created by the Sarbanes-Oxley Act of 2002 that has the authority to adopt rules concerning auditing, accounting quality control, independence, and ethics of public companies and public accountants.
Public defender. A government or government-paid attorney who represents the accused defendant in a criminal trial if the accused cannot afford a private defense lawyer.
Public domain. The point in time when anyone can produce and sell a prior patented invention, copyrighted material, or trademark, after a patent period or copyright period runs out, or trademark is not renewed, or the patent, copyright, or trademark is abandoned.
Public figure. Plaintiffs such as movie stars, sports personalities, and other celebrities who cannot recover for defamation unless they can prove that the defendant acted with "actual malice."
Publicly held corporation. A corporation that has many shareholders and whose securities are often traded on national stock exchanges.
Punitive damages. Damages that are awarded to punish the defendant to deter the defendant from similar conduct in the future and to set an example for others.
Purchase. The most common method of acquiring title to personal property is by purchasing the property from its owner.
Purchase money security interest. An interest a creditor automatically obtains when he or she extends credit to a consumer to purchase consumer goods.
Qualified immunity. A doctrine that states that foreign governments have qualified immunity from suits in U.S. courts, and are therefore subject to prosecution in U.S. courts under certain circumstances; also known as restricted immunity.
Qualified individual with a disability. A person who has a physical or mental impairment that substantially limits a major life activity who, with or without reasonable accommodation, can perform the essential functions of the job he or she desires or holds.
Qualified indorsement. An indorsement that includes the notation "without recourse" or similar language that disclaims liability of the indorser.
Qualified indorsers. Those who disclaim liability and are not secondarily liable on negotiable instruments they endorse. A qualified indorser does not guarantee payment of the instrument if the maker, drawer, or acceptor defaults on it.
Qualified opinion. An auditor's opinion that states that a company's financial statements are fairly represented except for, or subject to, a departure from generally accepted accounting principles (GAAPs), a change in accounting principles, or a material uncertainty.
Quality control standards. Standards set forth in a franchise agreement that require a franchisee to meet certain quality standards established by the franchisor.
Quarterly report (Form 10-Q). A report that must be filed quarterly with the Securities and Exchange Commission (SEC) by reporting companies that sets forth their financial condition.
Quarterly required distributions (QRDs). Quarterly payments made by master limited partnerships to investors.
Quasi contract. An equitable doctrine whereby a court may award monetary damages to a plaintiff for providing work or services to a defendant even though no actual contract existed. The doctrine is intended to prevent unjust enrichment and unjust detriment. Also called implied-in-law contract.
Quasi in rem jurisdiction. Jurisdiction that allows a plaintiff who obtains a judgment in one state to try to collect the judgment by attaching property of the defendant located in another state. Also called attachment jurisdiction.
Qui tam lawsuit. A lawsuit that is brought under the federal False Claims Act -- also known as the Whistleblower Statute -- which permits private parties to sue companies for fraud on behalf of the government and share in any monetary recovery.
Quid pro quo sex discrimination. Gender discrimination in employment that occurs where sexual favors are requested in order to obtain a job or be promoted. This violates Title VII of the Civil Rights Act.
Quiet title action. An action brought by a party, seeking an order of the court declaring who has title to disputed property. The court "quiets title" by its decision.
Quitclaim deed. A deed that provides the least amount of protection to the grantee because the grantor transfers only the interest he or she has in the property.
Quorum of the board of directors. The number of directors necessary to hold a board meeting or transact business of the board.
Quorum of the shareholders. A rule that requires that a majority of shares entitled to vote are represented at a shareholder's meeting in person or by proxy before a shareholder's meeting can be held; the articles of incorporation may require a greater number of shares than majority to constitute quorum.
Race. A term that refers to which of the following categories a person is classified as being a member of: Asian, African American, Caucasian, Native American, and Pacific Islander.
Race discrimination. Employment discrimination against a person because of his or her race, which include African Americans, Asians, Caucasians, Native Americans, and Pacific Islanders.
Racketeer Influenced and Corrupt Organizations Act (RICO). A federal act that provides for both criminal and civil penalties for racketeering.
Radiation pollution. Emissions from radioactive wastes that can cause injury and death to humans and other life and can cause severe damage to the environment.
Railway Labor Act. A federal statute enacted in 1926 and amended in 1934 that regulates labor organizing by employees of railroads and airlines.
Ratification. The act of a person after he or she has reached the age of majority by which he or she accepts a contract entered into when he or she was a minor.
Ratification of a contract. A situation in which a principal accepts an agent's unauthorized contract.
Rational basis test. A test that is applied to determine the constitutionality of classifications by the government based on classifications not involving suspect or protected class such as race, sex, or age.
Rawls's social justice theory. A moral theory that asserts that fairness is the essence of justice. The theory proffers that each person is presumed to have entered into a social contract with all others in society to obey moral rules that are necessary for people to live in peace and harmony.
Reaffirmation agreement. An agreement entered into by a debtor with a creditor prior to discharge, whereby the debtor agrees to pay the creditor a debt that would otherwise be discharged in bankruptcy. Certain requirements must be met for a reaffirmation agreement to be enforced.
Real estate sales contract. A contract for the sale of real property.
Real property. The land itself, as well as buildings, trees, soil, minerals, timber, plants, crops, fixtures, and other things permanently affixed to the land or buildings.
Reasonable accommodation for a disability. Under Title I of the Americans with Disabilities Act, assistance an employer is under an obligation to give to accommodate an individual's disability if doing so does not cause an undue hardship to the employer.
Reasonable accommodation for religion. Under Title VII of the Civil Rights Act of 1964, assistance an employer is under an obligation to give for the religious observances, practices, or beliefs of its employees if doing so does not cause an undue hardship to the employer.
Reasonable person standard. How an objective, careful, and conscientious person would have acted in the same circumstances. In a negligence action, the defendant's conduct is measured against that standard.
Reasonable person test. An objective test that is used to determine whether commercial contracts and contracts involving mechanical fitness meet a condition precedent.
Reasonable professional standard. How an objective, careful, and conscientious equivalent professional would have acted in the same circumstances. In a negligence action, the defendant professional's conduct is measured against that standard.
Reasonable search and seizure. Searches and seizures that are based on probable cause and do not violate the Fourth Amendment to the U.S. Constitution.
Reasonableness in the Uniform Commercial Code. A word used throughout the UCC to establish the duties of performance by the parties to sales and lease contracts.
Rebuttal. A process whereby after the defendant's attorney has finished calling witnesses, the plaintiff's attorney can call additional witnesses and put forth evidence to rebut the defendant's case.
Receiving stolen property. To (1) knowingly receive stolen property and (2) intend to deprive the rightful owner of that property.
Recognizance. A formal contract in which a party acknowledges in court that he or she will pay a specified sum of money if a certain event occurs.
Reconveyance. A written document filed by a lender or trustee with the county recorder's office which is proof that a mortgage or note secured by real property has been paid.
Record. Information about a trial such as the trial transcript, evidence introduced at trial, and the court's written memorandum.
Record. As defined by the Uniform Commercial Code, information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
Record date. A date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders' meeting.
Recording statute. A state statute that requires a mortgage or deed of trust to be recorded in the county recorder's office of the county in which the real property is located.
Record-keeping device. Negotiable instruments often serve as record-keeping devices.
Redeemable preferred stock. Preferred stock that permits a corporation to buy back the preferred stock at some future date; also known as callable preferred stock.
Re-direct examination. Examination of the plaintiff's witness by the plaintiff after the defendant has examined the plaintiff's witnesses on cross-examination.
Reformation. An equitable doctrine that permits the court to rewrite a contract to express the parties' true intentions.
Registered. Occurs when a business files a registration statement and prospectus with the Securities and Exchange Commission (SEC) registering its intent to issue securities to the public.
Registered agent. A person or corporation that is empowered to accept service of process on behalf of a corporation.
Registered office. An office designated in the articles of incorporation of a corporation that specifies where service of process on the corporation must be delivered.
Registration statement. A document that an issuer of securities files with the Securities and Exchange Commission (SEC) that contains required information about the issuer, the securities to be issued, and other relevant information.
Regular meeting of a board of directors. A meeting held by the board of directors at the time and place established in the bylaws.
Regulation A. A regulation that permits the issuer to sell securities pursuant to a simplified registration process.
Regulation E. A regulation adopted by the Federal Reserve Board that enforces and interprets the Electronic Funds Transfer Act.
Regulation Z. A regulation that sets forth detailed rules for compliance with the TILA.
Regulatory licensing statutes. Statutes that are enacted to protect the public that require certain persons or businesses to obtain a license from the government before being able to practice certain professions or engage in certain types of businesses.
Regulatory statutes. Statutes such as environmental laws, securities laws, and antitrust laws that provide for criminal violations and penalties.
Rejection of an offer. Express words or conduct by the offeree that rejects an offer. Rejection terminates the offer.
Rejoinder. A process whereby a defendant's attorney can call additional witnesses and introduce other evidence to counter the plaintiff's rebuttal.
Release of liability clause. A contractual provision that relieves one (or both) of the parties to a contract from tort liability for ordinary negligence; also known as an exculpatory clause.
Relevant geographical market. A relevant market that is defined as the area in which the defendant and its competitors sell the product or service.
Relevant market. The market required to be defined for a Sherman Act Section 2 charge of monopolization; includes defining the relevant product or service market and geographical market.
[[relevant product or service market. A relevant market that includes substitute products or services that are reasonably interchangeable with the defendant's products or services.
Reliance on a misrepresentation. An element of fraud that occurs when the innocent party to whom a misrepresentation of a material fact has been made justifiably relies on the misrepresentation and acts on it.
Religious discrimination. Discrimination against a person solely because of his or her religion or religious practices.
Remainder. A right of possession to real property that returns to a third party on the expiration of a limited or contingent estate (e.g., life estate).
Remainder beneficiary. A person who possesses the right of remainder to real property on the expiration of a limited or contingent estate (e.g., life estate).
Remainder beneficiary of a trust. A person or an entity who receives the trust corpus on the termination of a trust.
Remittitur. An action of a judge that reduces the amount of monetary damages awarded by the jury where the judge finds that the jury was biased, emotional, or inflamed in awarding damages.
Renounce. The action by a person who has been left an inheritance that rejects an inheritance.
Rent. The amount of money that a commercial or residential tenant has agreed to pay a landlord for the leased premises.
Rent-control ordinances. Local laws that stipulate the amount of rent a landlord can charge for residential housing.
Renters' insurance. Insurance that renters purchase to cover loss or damage to their possessions.
Reorganization bankruptcy. A form of bankruptcy in which a debtor reorganizes its capital structure, receives a partial discharge of unpaid debts, and takes other actions to emerge from bankruptcy as a viable concern.
Replacement cost insurance. Insurance that pays the cost to replace the damaged or destroyed property up to the policy limits.
Replacement workers. Workers who are hired by a company to take the place of the striking employees. Replacement workers do not have to be dismissed when the strike is over.
Replevin. The right of a buyer or lessee to recover goods from a seller or lessor who is wrongfully withholding the goods.
Reply. A document filed by the original plaintiff to answer the defendant's cross complaint.
Reporting company. Companies whose shares are traded on a national securities exchange and issuers who have made a registered offering under the Securities Act of 1933.
Repossession. A right granted to a secured creditor to take possession of the collateral on default by the debtor.
Representative's signature. An authorized signature of a designated agent on a written document or negotiable instrument that is made on behalf of the agent's principal.
Requirements contract. A contract in which a buyer contracts to purchase all of its requirements for an item from one seller.
Res ipsa loquitur. A tort in which the presumption of negligence arises because (1) the defendant was in exclusive control of the situation and (2) the plaintiff would not have suffered injury but for someone's negligence. The burden switches to the defendant to prove that he or she was not negligent.
Resale price maintenance. A per se violation of Section 1 of the Sherman Act that occurs when a party at one level of distribution enters into an agreement with a party at another level to adhere to a price schedule that either sets or stabilizes prices; also called vertical price-fixing.
Rescind. An act that cancels a contract.
Rescission. An action to rescind (undo) a contract. Rescission is available if there has been a material breach of contract, fraud, duress, undue influence, or mistake.
Reserved powers. Powers that are not specifically delegated to the federal government in the U.S. Constitution are reserved to the state governments.
Residuary clause. A clause in a will that leaves the remainder of an estate that remains after specific and general gifts are made and debts, taxes, and other costs are paid, to a beneficiary.
Residuary gift. A gift of an estate left after the debts, taxes, and specific and general gifts have been paid.
Resolutions. Actions taken by the board of directors of a corporation usually at a board meeting (e.g., authorize the corporation to enter into contracts or mergers, employ corporate officers). Corporate resolutions are recorded in minutes of the board of directors' meetings and specify the decisions that were made by the board during their meetings.
Resource Conservation and Recovery Act (RCRA). A federal statute that authorizes the EPA to regulate facilities that generate, treat, store, transport, and dispose of hazardous wastes.
Respondeat superior. A rule that says an employer or a principal is liable for the tortious conduct of its employees or agents while they are acting within the scope of its authority.
Responding brief. A written document prepared by an appellee and filed with an appellate court that sets forth legal research and other information that supports the appellee's position on appeal.
Restatement of the Law of Contracts. A compilation of model contract law principles drafted by legal scholars. The Restatement is not law.
Restatement (Second) of Agency. The second edition of a compilation of model agency law principles drafted by legal scholars. The Restatement is not law.
Restatement (Second) of Contracts. The second edition of the Restatement of the Law of Contracts. The Restatement is not law.
Restitution. The return of goods or property received from the other party to rescind a contract. If the actual goods or property are not available, a cash equivalent must be made.
Restraining order. An order that a court may issue if there is a showing that one person is likely to injure or harass another person; this order places limitations on the ability of the dangerous person to go near the person who has obtained the restraining order.
Restricted securities. Securities that are sold pursuant to the intrastate, private placement, and small offering exemptions that are subject to restrictions on resale for a period of time after the securities are issued.
Restrictive indorsement. An indorsement that contains some sort of instruction from the indorser.
Resulting trust. A trust that is implied from the conduct of the parties.
Retaliation. An action taken by an employer against an employee for filing a charge of discrimination or participating in a discrimination proceeding against the employer (e.g., dismissal or demotion). Retaliation violates antidiscrimination laws.
Retention of collateral. A secured creditor's repossession of collateral on a debtor's default and proposal to retain the collateral in satisfaction of the debtor's obligation.
Revenue-raising statute. A licensing statute whose primary purpose is raising revenue for the government.
Reverse discrimination. Discrimination against a group that is usually thought of as a majority.
Reverse engineering. Taking apart and examining a rival's product or re-creating a secret recipe.
Reverse tender offer. A tender offer that is made by a target corporation to purchase the shares of the corporation that is making the tender offer on the target corporation.
Reversion. The right of possession that returns to the grantor of real property after the expiration of a limited or contingent estate (e.g., life estate).
Revised Article 3 (Negotiable Instruments) of the Uniform Commercial Code. A comprehensive revision of the Uniform Commercial Code law of negotiable instruments that reflects modern commercial practices for the creation of, transfer of, enforcement of, and liability on negotiable instruments.
Revised Article 9 (Secured Transactions) of the Uniform Commercial Code. An article of the Uniform Commercial Code that governs secured transactions in personal property.
Revised Model Business Corporation Act (RMBCA). A revision of the Model Business Corporation Act (MBCA) that arranges the provisions of the act more logically, revises the language to be more consistent, and makes substantial changes in the provisions. A model act that is intended to provide a uniform law for the formation, operation, and termination of corporations.
Revised Uniform Limited Liability Company Act (RULLCA). A revision of the Uniform Limited Liability Company Act (ULLCA) that provides a more modern, comprehensive law for the formation, operation, and dissolution of limited liability companies.
Revised Uniform Limited Partnership Act (RULPA). A revision of the Uniform Limited Partnership Act (ULPA) that provides a more modern, comprehensive law for the formation, operation, and dissolution of limited partnerships.
Revised Uniform Partnership Act (RUPA). A revision of the Uniform Partnership Act (UPA) that provides a more modern, comprehensive law for the formation, operation, and dissolution of general partnerships.
Revocation of acceptance. Reversal of acceptance.
Revocation of an offer. Withdrawal of an offer by the offeror prior to its acceptance by the offeree that terminates the offer.
Revocation of a will. A situation that occurs when a testator or testatrix intentionally tears, burns, obliterates, or otherwise destroys his or her will.
Reward. An award given for performance of some service or attainment. To collect a reward, the offeree must (1) have knowledge of the reward offer prior to completing the requested act and (2) perform the requested act.
Rider. A document that modifies an insurance policy and becomes part of the insurance policy; also called an endorsement.
Right of first refusal. An agreement among shareholders of a corporation that requires a selling shareholder who is a signatory to the agreement to offer his or her shares for sale to the other parties to the agreement before selling them to anyone else.
Right of redemption of personal property. The right of a debtor to recover personal property that is collateral for a secured transaction after the debtor's default and before the creditor has disposed of the property by paying the secured creditor the full amount of the debt plus costs.
Right of redemption of real property. The right of a mortgagor to recover real property that is collateral for a mortgage after the debtor's default and before foreclosure by paying the mortgagee the full amount of the debt plus costs.
Right of survivorship of general partners. A rule that provides that on the death of a general partner, the deceased partner's right in specific partnership property vests in the remaining partner or partners; the value of the deceased general partner's interest in the partnership passes to his or her beneficiaries or heirs.
Right of survivorship of joint tenants. A legal rule that provides on the death of one joint tenant, the deceased person's interest in the real property automatically passes to the surviving joint tenant or joint tenants.
Right to a public jury trial. A right contained in the Sixth Amendment to the U.S. Constitution that guarantees a criminal defendant the right to a public jury trial.
Right to cancel a contract by the buyer or lessee. The right of a buyer or lessee of goods if a seller or lessor fails to deliver conforming goods or repudiates the contract.
Right to cancel a contract by the seller or lessor. The right of a seller or lessor of goods if the buyer or lessee breaches the contract by rejecting or revoking acceptance of the goods, failing to pay for the goods, or repudiating all or any part of the contract.
Right to cover. The right of a buyer or lessee to purchase or lease substitute goods if a seller or lessor fails to make delivery of the goods or repudiates the contract or if the buyer or lessee rightfully rejects the goods or justifiably revokes their acceptance.
Right to cure. The legal right of a seller or lessor who has delivered defective or nonconforming goods to repair or replace the defective or nonconforming goods if the time for performance has not expired and the seller or lessor notifies the buyer or lessee of his or her intention to make a conforming delivery within the contract time.
Right to die. The right of a terminally ill person to make a decision to end his or her life by assisted suicide. Assisted suicide is where a physician can provide a terminally ill person with the means to end his or her own life. Only a few states permit assisted suicide.
Right to dispose of goods. The right to dispose of goods in a good faith and commercially reasonable manner. A seller or lessor who is in possession of goods at the time the buyer or lessee breaches or repudiates a contract may in good faith resell, release, or otherwise dispose of the goods in a commercially reasonable manner and recover damages, including incidental damages, from the buyer or lessee.
Right to inspect goods. The right of a buyer or lessee of goods to inspect goods that are tendered, delivered, or identified in a sales or lease contract prior to accepting or paying for them.
Right to obtain specific performance. The right of a buyer or lessee of goods to obtain the goods from a seller or lessor if the goods are unique.
Right to participate in management. A situation in which, unless otherwise agreed, each general partner of a general or limited partnership, each partner of a limited liability partnership, and each nonmanager member of a limited liability company has a right to participate in the management of the business and has an equal vote on entity matters.
Right to reclaim goods. The right of a seller or lessor to demand the return of goods from the buyer or lessee under specified situations.
Right to recover damages for accepted nonconforming goods. The right of a buyer or lessee of goods who has accepted nonconforming goods to recover damages from the breaching seller or lessor.
Right to recover damages for breach of contract. A seller's or lessor's right to recover damages measured as the difference between the contract price (or rent) and the market price (or rent) at the time and place the goods were to be delivered, plus incidental damages, from a buyer or lessee who repudiates the contract or wrongfully rejects tendered goods.
Right to recover damages for nondelivery or repudiation. The right of the buyer or lessee of goods to recover damages if a seller or lessor fails to deliver the goods or repudiates the sales or lease contract.
Right to recover goods from the insolvent seller or lessor. The right of a buyer or lessee who has wholly or partially paid for goods before they are received to recover the goods from a seller or lessor who becomes insolvent within 10 days after receiving the first payment; the buyer or lessee must tender the remaining purchase price or rent due under the contract.
Right to recover lost profits. The right of a seller to sue a defaulting buyer to recover the profit it would have made from the defaulting buyer in a situation where the seller sold the goods to a new buyer but could have produced more of an item for sale.
Right to recover the purchase price or rent. A seller's or lessor's right to recover the contracted-for purchase price or rent from the buyer or lessee (1) if the buyer or lessee fails to pay for accepted goods, (2) if the buyer or lessee breaches the contract and the seller or lessor cannot dispose of the goods, or (3) if the goods are damaged or lost after the risk of loss passes to the buyer or lessee.
Right to reject nonconforming goods or improperly tendered goods. A situation in which a buyer or lessee rejects goods that do not conform to the contract. If the goods or the seller's or lessor's tender of delivery fails to conform to the contract, the buyer or lessee may (1) reject the whole, (2) accept the whole, or (3) accept any commercial unit and reject the rest.
Right to replevy (Recover) goods. The right of a buyer or lessee to recover goods from a seller or lessor who is wrongfully withholding the goods.
Right to share in the profits. A situation in which, unless otherwise agreed, each partner has a right to an equal share in the partnership's profits; losses are treated similarly.
Right to stop delivery of goods in transit. The right of a seller or lessor to stop delivery of goods in transit if he or she learns of the buyer's or lessee's insolvency or if the buyer or lessee repudiates the contract, fails to make payment when due, or gives the seller or lessor some other right to withhold the goods.
Right to sue letter. A letter that is issued by EEOC if it chooses not to bring an action against an employer that authorizes a complainant to sue the employer for employment discrimination.
Right to withhold delivery. A seller's or lessor's right to refuse to deliver goods to a buyer or lessee on breach of a sales or lease contract by the buyer or lessee or the insolvency of the buyer or lessee.
Right-to-work laws. Laws enacted by some states that provide that an individual employee cannot be forced to join a union or pay union dues and fees even though a labor union has been elected by other employees.
Risk of loss. Under the common law of contracts, the risk of loss of goods is placed on the party who holds title to the goods.
Risk of loss: destination contract. A situation in which the seller bears the risk of loss during transportation.
Risk of loss: shipment contract. A situation in which the buyer bears the risk of loss during transportation.
Risk of loss: Uniform Commercial Code (UCC). The UCC's detailed rules as to who bears the risk of loss in destination and shipment contracts.
Risk–utility analysis. A method for determining whether a product's design is defective that requires a court to consider the gravity of the danger posed by the design, the likelihood that injury will occur, the availability and cost of producing a safer alternative design, the social utility of the product, and other factors.
Robbery. The taking of personal property from another person by the use of fear or force.
Robinson-Patman Act. A federal statute, enacted in 1930, that prohibits price discrimination in the sale of goods if certain requirements are met.
Romano-Germanic civil law system. A civil law system based on a code of laws that dates to 450 bce, when Rome adopted the Twelve Tables, a code of laws applicable to the Romans.
Royalty fee. A fee paid by a franchisee to a franchisor for the continued use of the franchisor's trade name, property, and assistance, which is often computed as a percentage of the franchisee's gross sales and is paid on a regular basis.
Rule 10b-5. A rule of the Securities and Exchange Commission (SEC) that helps define the prohibitions of Section 10(b) of the Securities and Exchange Act of 1934 against deceptive and fraudulent activities in the purchase and sale of securities.
Rule of four. A rule that requires the votes of four justices to grant an appeal and schedule an oral argument before the U.S. Supreme Court.
Rule of reason. A rule that holds that only unreasonable restraints of trade violate Section 1 of the Sherman Act. The court must examine the pro- and anticompetitive effects of a challenged restraint.
Rule making. A process whereby administrative agencies adopt rules and regulations.
Rules and regulations. Laws adopted by administrative agencies to enforce and interpret statutes.
S corporation. A corporation that has met certain requirements and has elected to be taxed as an S corporation for federal income tax purposes. An S corporation pays no federal income tax at the corporate level. The S corporation's income or loss flows to the shareholders and must be reported on the shareholders' individual income tax returns.
Safe Drinking Water Act. A federal statute that authorizes the EPA to establish national primary drinking water standards.
Sale of goods. The passing of title of goods from a seller to a buyer for a price; also called a conveyance.
Sale of real property. The passing of title to real property from a seller to a buyer; also called a conveyance.
Sale on approval. A type of sale in which there is no actual sale unless and until the buyer accepts the goods.
Sale or lease of assets. A sale or lease that occurs when a corporation sells, leases, or otherwise disposes of all or substantially all of its property in other than the usual and regular course of business.
Sale or return contract. A contract in which the seller delivers goods to a buyer with the understanding that the buyer may return them if they are not used or resold within a stated or reasonable period of time.
Sale proceeds. The resulting assets from the sale, exchange, or disposal of collateral subject to a security agreement.
Sales contract. A contract for the sale of goods that is subject to Article 2 (Sales) of the Uniform Commercial Code (UCC).
Same-gender harassment (Same-sex harassment). Harassment in the workplace against an employee by another employee of the same sex that constitutes actionable gender harassment.
Same-gender marriage (Same-sex marriage). A marriage between two people of the same sex.
Same-sex harassment (Same-gender harassment). Harassment in the workplace against an employee by another employee of the same sex that constitutes actionable sexual harassment.
Same-sex marriage (Same-gender marriage). A marriage between two people of the same sex.
Sarbanes-Oxley Act of 2002. A federal statute enacted by Congress to improve corporate governance, bring more transparency to securities markets, eliminate conflicts of interests that previously existed in the securities industry, promote business ethics, and impose civil and criminal penalties for violations of the act.
Satisfaction. The performance of an accord.
Schedule C (Profit or Loss from Business). A federal income tax form that is attached to a sole proprietors federal personal income tax form that shows the income or loss from his or her sole proprietorship.
Schedules. Documents filed by a debtor on filing a voluntary petition for bankruptcy that name secured and unsecured creditors and that describe property owned by the debtor, the debtor's income, and other financial information.
Scienter ("guilty mind"). Knowledge that a representation is false or that it was made without sufficient knowledge of the truth. Intent to deceive.
Scope of employment. The scope of an agent's or employee's duties while conducting work for their principal or employer.
Search warrant. A warrant issued by a court that authorizes the police to search a designated place for specified contraband, articles, items, or documents. A search warrant must be based on probable cause.
SEC Rule 10b-5. A rule of the Securities and Exchange Commission (SEC) that helps define the prohibitions of Section 10(b) of the Securities and Exchange Act of 1934 against deceptive and fraudulent activities in the purchase and sale of securities.
SEC Rule 10b5-1. A rule of the Securities and Exchange Commission (SEC) that prohibits outsiders from trading in the security of any issuer on the basis of material nonpublic information that is obtained by a breach of duty of trust or confidence owed to the person who is the source of the information.
SEC Rule 144. A rule of the Securities and Exchange Commission (SEC) that stipulates that securities issued pursuant to the private placement exemption or the small offering exemption are restricted securities that cannot be resold for six months if the issuer is an SEC reporting company (e.g., larger firms) or one year if the issuer is not an SEC reporting company (e.g., smaller firms).
SEC Rule 147. A rule of the Securities and Exchange Commission (SEC) that provides that an intrastate offering of securities can be made without registration with the Securities and Exchange Commission (SEC) in the one state if certain requirements are met. The rule also states that securities sold pursuant to an intrastate offering exemption cannot be sold to nonresidents for a period of nine months.
SEC Rule 504. A rule of the Securities and Exchange Commission (SEC) that exempts from registration the sale of securities not exceeding $1 million during a 12-month period. Called the small offering exemption.
SEC Rule 506. A rule of the Securities and Exchange Commission (SEC) that exempts from registration the sale of securities to an unlimited number of accredited investors and to no more than 35 nonaccredited investors. Called the private placement exemption.
Second-degree murder. The intentional unlawful killing of a human being by another person that is not premeditated or planned in advance but involves some deliberation.
Secondarily liable. Liability of a guarantor where the guarantor agrees to pay the principal debtor's debt if the principal fails to pay the debt when it is due.
Secondary boycott picketing. A type of picketing in which a union tries to bring pressure against an employer by picketing the employer's suppliers or customers.
Secondary liability. Liability on a negotiable instrument that is imposed on a party only when the party primarily liable on the instrument defaults and fails to pay the instrument when due. Drawers of checks and drafts and unqualified indorsers of negotiable instruments have secondary liability on the instruments.
Secondary meaning. Consists of the use of ordinary words or symbols by a party to the extent that they have acquired a secondary meaning and qualify for trademark or service mark status under federal trademark law.
Secret profits. Profits that occur where an agent, a general partner, a director or an officer of a corporation, a partner in a limited liability partnership, certain members of a limited liability company, or someone else who owes a fiduciary duty to a principal makes a secret profit during the course of their employment by their principal.
Secretariat. A staff of persons that administers the day-to-day operations of the United Nations. It is headed by the secretary-general.
Secretary of state. An office of state governments where many legal documents are filed.
Secretary-general. The person who heads the Secretariat of the United Nations. The secretary-general is elected by the General Assembly of the United Nations.
Section 1 of the Sherman Act. A section of a federal statute that prohibits contracts, combinations, and conspiracies in restraint of trade.
Section 2 of the Clayton Act (RobinsonPatman Act). A section of a federal statute that prohibits price discrimination in the sale of goods if certain requirements are met.
Section 2 of the Sherman Act. A section of a federal statute that prohibits monopolization and attempts or conspiracies to monopolize trade.
Section 2(a) of the Robinson-Patman Act. A section of a federal statute that prohibits price discrimination in the sale of commodities of like grade and quality in sales to two or more purchasers contemporaneously in time that causes actual injury to the plaintiff.
Section 2(b) of the Robinson-Patman Act. A section of a federal statute that establishes the meeting the competition defense to price discrimination.
Section 2-201(1) of the Uniform Commercial Code (UCC). A section of the Uniform Commercial Code (UCC) that states that sales contracts for the sale of goods costing $500 or more must be in writing. Revised Article 2 raises this amount to $5,000.
Section 2A-201(1) of the Uniform Commercial Code (UCC). A section of the Uniform Commercial Code (UCC) that states that lease contracts involving payments of $1,000 or more must be in writing. Revised Article 2A raises this amount to $20,000.
Section 3 of the Clayton Act. A section of a federal statute that prohibits tying arrangements involving sales and leases of goods.
Section 4 of the Clayton Act. A section of a federal statute that provides that anyone injured in his or her business or property by the defendant's violation of any federal antitrust law (except the Federal Trade Commission Act) may bring a private civil action and recover from the defendant treble damages plus reasonable costs and attorneys' fees.
Section 5 of the Federal Trade Commission Act (FTC Act). A section of a federal statute that prohibits unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce.
Section 5 of the Securities Act of 1933. A section of a federal statute that requires an issuer to register its securities with the Securities and Exchange Commission (SEC) prior to selling them to the public.
Section 7 of the Clayton Act. A section of a federal statute that provides that it is unlawful for a person or business to acquire the stock or assets of another "where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly."
Section 7 of the National Labor Relations Act (NLRA). A section of a federal statute that provides that employees shall have the right to self-organize, to form, join, or assist labor organizations, to bargain collectively with employers through representatives of their own choosing, and to engage in other concerted activities in support of union organization and collective bargaining.
Section 8(a) of the National Labor Relations Act (NLRA). A section of a federal statute that makes it an unfair labor practice for an employer to interfere with, coerce, or restrain employees from exercising their statutory right to form and join unions.
Section 8(b) of the National Labor Relations Act (NLRA). A section of a federal statute that makes it an unfair labor practice for a labor union to interfere with, coerce, or restrain employees from exercising their statutory right to form and join unions.
Section 10A of the Securities Exchange Act of 1934. A section of a federal statute that imposes a duty on auditors to detect and report illegal acts committed by their clients.
Section 10(b) of the Securities Exchange Act of 1934. A section of a federal statute that prohibits any manipulative or deceptive practice in connection with the purchase or sale of a security.
Section 10(b) insider. Parties include (1) officers, directors, and employees at all levels of a company; (2) lawyers, accountants, consultants, and agents and representatives who are hired by the company on a temporary and nonemployee basis to provide services or work to the company; and (3) others who owe a fiduciary duty to the company.
Section 11 of the Securities Act of 1933. A section of a federal statute that imposes civil liability on persons who intentionally defraud investors by making misrepresentations or omissions of material facts in the registration statement or who are negligent for not discovering the fraud.
Section 11(a) of the Securities Act of 1933. A section of a federal statute that imposes civil liability on accountants and others for (1) making misstatements or omissions of material facts in a registration statement or (2) failing to find such misstatements or omissions.
Section 12 of the Securities Act of 1933. A section of a federal statute that imposes civil liability on any person who violates the provisions of Section 5 of the act.
Section 13(d) of the Securities Exchange Act of 1934. A section of a federal statute that requires any party that acquires 5 percent or more of an equity security of a company registered with the Securities and Exchange Commission (SEC) to report the acquisition to the SEC and disclose its intentions regarding the acquisition.
Section 14(a) of the Securities Exchange Act of 1934. A section of a federal statute that gives the Securities and Exchange Commission (SEC) the authority to regulate the solicitation of proxies.
Section 14(e) of the Williams Act. A section of the Williams Act that prohibits fraudulent, deceptive, and manipulative practices in connection with a tender offer.
Section 16 of the Clayton Act. A section of a federal statute that permits the government or a private plaintiff to obtain an injunction against anticompetitive behavior that violates antitrust laws.
Section 16 statutory insider. Any person who is an executive officer, a director, or a 10 percent shareholder of an equity security of a reporting company.
Section 16(a) of the Securities Exchange Act of 1934. A section of a federal statute that defines any person who is an executive officer, a director, or a 10 percent shareholder of an equity security of a reporting company as a statutory insider for Section 16 purposes.
Section 16(b) of the Securities Exchange Act of 1934. A section of a federal statute that requires that any profits made by a statutory insider on transactions involving short-swing profits belong to the corporation.
Section 18(a) of the Securities Exchange Act of 1934. A section of a federal statute that imposes civil liability on any person who makes false or misleading statements in any application, report, or document filed with the SEC.
Section 24 of the Securities Act of 1933. A section of a federal statute that imposes criminal liability on any person who willfully violates the Securities Act of 1933 or the rules or regulations adopted thereunder.
Section 32 of the Securities Exchange Act of 1934. A section of a federal statute that imposes criminal liability on any person who willfully violates the Securities Exchange Act of 1934 or the rules or regulations adopted thereunder.
Section 32(a) of the Securities Exchange Act of 1934. A section of a federal statute that makes it a criminal offense for any person willfully and knowingly to make or cause to be made any false or misleading statement in any application, report, or other document required to be filed with the Securities and Exchange Commission (SEC) pursuant to the Securities Exchange Act of 1934 or any rule or regulation adopted thereunder.
Section 101 of the Uniform Securities Act. A section of a model act that makes it a criminal offense for accountants and others to willfully falsify financial statements and other reports.
Section 102(b)(7) of the Delaware Corporation Code. A section of the Delaware corporation code that permits Delaware corporations to include an exculpatory provision in the certificate of incorporation that protects directors from personal liability arising from their ordinary or gross negligence in the performance of their duties as directors.
Section 303 of the Revised Uniform Limited Partnership Act (RULPA). A 2001 amendment to the Revised Uniform Limited Partnership Act (RULPA) that permits limited partners to participate in the management of a limited partnership without losing their limited liability shield.
Section 406 of the Sarbanes-Oxley Act. A section of a federal statute that requires a public company to disclose whether it has adopted a code of ethics for senior financial officers, including its principal financial officer and principal accounting officer.
Section 552 of the Restatement (Second) of Torts. A rule that says that an accountant is liable only for negligence to third parties who are members of a limited class of intended users of the client's financial statements. It provides a middle standard for holding accountants liable to third parties for negligence.
Section 1981 of the Civil Rights Act of 1866. A section of a federal statute enacted after the Civil War that says all persons "have the same right . . . to make and enforce contracts . . . as is enjoyed by white persons." It prohibits racial and color discrimination.
Section 4205 of the Patient Protection and Affordable Care Act. A section of a federal statute that requires restaurants and retail food establishments and vending machine operators with 20 or more locations to disclose calorie counts of the food items they serve on menus, menu boards, and drive-through menu boards.
Section of the country. A division of the country that is based on the relevant geographical market; the geographical area that will feel the direct and immediate effects of the merger.
Secured credit. Credit that requires security (collateral) to secure payment of the loan.
Secured creditor. A creditor who has a security interest in collateral. Also called a secured party.
Secured party in a secured transaction. The seller, lender, or other party in whose favor there is a security interest.
Secured personal property. A bankruptcy rule that states that if personal property of an individual debtor secures a claim or is subject to an unexpired lease (e.g., an automobile lease), the debtor must either (1) surrender the personal property, (2) redeem the property by paying the secured lien in full, or (3) assume the unexpired lease.
Secured transaction. A transaction that is created when a creditor makes a loan to a debtor in exchange for the debtor's pledge of personal property as security.
Securities Act of 1933. A federal statute that primarily regulates the issuance of securities by corporations, limited partnerships, and associations.
Securities and Exchange Commission (SEC). A federal administrative agency that is empowered to administer federal securities laws. The Securities and Exchange Commission (SEC) can adopt rules and regulations to interpret and implement federal securities laws.
Securities Exchange Act of 1934. A federal statute that primarily regulates the trading in securities.
Securities law. Federal and state laws that regulate the issuance and trading of securities.
Security. (1) An interest or instrument that is common stock, preferred stock, a bond, a debenture, or a warrant; (2) an interest or instrument that is expressly mentioned in securities acts; and (3) an investment contract.
Security agreement. A written document signed by a debtor that creates a security interest in personal property.
Security Council. A council of the United Nations that is composed of 15 member nations, five of which are permanent members and 10 other countries are chosen by the members of the General Assembly, that is responsible for maintaining international peace and security.
Security interest in personal property. An interest that is created when a party borrows money from a lender and pledges personal property as security for repayment of the loan.
Security interest in real property. An interest that is created when a party borrows money from a lender and pledges real estate as security for repayment of the loan.
Self-dealing. A situation that occurs when an agent, a general partner, a director or an officer of a corporation, a partner in a limited liability partnership, certain members of a limited liability company, or anyone else who owes a fiduciary duty to a principal engages in undisclosed self-dealing with their principal, such as undisclosed purchasing, selling, or leasing of property with their principal.
Self-Employment Contributions Act. A federal statute that requires certain selfemployed persons to contribute (pay taxes) to the Social Security fund.
Self-incrimination. A provision of the Fifth Amendment to the U.S. Constitution that no person shall be compelled in any criminal case to be a witness against himor herself.
Separate property. Property owned by a spouse prior to marriage, as well as inheritances and gifts received by a spouse during the marriage.
Sequester. A process in which jurors are separated from family and others during jury deliberation.
Series of forgeries or alterations. A rule that stipulates that if the same wrongdoer engages in a series of forgeries or alterations on the same account, the customer must report that to the payer bank within a reasonable period of time, not exceeding 30 days from the date that the bank statement was made available to the customer.
Service corporation (S.C.). A corporation formed by lawyers, doctors, or other professionals.
Service mark. A mark that distinguishes the services of the holder from those of its competitors.
Service of process. The process of serving a summons on a defendant to obtain personal jurisdiction over him or her.
Servient estate. The land over which an easement is granted.
Servient party. A person who is subject to the influence of a dominate person who takes advantage of the servient person's mental, emotional, or physical weakness and unduly influences the servient person to enter into a contract.
Settlement agreement. In a divorce proceeding, a written document signed by divorcing parties that evidences their agreement settling property rights and other issues of their divorce.
Settlement conference (Pretrial hearing). A hearing before a trial in order to facilitate the settlement of a case.
Sex discrimination (Gender discrimination). Discrimination against a person because of his or her gender.
Sex-plus discrimination. A form of gender discrimination in which an employer does not discriminate against a class as a whole but treats a subset of the class differently (e.g., does not discriminate against females in general but does discriminate against married women or women with children).
Sexual harassment (Gender harassment). Lewd remarks, touching, intimidation, posting of indecent materials, or other verbal or physical conduct of a sexual nature that occurs on the job that creates a hostile work environment.
Share exchange. A situation in which one corporation acquires all the shares of another corporation, and both corporations retain their separate legal existence.
Shareholder resolution. A resolution that a shareholder who meets certain ownership requirements may submit to other shareholders for a vote. Many shareholder resolutions concern social issues.
Shareholder voting agreement. An agreement between two or more shareholders of a corporation that stipulates how they will vote their shares for the election of directors or other matters that require a shareholder vote.
Shareholders. Owners of a corporation who elect the board of directors and vote on fundamental changes in the corporation.
Shareholders' list. A list that contains the names and addresses of the shareholders of a corporation as of the record date and the class and number of shares owned by each shareholder.
Shareholders' meeting. Meetings of the shareholders of a corporation that are held to elect directors, choose an independent auditor, and take other actions.
Shelter principle. A rule which says that a holder who does not qualify as a holder in due course in his or her own right becomes a holder in due course if he or she acquires the instrument through a holder in due course.
Sherman Antitrust Act (Sherman Act). A federal statute, enacted in 1890, that makes certain restraints of trade and monopolistic acts illegal.
Shipment contract. A contract that requires a seller to ship the goods to the buyer via a common carrier.
Shipping terms. Terms in sales contracts that establish duties and assesses risk of loss when goods are shipped by a common carrier such as a trucking company, a ship, or a railroad.
Short-form merger. A merger between a parent corporation and a subsidiary corporation that does not require the approval of the shareholders of either corporation or the approval of the board of directors of the subsidiary corporation.
Short-swing profits. Profits that are made by statutory insiders on trades involving equity securities of their corporation that occur within six months of each other.
Sight draft. A draft payable on sight; also called a demand draft.
Signature. Any name or word, mark, or symbol used in lieu of a written signature, that may handwritten, typed, printed, stamped, or made in almost any other manner that is executed or adopted by a party to authenticate a writing.
Signature liability. A liability rule that holds that a person cannot be held contractually liable on a negotiable instrument unless his or her signature appears on the instrument; also called contract liability.
Signature requirement. A requirement that a negotiable instrument must be signed by the drawer or maker. Any symbol executed or adopted by a party with a present intent to authenticate the writing qualifies as his or her signature.
Signer. A person who signs an instrument in the capacity of (1) a maker of notes or certificates of deposit, (2) a drawer of drafts or checks, (3) a drawee who certifies or accepts checks or drafts, (4) an indorser who indorses an instrument, (5) an agent who signs on behalf of others, or (6) an accommodation party.
Sit-down strike. A labor strike in which the striking employees continue to occupy the employer's premises. Such strikes are illegal because they deny the employer's statutory right to continue its operations during a strike.
Sixth Amendment to the U.S. Constitution. An amendment to the U.S. Constitution that guarantees that a criminal defendant has the right to a public jury trial, to have a speedy trail, to examine witnesses, and other trial related rights.
Slander Oral defamation of character..
SM. A symbol that designates an owner's legal claim to an unregistered mark that is associated with a service.
Small business bankruptcy. A bankruptcy proceeding that provides an efficient and cost-saving method for small businesses to reorganize under Chapter 11 reorganization bankruptcy.
Small certificate of deposit (Small CD). A certificate of deposit that is commonly under $100,000.
Small claims court. A court that hears civil cases involving small dollar amounts.
Small company doctrine. A doctrine that permits two or more small competing companies to merge without violating antitrust law if the merger would allow the merged firm to compete more effectively with a large company.
Small Company Offering Registration (SCOR). A method for small companies to sell up to $1 million of securities to the public by using a question-and-answer disclosure Form U-7.
Small offering exemption (SEC Rule 504). An exemption from registration that permits the sale of securities not exceeding $1 million during a 12-month period.
Social responsibility of business. A requirement that corporations and businesses act with awareness of the consequences and impact that their decisions will have on others.
Social Security. A federal system that provides government benefits to covered persons and their dependents, including (1) retirement benefits, (2) survivors' benefits to family members of deceased workers, (3) disability benefits, and (4) medical and hospitalization benefits.
Social Security Administration. A federal agency that administers the Social Security system.
Sociological School of jurisprudence. A school of thought that asserts that law is a means of achieving and advancing certain sociological goals.
Socratic method. A question-and-answer method used by law professors in class to stimulate class discussions and debate.
Sole proprietor. The owner of a sole proprietorship.
Sole proprietorship. A form of business in which the owner is actually the business; the business is not a separate legal entity.
Spam. Unsolicited commercial e-mail.
Special bailments. Bailments that involve warehouse companies, common carriers, and innkeepers.
Special federal courts. Federal courts that hear matters of specialized or limited jurisdiction.
Special indorsement. An indorsement that contains the signature of the indorser and specifies the person (indorsee) to whom the indorser intends the instrument to be payable. It creates order paper.
Special meeting of a board of directors. A meeting convened by a board of directors to consider important topics such as the issuance of new shares, merger proposals, hostile takeover attempts, and so forth.
Special power of attorney. A power of attorney in which a principal confers powers on an agent to act in specified matters on the principal's behalf.
Special shareholders' meetings. Meetings of shareholders that may be called to consider and vote on important or emergency issues, such as a proposed merger or amending the articles of incorporation.
Special warranty deed (Limited warranty deed). A deed to real property that protects a buyer from defects in title that were caused by the seller. The seller is not liable for defects in title or for encumbrances that existed before the seller obtained the property.
Specially manufactured goods. Goods that buyers and lessees order that are to be manufactured to the buyer's or lessee's unique specifications.
Specific duty standards. Occupational Safety and Health Administration (OSHA) standards that address safety problems of a specific nature (e.g., a requirement for a safety guard on a particular type of equipment).
Specific gift. A gift of a specifically named piece of property in a will.
Specific government regulation. Laws that regulate specific industries (e.g., banking).
Specific intent crime. A crime that requires that the perpetrator intended to achieve a specific result from his illegal act.
Specific performance. A remedy that orders the breaching party to perform the acts promised in the contract. Specific performance is usually awarded in cases in which the subject matter is unique, such as in contracts involving land, heirlooms, and paintings.
Speedy Trial Act. A federal statute that requires that a criminal defendant in a federal case be brought to trial within 70 days after indictment.
Spendthrift trust. A trust that is designed to prevent a beneficiary's personal creditors from reaching his or her trust interest. All control over the trust is removed from the beneficiary.
Spousal support. Payments made by one divorced spouse to the other divorced spouse; also called alimony.
Spouse–spouse privilege. A privilege granted to an accused through the Fifth Amendment to the U.S. Constitution to keep his or her spouse from testifying against him or her; a spouse may testify against his or her spouse where the accused spouse is charged with harming his or her spouse.
Staggered terms. A situation in which a board of directors of a corporation is divided into classes that are elected to serve two or three years on the board of directors.
Stakeholder interest. A theory of social responsibility that says a corporation must consider the effects its actions have on persons other than its stockholders.
Stale check. A check that has been outstanding for more than six months.
Standard fire insurance. Insurance that protects a home owner from loss caused by fire, lightning, smoke, and water damage.
Standard Oil Company of New Jersey v. United States. A U.S. Supreme Court decision that found Standard Oil Company guilty of monopolizing the petroleum industry through abusive and anticompetitive practices and as a remedy broke up Standard Oil into 30 competing firms. The Supreme Court adopted the rule of reason standard for analyzing Section 1 of the Sherman Act antitrust cases.
Standards of interpretation. Rules applied by courts in defining ordinary words, technical words, specific terms, and other words used in contracts.
Standing to sue. A requirement that a plaintiff have some stake in the outcome of a lawsuit in order to bring a lawsuit.
Standstill agreement. An agreement entered into by a target company with a tender offeror whereby the tender offeror who receives a payment of greenmail agrees to abandon its tender offer and not purchase any additional stock of the target company for an agreed-on period of time.
Stare decisis. A doctrine that requires adherence to precedent. Stare decisis is Latin for "to stand by the decision."
State action exemption. Business activities that are mandated by state law and are therefore exempt from federal antitrust laws.
State administrative agencies. Administrative agencies that states create to enforce and interpret state law.
State antitrust laws. State statutes that regulate anticompetitive behavior and monopoly business practices.
State constitutions. Constitutions that are adopted by states. State constitutions that are often patterned after the U.S. Constitution, although many are more detailed.
State courts. Courts established by states.
State implementation plan (SIP). A plan that must be submitted by each state that sets forth how the state plans to meet federal ambient air quality standards.
State median income. For a family of any size, income for which half of the state's families of this size have incomes above this figure and half of the state's families of this size have incomes less than this figure.
State securities laws. State laws that regulate the issuance and trading of securities; often referred to as blue-sky laws.
State statutes. Statutes enacted by state legislatures.
State supreme court. The name often given to a state's highest court.
Statement of disassociation. A document filed with the secretary of state that gives constructive notice that a member has disassociated from a limited liability company (LLC).
Statement of opinion. A commendation of goods, made by a seller or lessor, that does not create an express warranty; also known as puffing.
Statement of policy. A statement issued by an administrative agency that announces a proposed course of action that an agency intends to follow in the future.
Stationary sources of air pollution. Sources of air pollution, such as industrial plants, oil refineries, and public utilities.
Statute. Written law enacted by the legislative branch of the federal and state governments that establishes certain courses of conduct that must be adhered to by covered parties.
Statute of Frauds. A state statute that requires certain types of contracts to be in writing.
Statute of limitations. A statute that establishes the period during which a plaintiff must bring a lawsuit against a defendant.
Statute of repose. A statute that limits the seller's liability to a certain number of years from the date the product was first sold.
Statute of Wills. A state statute that establishes the requirements for making a valid will.
Statutorily defined securities. Interests or instruments that are expressly defined as securities, including interests in oil, gas, and mineral rights; preorganization subscription agreements; and deposit receipts for foreign securities.
Statutorily prescribed period of time. The required statutory period during which a person must wrongfully possess another party's real property to obtain title to that property through adverse possession.
Statutory close corporation. A corporation that may dispense with some of the formalities of operating a corporation.
Statutory exemptions. Exemptions from antitrust laws that are expressly provided in statutes enacted by Congress.
Statutory period of redemption. The specified period of time during which a state allows a mortgagor to redeem real property after foreclosure on the property because of default on a loan.
Statutory priority of unsecured claims. A rule of bankruptcy law that stipulates the priority of unsecured claims that are to be satisfied out of the bankruptcy estate.
Stock dividend. Additional shares of stock distributed as a dividend.
Stop-payment order. An order by a drawer of a check to the payer bank not to pay or certify a check.
Stop Trading on Congressional Knowledge Act (STOCK Act). A federal statute the prohibits members and employees of Congress, the president and all employees of the executive branch, and judges and employees of the judicial branch from using nonpublic information derived from the individual's position or gained from performance of the individual's duties for personal benefit.
Straight voting. A system of shareholder voting for the board of directors of a corporation whereby each shareholder votes the number of shares he or she owns for his or her choices from the candidates running for the board of director positions that must be filed; also called noncumulative voting.
Strategic alliance. An arrangement between two or more companies whereby they agree to ally themselves and work together to accomplish a designated objective.
Strict liability. Liability without fault.
Strict scrutiny test. A test that is applied to determine the constitutionality of classifications by the government based on race, national origin, citizenship, or voting rights.
Strike. A cessation of work by union members in order to obtain economic benefits or to correct an unfair labor practice.
Student loans. Under bankruptcy law, educational loans made by or guaranteed by governmental units or nongovernmental commercial institutions such as banks, as well as funds for scholarships, benefits, or stipends granted by educational institutions.
Subchapter S Revision Act. A federal statute that allows shareholders of qualifying corporations to avoid double taxation by electing S corporation status.
Subcommittee. A special group composed of members of a committee of the U.S. House of Representatives or U.S. Senate.
Subfranchisor. An area franchisee who has been granted for an area franchise for a designated geographical area and who has the authority to negotiate and sell franchises on behalf of the franchisor in that area.
Sublease. An arrangement in which a tenant transfers some of his or her rights under a lease to another party.
Sublessee. The new tenant in a sublease arrangement.
Sublessor. An original tenant who transfers some or all of his rights under a lease by sublease.
Submission agreement. An agreement entered into by parties to a dispute where there is no arbitration agreement to have their dispute arbitrated.
Subsequent assignee. A party to whom an assignee has transferred a right to receive performance under a contract; also known as subassignee.
Subsequent will. A will that is executed after a previous will that revokes the prior will.
Subsidiary corporation in a share exchange. A corporation that is owned by the parent corporation in a share exchange.
Substantial performance. Performance by a contracting party that deviates only slightly from complete performance; there is a minor breach.
Substantive administrative law. Law that administrative agencies enforce.
Substantive due process. A category of due process that requires that government statutes, ordinances, regulations, or other laws be clear on their face and not overly broad in scope.
Substantive rule. Government regulation that has the force of law and must be adhered to by covered persons and businesses.
Substitute for money. Certain forms of negotiable instruments -- such as checks -- serve as substitutes for money.
Substituted contract. A contract that contracting parties enter into that revokes and discharges an existing contract and is a substitute for the first contract.
Subsurface rights. Rights to the earth located beneath the surface of the land; also known as mineral rights.
Successor trustee. A trustee who replaces the grantor-trustee if the grantor becomes incapacitated or too ill to manage the trust.
Suicide clause. A clause in a life insurance contract that provides that if an insured commits suicide before a stipulated date, the insurance company does not have to pay the life insurance proceeds.
Summons. A court order directing the defendant to appear in court and answer the complaint.
Superfund. Common name for the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), a federal statute that authorizes the federal government to deal with hazardous wastes. The act creates a monetary fund to finance the cleanup of hazardous waste sites.
Super-priority lien. A statutory lien given to workers on personal property to which they furnish services or materials in the ordinary course of business which usually prevails over all other security interests in the goods. Also called an artisan's lien.
superseding or Intervening event. In tort law, an event for which a defendant is not responsible. The defendant is not liable for injuries caused by the superseding or intervening event.
Supervening event. An alteration or a modification of a product by a party in the chain of distribution that absolves all prior sellers from strict liability.
Supervening illegality. The enactment of a statute, regulation, or court decision that makes the object of an offer illegal. This action terminates the offer.
Supervisor. For Title VII purposes, a supervisor is a person who is empowered by an employer to take tangible employment actions against a person, such as hiring, firing, promoting, demoting, reassigning, or making significant changes in employment benefits.
Supplier. The party in a three-party finance lease transaction that sells the goods to a lessor and the lessor leases the goods to a lessee.
Supramajority voting requirement. A rule established by a corporation that stipulates that a greater than majority of the number of shares (the percent as set by corporation code or corporate document) are needed to constitute a quorum for a vote of the shareholders; also known as supermajority voting requirement.
Supremacy Clause. A clause of the U.S. Constitution that establishes that the U.S. Constitution and federal treaties, laws, and regulations are the supreme law of the land.
Supreme Court of the United States. The highest court of the federal court system. It hears appeals from the U.S. Courts of Appeals and, in some instances, from special federal courts, U.S. District Courts, and the highest state courts. Also called the U.S. Supreme Court.
Surety (Co-debtor). The third person who agrees to be liable in a surety arrangement; also known as the co-signer or accommodation party. The surety is primarily liable on the debt.
Surety arrangement. An arrangement in which a third party promises to be primarily liable with the borrower for the payment of the borrower's debt.
Surface rights. The right to occupy the land. The owner may use, enjoy, and develop the property as he or she sees fit, subject to any applicable government laws and regulations.
Surviving corporation. The corporation that continues to exist after a merger.
Suspect class. A class of individuals identified by their race or national origin or citizenship.
Taft-Hartley Act (Labor Management Relations Act). A federal statute enacted in 1947 that expanded the activities that labor unions could engage in.
Taking for value. A requirement that says a holder must give value for a negotiable instrument in order to qualify as a holder in due course (HDC).
Taking in good faith. A requirement that says a holder must take the instrument in good faith in order to qualify as a holder in due course (HDC).
Taking possession of the collateral. A situation that occurs when a creditor takes possession of collateral when a secured loan is in default.
Taking where there is no evidence of forgery, alteration, or irregularity. A requirement that says a holder does not qualify as a holder in due course (HDC) if at the time the instrument was issued or negotiated by the holder it bore evidence of forgery or alteration or was otherwise so irregular or incomplete as to call attention to its authenticity.
Taking without notice of defect. A requirement that says a person cannot qualify as a holder in due course (HDC) if he or she has notice that the instrument is defective in certain ways.
Takings Clause. A clause of the Fifth Amendment to the U.S. Constitution that provides that the government may take private property from property owners to be used for public use. The government must pay the owner of the property just compensation for the taking.
Tangible personal property. Property such as goods, equipment, vehicles, furniture, computers, clothing, and jewelry.
Tangible property. All real property and physically defined personal property, such as buildings, goods, animals, and minerals.
Tangible writing. Writings that can be physically seen that are subject to copyright registration and protection.
Target corporation. A corporation that is proposed to be acquired in a tender offer situation.
Tarnishment. A situation that occurs when a famous mark is linked to products of inferior quality or is portrayed in an unflattering, immoral, or reprehensible context likely to evoke negative beliefs about the mark's owner.
Tax Reform Act of 1976. A federal statute that imposes criminal liability on accountants and others who prepare federal tax returns if they (1) willfully understate a client's tax liability, (2) negligently understate the tax liability, or (3) aid or assist in the preparation of a false tax return.
Tax sale. A government sale of property belonging to an owner of real property who fails to pay property taxes in order to raise the amount of the taxes. If the taxes remain unpaid for a statutory period of time, the government can sell the property at a tax sale to satisfy the lien.
Temporary alimony. Alimony that is ordered by the court to be paid by one divorcing spouse to the other divorcing spouse for a limited period of time; also called rehabilitation alimony.
Tenancy at sufferance. A tenancy created when a tenant retains possession of property after the expiration of another tenancy or a life estate without the owner's consent.
Tenancy at will. A tenancy created by a lease of real property that may be terminated at any time by either party.
Tenancy by the entirety. A form of coownership of real property that can be used only by married couples.
Tenancy for years. A tenancy for real property created when a landlord and a tenant agree on a specific duration for a lease.
Tenancy in common. A form of co-ownership in which the interest of a surviving tenant in common passes to the deceased tenant's estate and not to the co-tenants.
Tenant. The party to whom a leasehold is transferred. Also known as a lessee.
Tenant in common. Parties who co-own real property in a tenancy in common arrangement.
Tenant in partnership. A legal rule that provides that general partners are coowners with the other general partners of the specific property owned by the partnership.
Tender of delivery. The obligation of a seller to transfer and deliver goods to the buyer or lessee in accordance with a sales or lease contract.
Tender of performance. An unconditional and absolute offer by a contracting party to perform his or her obligations under a contract; also known as tender.
Tender offer. An offer that an acquirer makes directly to a target corporation's shareholders in an effort to acquire the target corporation.
Tender offeror. A party who makes a tender offer.
Term LLC. A limited liability company (LLC) that has a specified term of duration.
Termination-at-will clause. A clause in a franchise agreement that permits a franchisor to terminate a franchise without cause; these clauses are generally held to be void.
Termination of a corporation. An act that occurs after the winding up of the corporation's affairs, the liquidation of its assets, and the distribution of the proceeds to the claimants.
Termination of an offer by act of the parties. The termination of an offer when one party takes an action that indicates that he is not interested in forming a contract under the terms of the offer, including (1) rejection of an offer by the offeree, (2) counteroffer by the offeree, and (3) revocation of an offer by the offeror.
Termination of an offer by operation of law. The termination of an offer by the operation of law, including (1) the destruction of the subject matter, (2) the death of incompetency of the offeror or the offeree, (3) a supervening illegality, and (4) lapse of time of the offer.
Termination statement. A document filed by a secured party that ends a secured interest because the debt has been paid.
Territory. A geographical area assigned by a franchisor for a franchisee to serve; often the geographical territory is granted exclusively to the franchisee.
Test the waters. The ability of an emerging growth company (EGC) to communicate with institutional accredited investors to determine if there is enough interest in company's proposed initial public offering to go through with it.
Testamentary capacity. The requirement that a testator or testatrix be of legal age and "sound mind" when a will was executed.
Testamentary trust. A trust created by will; the trust comes into existence when the settlor dies.
Testator or Testatrix. A person who makes a will.
testator's (Or testatrix's signature. The signature of a person who makes a will.
Theft. A crime that does not distinguish among and includes the crimes of robbery, burglary, and larceny.
Thermal pollution. Heated water or material discharged into waterways that upsets the ecological balance and decreases the oxygen content.
Third-party beneficiary. A third party who benefits by the performance by others of the others' contracts.
Third-party lender. A party from whom a buyer obtains financing to purchase goods from a seller where the lender takes a security interest in the goods.
Three-party secured transaction. A transaction that occurs when a seller sells goods to a buyer who has obtained financing from a third-party lender who takes a security interest in the goods sold.
Tie decision. A decision in which the appellate or supreme court justices reach a tie (equal) vote. The lower court's decision stands. The decision is not precedent.
Time draft. A draft payable at a designated future date.
Time instrument. An instrument that is payable at a designated future date.
Time is of the essence. A condition used in contracts that designates that the performance of the contract by a stated time is an express condition and that there is a breach of contract if the contracting party does not perform by the stated date.
Time instrument. An instrument that specifies a definite date for payment of the instrument.
Time note. A note payable at a specific time.
Tippee. A person who receives material nonpublic information from a tipper.
Tipper. A person who discloses material nonpublic information to another person.
Tipper-tippee liability. Liability that occurs when a tipper discloses material nonpublic information to a tippee that the tippee knows or has reason to know is inside information, and the tippee trades securities based on this information.
Title. Legal, tangible evidence of ownership of goods, real property, or other property.
Title I of the Americans with Disabilities Act. A title of a federal statute that prohibits employment discrimination against qualified individuals with disabilities in regard to job application procedures, hiring, compensation, training, promotion, and termination.
Title I of the Landrum-Griffin Act. Labor's "bill of rights," which gives each union member equal rights and privileges to nominate candidates for union office, vote in elections, and participate in membership meetings.
Title II of the Genetic Information Nondiscrimination Act (GINA). A title of a federal statute that makes it illegal for an employer to discriminate against job applicants and employees based on genetic information (e.g., propensity to be stricken by diseases).
Title III of the Americans with Disabilities Act (ADA). A title of a federal statute that prohibits discrimination on the basis of disability in places of public accommodation operated by private entities.
Title III of the Consumer Credit Protection Act. A title of a federal statute that allows debtors who are subject to a writ of garnishment to retain the greater of (1) 75 percent of their weekly disposable earnings (after taxes) or (2) an amount equal to 30 hours of work paid at federal minimum wage.
Title VII of the Civil Rights Act of 1964. A title of a federal statute enacted to eliminate job discrimination based on five protected classes: race, color, religion, sex, and national origin. Also known as the Fair Employment Practices Act.
Title insurance. Insurance that purchasers of real property purchase to insure that they have clear title to the property. If a defect in title is later found, the insurance company must reimburse the insured for any losses caused by undiscovered defects in title.
Title to goods. Legal, tangible evidence of ownership of goods.
TM. A symbol that designates an owner's legal claim to an unregistered mark that is associated with a product.
Top-level domain name (TLD). The most commonly used extensions for domain names (e.g., .com, .org, .edu).
Torrens system. A method of determining title to real property in a judicial proceeding at which everyone claiming an interest in the property can appear and be heard. After the evidence is heard, the court issues a certificate of title to the person who is determined to be the rightful owner.
Tort. A wrong. There are three categories of torts: (1) intentional torts, (2) unintentional torts (negligence), and (3) strict liability.
Tort of bad faith. Breach of the implied covenant of good faith and fair dealing.
Tort liability. Liability of a person that arises by the violation of the legal doctrines of intentional tort, negligence, or strict liability.
Tortfeasor. A person who intentionally or unintentionally (negligently) causes injury or death to another person. A person liable to persons he or she injures and to the heirs of persons who die because of his or her conduct.
Tortious conduct. An act that is a tort (wrong).
Totten trust. A trust that is created when a person deposits money in a bank account in his or her own name and holds it as a trustee for the benefit of another person.
Toxic air pollutants. Toxic chemicals, such asbestos, mercury, vinyl chloride, benzene, beryllium, and radionuclides.
Toxic substances. Chemicals used by agriculture, industry, business, mining, and households that cause injury to humans, birds, animals, fish, and vegetation.
Toxic Substances Control Act. A federal statute that authorizes the Environmental Protection Agency to regulate toxic substances.
Trade acceptance. A sight draft that arises when credit is extended (by a seller to a buyer) with the sale of goods. The seller is both the drawer and the payee, and the buyer is the drawee.
Trade name. A name under which a sole proprietor, partnership, or corporation may operate a business.
Trade secret. A product formula, pattern, design, compilation of data, customer list, or other business secret.
Trademark. A distinctive mark, symbol, name, word, motto, or device that identifies the goods of a particular business.
Trademark Dilution Revision Act. A federal statute that provides that a dilution plaintiff does not need to show that it has suffered actual harm to prevail in its dilution lawsuit but instead show only that there would be the likelihood of dilution.
Trademark Electronic Application System (TEAS). A system that permits the electronic filing of trademark applications with the U.S. Patent and Trademark Office (PTO).
Trademark infringement. Unauthorized use of another's mark. The holder may recover damages and other remedies from the infringer.
Traditional contract law. Contract law that is based on the common law of contracts.
Training program. A requirement contained in some franchise agreements that require franchisees and their personnel to attend training programs either on site or at the franchisor's training facilities.
Transfer. Any passage of an instrument other than its issuance and presentment for payment.
Transfer warranties. Any of the following five implied warranties: (1) The transferor has good title to the instrument or is authorized to obtain payment or acceptance on behalf of one who does have good title; (2) all signatures are genuine or authorized; (3) the instrument has not been materially altered; (4) no defenses of any party are good against the transferor; and (5) the transferor has no knowledge of any insolvency proceeding against the maker, the acceptor, or the drawer of an unaccepted instrument.
Transferred intent doctrine. A doctrine under which the law transfers the perpetrator's intent from the target to the actual victim of the act.
Transnational corporation. A corporation that operates in more than one country; also called a multinational corporation.
Treasury shares. Issued shares that have been repurchased by the corporation. Treasury shares may not be voted by the corporation. Treasury shares may be resold by the corporation.
Treaty. An agreement between two or more nations that is formally signed by an authorized representative of each nation and ratified by each nation.
Treaty Clause. A clause of the U.S. Constitution that states that the president "shall have the power . . . to make treaties, provided two-thirds of the senators present concur."
Treble damages. Damages that may be awarded in a successful civil antitrust lawsuit that is an amount that is triple the amount of actual damages.
Trial brief. Documents submitted by the parties' attorneys to the judge that contain legal support for their side of the case.
Trier of fact. The jury in a jury trial; the judge where there is no jury trial.
Trust. A legal arrangement established when one person transfers title to property to another person to be held and used for the benefit of a third person.
Trust corpus. Property and assets held in trust; also known as trust res.
Trust instrument. A written agreement that creates a trust; also known as trust agreement.
Trustee. A party who holds legal title to the trust corpus and manages the trust for the benefit of the beneficiary or beneficiaries.
Trustee. A party who holds legal title to real property where a deed of trust and note are used to obtain credit for the purchase of real property until the amount borrowed has been paid.
Trustor. The owner-debtor where a deed of trust and note are used to obtain credit for the purchase of real property.
Trustor. A person who creates a trust; also known as a settlor.
Truth-in-Lending Act (TILA). A federal statute that requires creditors to make certain disclosures to debtors in consumer transactions and real estate loans on the debtor's principal dwelling.
Two-party secured transaction. A transaction that occurs when a seller sells goods to a buyer on credit and retains a security interest in the goods.
Tying arrangement. A restraint of trade in which a seller refuses to sell one product to a customer unless the customer agrees to purchase a second product from the seller. Types of sales where the seller entrusts possession of goods to a buyer on a trial basis.
U.S. Army Corps of Engineers (USACE). A federal agency that is authorized to issue permits for discharge of dredged or fill material into navigable waters and qualified wetlands in the United States.
U.S. Bankruptcy Courts. Federal courts that decide cases that involve federal bankruptcy laws.
U.S. Citizenship and Immigration Services (USCIS). A federal agency that is part of the U.S. Department of Homeland Security that processes immigrant visa and naturalization petitions and has other duties involving immigration.
U.S. Congress. The name of the U.S. Senate and the U.S. House of Representatives jointly.
U.S. Constitution. The fundamental law of the United States of America. It was ratified by the states in 1788. The supreme law of the United States.
U.S. Copyright Office. A federal government agency with which copyrights for published and unpublished works may be registered.
U.S. Court of Appeals for the Armed Forces. A federal court that decides cases involving members of the armed forces.
U.S. Court of Appeals for the Federal Circuit. A court of appeals located in Washington DC that has special appellate jurisdiction to review the decisions of the U.S. Court of Federal Claims, the U.S. Patent and Trademark Office, and the U.S. Court of International Trade.
U.S. Court of Appeals for Veterans Claims. A federal court that decides cases involving veterans of the armed forces.
U.S. Court of Federal Claims. A federal court that decides cases brought against the United States.
U.S. Court of International Trade. A federal court that decides cases involving tariffs and international trade disputes.
U.S. Courts of Appeals. Federal intermediate appellate courts that decide appeals from U.S. District Courts, several other federal courts, and some federal administrative agencies.
U.S. Department of Agriculture (USDA). A federal cabinet-level department that is primarily responsible for regulating meat, poultry, and other food products.
U.S. Department of Homeland Security (DHS). A federal cabinet-level department that enforces laws to prevent domestic terrorist attacks and related criminal activities, reduce vulnerability to terrorist attacks, and assist in recovery in the event of a terrorist attack.
U.S. Department of Housing and Urban Development (HUD). A federal cabinetlevel department that enforces the Fair Housing Act and other federal statutes and provides other government housing services.
U.S. Department of Justice (Justice Department or DOJ). A federal cabinetlevel department that is responsible for the enforcement of federal laws.
U.S. Department of Labor. A federal cabinet-level department that is empowered to enforce specific federal employment laws.
U.S. District Courts. Federal trial courts of general jurisdiction that decide cases not within the jurisdiction of specialized federal courts.
U.S. District of Columbia Circuit. A federal intermediate appellate court located in Washington DC.
U.S. Foreign Intelligence Surveillance Court (FISA Court). A special federal court that hears requests from federal intelligence agencies to issue warrants to conduct physical and electronic surveillance of Americans or foreigners in the United States who are deemed a threat to national security.
U.S. Foreign Intelligence Surveillance Court of Review (FISCR). A special federal court to which the U.S. government may appeal a decision of the U.S. Foreign Intelligence Surveillance Court (FISA Court) when it denies a government application for a FISA warrant.
U.S. House of Representatives. One of the two legislative bodies that make up the bicameral legislative system of the U.S. government. The number of representatives in the U.S. House of Representatives is determined according to the population of each state.
U.S. Patent and Trademark Office (PTO). A federal government agency where applications for patents and trademarks are filed and decisions regarding these applications are made.
U.S. Senate. One of the two legislative bodies that make up the bicameral legislative system of the U.S. government. The U.S. Senate is composed of two U.S. senators from each state.
U.S. Supreme Court. The highest court of the federal court system. It hears appeals from the U.S. Courts of Appeals and, in some instances, from special federal courts, U.S. District Courts, and the highest state courts. Also called the Supreme Court of the United States.
U.S. Tax Court. A federal court that decides cases that involve federal tax laws.
U.S. Trustee. A federal government official who is responsible for handling and supervising many of the administrative tasks of a bankruptcy case.
UCC Financing Statement (Form UCC-1). A uniform financing statement form that is used in all states to perfect a security interest in personal property.
UCC Statute of Frauds. A rule that requires all contracts for the sale of goods priced at $500 or more and lease contracts requiring payments of $1,000 or more to be in writing.
UCC statute of limitations. A rule that provides that an action for breach of any written or oral sales or lease contract must commence within four years after the cause of action accrues. The parties may agree to reduce the limitations period to one year.
Ultra vires act. An act by a corporation that is beyond its express or implied powers.
Ultramares Corporation v. Touche. A famous court decision by Judge Cardozo that established the Ultramares doctrine for finding accountants liable to third parties.
Ultramares doctrine. A rule that says that an accountant is liable only for negligence to third parties who are in privity of contract or in a privity-like relationship with the accountant. This is a narrow standard for holding accountants liable to third parties for negligence.
Umbrella insurance. Liability insurance coverage that exceeds the basic liability insurance on individual places or possessions (e.g., home, automobile, land, etc.). An umbrella policy pays only if the basic policy limits on other liability insurance policies have been exceeded.
Unanimous decision. A decision in which all of the justices agree as to the outcome and reasoning used to decide the case. The decision becomes precedent.
Unanimous decision at a criminal trial. A decision in a criminal trial in which the jury members unanimously find the defendant guilty or not guilty.
Unaudited financial statements. Financial statements of a company that have not been audited by an accountant.
Unauthorized signature. A signature made by a purported agent without authority from the purported principal.
Unconditional. A requirement that a negotiable instrument must contain either an unconditional promise to pay (note or CD) or an unconditional order to pay (draft or check).
unconditional promise or Order to pay requirement. A requirement that a negotiable instrument must contain either an unconditional promise to pay (note or CD) or an unconditional order to pay (draft or check).
Unconscionability. A doctrine contained in the Uniform Commercial Code (UCC) that permits a judge to find a sales or lease contract to be unconscionable because the contract or lease is oppressive or manifestly unfair or unjust.
Unconscionable contract. A contract that courts refuse to enforce in part or at all because it is oppressive or manifestly unfair as to be unjust.
Undersecured creditor. A secured creditor in a bankruptcy proceeding where the value of the collateral securing the secured loan is less than the creditor's secured interest.
Undisclosed agency. An agency in which a contracting third party does not know of either the existence of the agency or the principal's identity.
Undisclosed principal. The principal in an undisclosed agency.
Undue hardship. A bankruptcy test that stipulates that student loans cannot be discharged in any form of bankruptcy unless their nondischarge would cause an undue hardship to the debtor and his or her dependents. Whether undue hardship exists is construed strictly.
Undue hardship. (1) Under Title I of the Americans with Disabilities Act, a problem that is great enough to prevent an employer from accommodating an individual's disability. (2) Under Title VII of the Civil Rights Act of 1964, a problem that is great enough to prevent an employer from accommodating the religious observances, practices, or beliefs of its employees.
Undue influence. A situation in which one person takes advantage of another person's mental, emotional, or physical weakness and unduly persuades that person to enter into a contract or make a will; the persuasion by the wrongdoer must overcome the free will of the innocent party.
Unduly burden interstate commerce. A concept that says states may enact laws that protect or promote the public health, safety, morals, and general welfare, as long as the laws do not unduly burden interstate commerce.
Unemployment compensation. Compensation that is paid by the government to workers who are temporarily unemployed.
Unenforceable contract. A contract in which the essential elements to create a valid contract are met but there is some legal defense to the enforcement of the contract.
Unequivocal acceptance. An offeree's acceptance of an offer that is clear, unambiguous, and has only one possible meaning.
Unexpired lease. In bankruptcy law, a lease that has not been fully performed. With the bankruptcy court's approval, a debtor may reject unexpired leases in bankruptcy.
Unfair advantage theory. A theory that holds that a merger may not give the acquiring firm an unfair advantage over its competitors in finance, marketing, or expertise.
Unfair and deceptive practices. Conduct such as false and deceptive advertising, bait-and-switch operations, overly aggressive sales tactics, and such. Unfair and deceptive practices are prohibited by Section 5 of the Federal Trade Commission Act (FTC Act).
Unfair labor practice. A practice that occurs when an employer or a labor union interferes with, coerces, or restrains employees from exercising their statutory right to form and join labor unions.
Unfair methods of competition and unfair or deceptive acts or practices. Unfair methods and deceptive acts and practices used by businesses that are prohibited by Section 5 of the Federal Trade Commission Act (FTC Act).
Unexpired lease. A lease that has not been fully performed.
Unfinished goods. Goods subject to a sales or lease contract that are not completed.
Unified Contract Law. A statute of China that establishes contract law that provides for the formation of contracts and the enforcement of contracts and sets forth remedies for the breach of contracts.
Uniform Arbitration Act. A uniform law that many states have adopted that promotes the arbitration of disputes at the state level.
Uniform Commercial Code (UCC). A comprehensive statutory scheme that includes laws that cover aspects of commercial transactions.
Uniform Computer Information Transactions Act (UCITA). A model act that establishes uniform legal rules for the formation and enforcement of electronic contracts and licenses.
Uniform Customs and Practices for Documentary Credits (UCP). A law that governs international letters of credit.
Uniform Franchise Offering Circular (UFOC). A uniform disclosure document that requires a franchisor to make specific presale disclosures to prospective franchisees.
Uniform Gifts to Minors Act (UGMA). An act that establishes procedures for adults to make gifts of money and other assets to minors.
Uniform Limited Liability Company Act (ULLCA). A model act that provides comprehensive and uniform laws for the formation, operation, and dissolution of LLCs.
Uniform Limited Partnership Act (ULPA). A model act that provides comprehensive and uniform laws for the formation, operation, and dissolution of limited partnerships.
Uniform Limited Partnership Act of 2001 (Re-RULPA). A model act that significantly amended the Revised Uniform Limited Partnership Act (RULPA) and permits a new form of entity called a limited liability limited partnership (LLP) wherein all of the partners are provided limited liability.
Uniform Partnership Act (UPA). A model act that codifies partnership law. Most states have adopted the UPA in whole or in part.
Uniform Sales Act. A uniform law that was promulgated in the United States in 1906 to govern the sales of goods.
Uniform Securities Act. An act that was drafted to coordinate state securities laws with federal securities laws; it has been adopted by many states.
Uniform Simultaneous Death Act. An act that provides that if people who would inherit property from each other die simultaneously, each person's property is distributed as though he or she had survived.
Uniform Trade Secrets Act. A uniform law that many states have adopted that gives statutory protection to trade secrets.
Uniform Transfers to Minors Act (UTMA). An act that establishes procedures for adults to make gifts of money and other assets to minors.
Uniformed Services Employment and Reemployment Rights Act. A federal statute that protects and grants employment benefits to persons who serve or have served in the U.S. military services (Air Force, Army, Coast Guard, Marines, and Navy) or who is or has been a member of the Reserves or National Guard.
Unilateral contract. A contract in which the offeror's offer can be accepted only by the performance of an act by the offeree; a "promise for an act."
Unilateral mistake. A mistake in which only one party is mistaken about a material fact regarding the subject matter of a contract.
Unilateral refusal to deal. A unilateral choice by one party not to deal with another party. This does not violate Section 1 of the Sherman Act because there is not concerted action. Also known as the Colgate doctrine.
Unilateral rescission. An attempt by one party to a contract to terminate the contract without the other party's consent; unilateral rescission is not effective and constitutes a breach of the contract.
Uninsured motorist coverage. Automobile insurance that provides coverage to a driver and passengers who are injured by an uninsured motorist or a hit-and-run driver.
Unintentional tort. A doctrine that says a person is liable for harm that is the foreseeable consequence of his or her actions; also known as negligence.
Union security agreement. An agreement between an employer and a union that provides some form of security for union workers, such as a union shop or an agency shop agreement.
Union shop. A workplace where an employee must join the union within a certain number of days after being hired.
Unissued shares. Authorized shares that have not been sold by the corporation.
Units. Shares of master limited partnerships whose interests are traded on organized securities exchanges.
United Nations (UN). An international organization created by a multilateral treaty in 1945 to promote social and economic cooperation among nations and to protect human rights.
United Nations Biosafety Protocol for Genetically Altered Foods. A United Nations–sponsored agreement that more than 150 countries have agreed to that requires all genetically engineered foods be clearly labeled with the phrase "May contain living modified organisms."
United Nations Children's Fund (UNICEF). An agency of the United Nations whose goal is to provide humanitarian aid and assistance to children and mothers of children, primarily in developing countries.
United Nations Convention on Contracts for the International Sale of Goods (CISG). A model act promulgated by the United Nations that provides legal rules that govern the formation, performance, and enforcement of international sales contracts.
Universal default rule. A rule that permits all credit-card companies with whom a cardholder has a credit card to raise the interest on their card if the cardholder is late in making a payment to any creditcard company.
Universal defense (Real defense). A defense against payment of an instrument that can be raised against both holders and holders in due course (HDCs).
Unlawful detainer action. A legal process that a landlord must complete to evict a holdover tenant; also known as an eviction proceeding.
Unlimited personal liability. A situation where a person is personally liable for the debts of certain business entities, such as sole proprietors of sole proprietorships, general partners of general and limited partnerships, and members of limited liability companies.
Unlimited personal liability of a general partner. The personal liability of general partners of a general partnership or a limited partnership for the debts and obligations of the partnership.
Unlimited personal liability of a sole proprietor. The personal liability of a sole proprietor for the debts and obligations of the sole proprietorship.
Unprotected speech. Speech that is not protected by the First Amendment and may be forbidden by the government.
Unqualified indorsement. An indorsement whereby the indorser promises to pay the holder or any subsequent indorser the amount of the instrument if the maker, drawer, or acceptor defaults on it.
Unqualified indorser. An indorser who signs an unqualified indorsement to an instrument. This person has secondary liability on negotiable instruments.
Unqualified opinion. An auditor's opinion that states that the company's financial statements fairly represent the company's financial position, the results of its operations, and the change in cash flows for the period under audit, in conformity with generally accepted accounting principles (GAAPs).
Unreasonable restraints of trade. Restraints of trade that are found to be unreasonable violate Section 1 of the Sherman Antitrust Act.
Unreasonable search and seizure. Protection granted to people and businesses by the Fourth Amendment to the U.S. Constitution against unreasonable search and seizure by the government.
Unregistered securities. Securities that under the law were required to be registered with the Securities and Exchange Commission (SEC) before being issued but were not registered when they were sold to the public.
Unsecured credit. Credit that does not require any security (collateral) to protect the payment of the debt.
Unsecured creditor. The creditor in a credit transaction where the debtor does give security (collateral) to protect the payment of the debt.
Unusual change of circumstances. A legal rule that states that an agency terminates when there has been an unusual change in circumstances that would lead the agent to believe that the principal's original instructions are no longer valid.
Usage of trade. Any practice or method of dealing that is regularly observed or adhered to in a place, a vocation, a trade, a profession, or an industry.
Useful. A patent requirement that an invention has some practical purpose.
Usurping an opportunity. A situation that occurs when an agent, a general partner, a director or an officer of a corporation, a partner in a limited liability partnership, certain members of a limited liability company, and anyone else who owes a fiduciary duty to a principal personally takes (usurps) an opportunity that belongs to their principal.
Usury law. A law that sets an upper limit on the interest rate that can be charged on certain types of loans.
Utilitarianism. A moral theory that dictates that people must choose the action or follow the rule that provides the greatest good to society.
Utility patent. A patent that protects the functionality of the invention.
Valid contract. A contract that meets all the essential elements to establish a contract; a contract that is enforceable by at least one of the parties.
Variance. An exception to a zoning ordinance that permits a type of building or use in an area that would not otherwise be allowed in the area by a zoning ordinance.
Venue. A concept that requires lawsuits to be heard by the court within the proper jurisdiction that is nearest to the location in which the incident occurred or where the parties reside.
Verdict. A decision reached by a jury.
Vertical merger. A merger that integrates the operations of a supplier and a customer.
Vertical restraint of trade. A restraint of trade that occurs when two or more parties on different levels of distribution enter into a contract, combination, or conspiracy to restrain trade.
Vesting. A situation that occurs when an employee has a nonforfeitable right to receive pension benefits.
Veterans' Benefits Act of 2010. A federal statute that protects and grants employment benefits to persons who serve or have served in the U.S. military services (Air Force, Army, Coast Guard, Marines, and Navy) or who is or has been a member of the Reserves or National Guard.
Vicarious liability. Liability without fault that occurs when a principal is liable for an agent's tortious conduct because of the employment contract between the principal and agent, not because the principal was personally at fault.
Videotaped will. A will that is read and signed and attested to while being videotaped.
Violation. A crime that is neither a felony nor a misdemeanor that is usually punishable by a fine.
Violent strike. A labor strike where the striking employees cause substantial damage to property of the employer or a third party. Violent strikes are illegal.
Virgule. A slash mark (/). If an instrument is payable to two or more payees or indorsees by using a slash mark (/) -- called a virgule -- to separate their names, then the instrument is payable in the alternative -- that is, the instrument is treated as if the / is an "or." In such case, either person may individually negotiate the instrument.
Virtual courthouse (Electronic courts or E-courts). Courts in which electronic technology is used to file documents with the court and hold some conferences with the opposing attorney and the judge.
Visitation rights. Rights of a noncustodial parent to visit his or her child for limited periods of time.
Void contract. A contract that has no legal effect; a nullity.
Void leasehold interest. An invalid leasehold interest. In a case in which a lessee leases goods from a thief who has stolen them, the lessee does not acquire any leasehold interest in the goods. The lessee has a void leasehold interest, and the real owner can reclaim the goods from lessee.
Void title. An invalid title. In a case in which a buyer purchases goods from a thief who has stolen them, the purchaser does not acquire title to the goods. The buyer has void title and the real owner can reclaim the goods from the purchaser.
Voidable contract. A contract in which one or both parties have the option to void their contractual obligations. If a contract is voided, both parties are released from their contractual obligations.
Voidable leasehold interest. An interest in goods that a lessee acquires if he or she leases the goods through fraud, a check that is later dishonored, or impersonation of another person. A person with a voidable leasehold interest in goods can transfer a valid leasehold interest to a good faith subsequent lessee.
Voidable title. A title to goods that a purchaser acquires if he or she acquires the goods through fraud, a check that is later dishonored, or impersonation of another person. A person with voidable title to goods can transfer good title to a good faith purchaser for value.
Voir dire. A process whereby prospective jurors are asked questions by the judge and attorneys to determine whether they would be biased in their decisions.
Voluntary dissolution. Dissolution of a corporation that has begun business or issued shares, on recommendation of the board of directors and a majority vote of the shares entitled to vote.
Voluntary manslaughter. The intentional unlawful killing of a human being by another person that is not premeditated or planned in advance but that occurs under circumstances that would cause a person to become emotionally upset. Sometimes referred to as third-degree murder.
Voluntary petition. A petition voluntarily filed by a debtor to begin a bankruptcy proceeding.
Voting. A method for the electorate to select between candidates for certain government offices and to determine whether issues presented to the electorate are approved or disapproved.
Voting trust. An arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares. Legal title to these shares is held in the name of the trustee.
Voting trust certificates. Documents that are issued to shareholders that evidence their ownership interests in a voting trust.
Wagner Act (National Labor Relations Act). A federal statute enacted in 1935 that established the right of employees to form and join labor organizations, to bargain collectively with employers, and to engage in concerted activity to promote these rights.
Warehouser. Companies that engage in the business of storing property for compensation; also known as warehouse company.
Warehouse receipt. A document of title issued by a warehouse company stating that the bailor has title to the bailed goods.
Warrantless arrest. An arrest that is made without an arrest warrant. The arrest must be based on probable cause and have viable proof that it was not feasible to obtain an arrest warrant prior to the arrest.
Warrantless searches. A search that is made without a search warrant. Warrantless searches are constitutional if they are based on probable cause and are made (1) incident to arrest, (2) where evidence is in "plain view," or (3) where it is likely that evidence will be destroyed.
Warranty. A seller's or lessor's express or implied assurance to a buyer or lessee that the goods sold or leased meet certain quality standards.
Warranty against infringements. An automatic warranty that a seller or lessor of goods who is a merchant regularly dealing in goods of the kind being sold or leased makes that warrants that the goods are delivered free of any third-party patent, trademark, or copyright claim.
Warranty disclaimer. A statement that negates implied warranties and sometimes express warranties if certain requirements are met.
Warranty liability. Liability that is imposed on transferors of instruments for breaching certain implied warranties when negotiating instruments. Warranty liability is imposed whether or not the transferor signed the instrument.
Warranty of good title. A warranty that is made by a seller of goods that warrants that the seller has valid title to the goods he or she is selling and that the transfer of title is rightful.
Warranty of no interference. A warranty made by the lessor of goods that no person holds a claim or an interest in the goods that will interfere with the lessee's enjoyment of his or her leasehold interest. Also known as a warranty of quiet possession.
Warranty of no security interests. An automatic warranty that sellers of goods make that warrants that the goods they are selling are free from any third-party security interests, liens, or encumbrances that are unknown to the buyer.
Water pollution. Pollution of lakes, rivers, oceans, and other bodies of water.
Web contract. Contracts entered into with Internet sellers, lessors, and licensors who use web addresses to sell and lease goods and services and license software and other intellectual property over the Internet.
Website. Internet address used by persons and businesses to sell and lease goods, license software, or otherwise communicate information.
Well-known seasoned investor (WKSI). An issuer whose size and presence in the market permits it to provide information in addition to that contained in a preliminary prospectus, such as forward-looking information, electronic communications, and other factual information, to investors prior to its securities being sold to the public.
Wetlands. Areas that are inundated or saturated by surface water or groundwater that support vegetation typically adapted for life in such conditions.
Whistleblower bounty program. A program that allows the government to pay an informant 10 to 30 percent of money collected in a successful Securities and Exchange Commission (SEC) action against a defendant based on the information provided by the informant.
White-collar crime. Crimes that are prone to being committed by businesspersons.
White knight merger. A merger of a target company of a tender offer with a friendly party that usually leaves the target corporation and/or its management intact.
Wickard, Secretary of Agriculture v. Filburn. U.S. Supreme Court decision that upheld a federal government statute as constitutionally regulating interstate commerce.
Wildcat strike. A labor strike where the striking employee union members go on strike without proper authorization from the union. Such a strike is illegal but becomes lawful if it is quickly ratified by the union.
Willful act of monopolizing. An act that is required for there to be a violation of Section 2 of the Sherman Act. Possession of monopoly power without such act does not violate Section 2.
Will. A document that stipulates how a person wants his or her property distributed on death.
Williams Act. A federal act that amended the Securities Exchange Act of 1934 that specifically regulates tender offers.
Winding up and liquidation. The process of liquidating the assets of a business and distributing the proceeds to satisfy claims against the business.
Wire fraud. The use of telephone or telegraph to defraud another person.
Work product immunity. A law that provides that an accountant's work papers cannot be used against a client in a court action. Some states follow this rule, but the federal government does not.
Work visas. Visas issued by the U.S. government that permit foreign nationals to work in the United States if they meet certain qualifications.
Worker Adjustment and Retraining Notification Act (WARN Act or Plant Closing Act). A federal statute that requires employers with 100 or more employees to give their employees 60 days' notice before engaging in certain plant closings and layoffs.
Workers' compensation. Compensation paid to workers and their families when workers are injured in connection with their jobs.
Workers' compensation acts. Acts that compensate workers and their families if workers are injured in connection with their jobs.
Workers' compensation board (Workers' compensation commission). A government agency the determines the legitimacy of workers claims for workers' compensation benefits.
Workers' compensation insurance. Insurance that compensates employees for work-related injuries.
Work-related test. A test that determines whether an agent committed an intentional tort within a work-related time or space; if so, the principal is liable for any injury caused by the agent's intentional tort.
World Bank. An agency of the United Nations whose primary function is to provide money to developing countries to fund projects for humanitarian purposes and to relieve poverty.
World Trade Organization (WTO). An international organization of 153 member nations created to promote and enforce trade agreements among member countries and customs territories.
World Wide Web. An electronic connection of millions of computers that support a standard set of rules for the exchange of information; also known as the Web.
Writ of attachment. A prejudgment court order that permits the seizure of a debtor's property while a lawsuit is pending.
Writ of certiorari. An official notice that the Supreme Court will review a case.
Writ of execution. A postjudgment court order that permits the seizure of the debtor's property that is in the possession of the debtor.
Writ of garnishment. A postjudgment court order that permits the seizure of a debtor's property that is in the possession of third parties.
Writing requirement for a contract. A situation where a contract must be in writing to be enforceable.
Writing requirement for a negotiable instrument. A requirement that a negotiable instrument be in the writing, whether on a preprinted form, typewritten, or handwritten.
Writing requirement for a will. The requirement that a will must be in writing to be valid. There are limited exceptions to this rule.
Written confirmation rule. A UCC rule that provides that if both parties to an oral sales or lease contract are merchants, the Statute of Frauds writing requirement can be satisfied if (1) one of the parties to an oral agreement sends a written confirmation of the sale or lease within a reasonable time after contracting and (2) the other merchant does not give written notice of an objection to the contract within 10 days after receiving the confirmation.
Written memorandum. A memorandum issued by a trial court that sets forth the reasons for the judgment.
Wrongful disassociation. A situation in which a member withdraws from (1) a term limited liability company (LLC) prior to the expiration of the term or (2) an at-will LLC when the operating agreement eliminates a member's power to withdraw.
Wrongful dishonor. A situation in which there are sufficient funds in a drawer's account to pay a properly payable check but the bank does not pay the check.
Wrongful dissolution. A situation in which a partner withdraws from a partnership without having the right to do so at that time.
Wrongful eviction (Unlawful eviction). A situation that occurs when a landlord, or anyone acting with the landlord's consent, interferes with the tenant's use and enjoyment of the property. A violation of the covenant of quiet enjoyment; also called unlawful eviction.
Wrongful possession. A situation that occurs when a tenant retains possession of property after the expiration of a tenancy or a life estate without the owner's consent.
Wrongful termination. The termination of an agency contract, in violation of the terms of the agency contract. In this situation, the nonbreaching party may recover damages from the breaching party.
Wrongful termination of a franchise. A situation that occurs if a franchisor terminates a franchise agreement without just cause. The franchisee may recover damages from the franchisor.
WTO appellate body. A panel of seven judges selected from World Trade Organization member nations that hears and decides appeals from decisions of the dispute-settlement body.
WTO dispute settlement body. A board composed of one representative from each World Trade Organization member nation that reviews panel reports.
WTO panel. A body of three World Trade Organization judges that hears trade disputes between member nations and issues a panel report.
Zippo Manufacturing Company v. Zippo Dot Com, Inc.. A seminal case that establishes rules for determining the jurisdiction of courts over parties that sell goods over the Internet.
Zoning. Government regulation that establishes land use districts (i.e., areas are generally designated residential, commercial, or industrial), restricts the height, size, and location of buildings, and establishes aesthetic requirements or other limitations for the exterior of buildings.
Zoning commission. A local administrative body that formulates zoning ordinances, conducts public hearings, and makes recommendations to the city council.
Zoning ordinances. Local laws that are adopted by municipalities and local governments to regulate land use within their boundaries.

Business Law 9e by Cheeseman

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