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abuse of process  The malicious and deliberate misuse or perversion of regularly issued court process.
abandonment  When a tenant moves out of a leased premises and discontinues making rent payments.
absolute privilege  An absolute special right, immunity, permission, or benefit given to an individual to make any statement, right or false, about someone without being held liable for defamation for any false statements made, regardless of intent or knowledge of the falsity of the claim.
absolutism  Any set of ethics that is based on rules. These rules are considered moral regardless of perspective or dilemma.
acceptance  A key element of a contract consisting of one party, the offeree, agreeing to the terms of the offer in the contract made by the other party, the offeror.
acceptor  A person (drawee) who accepts and signs a draft to agree to pay the draft when it is presented.
accommodation party  A party who signs an instrument to provide credit for another party that has also signed the instrument.
accord and satisfaction  In a contract, when one of the parties wishes to substitute a different performance for his or her original duty under the contract; the promise to perform the new duty is called the accord, and the actual performance of that new duty is called the satisfaction.
accountant-client privilege  The right of an accountant to not reveal any information given in confidence by a client. The privilege is not granted by every state, nor by the federal government.
accounting  A review and listing of all partnership assets and/or profit.
accredited investor  A private investor who is allowed to accept private securities offerings under certain specific guidelines set by the SEC.
act utilitarianism  The method of ethics where all of the possible outcomes of a decision are weighed. This principle states that the outcome that creates the most happiness is the one that should be chosen.
actual cause  The determination that the defendant's breach of duty resulted directly in the plaintiff 's injury.
actual eviction  When a landlord physically prevents a lessee from entering the leased premises.
actual notice  Notice given about the termination of an agency relationship when third parties are directly informed.
actual malice  A statement that is made or materials that are published with knowledge that the information was false or with reckless disregard of whether it was false.
actus reus  Latin words for "guilty act." It refers to a wrongful behavior that is associated with the physical act of a declared crime.
ad substantiation  An FTC standard requiring that advertisements have reasonable basis for the claims made in the ad.
adhesion contract  A contract rescinded on the grounds of unconscionability and the absence of one party's free will to enter a contract.
administrative agency  Generally defined as any body created by the legislative branch (e.g., Congress, a state legislature, or a city council) to carry out specific duties.
administrative law  The collection of rules and decisions made by administrative agencies to fill in the particular details missing from constitutions and statutes.
administrative law judge (ALJ)  Presides over an administrative hearing; may attempt to get the parties to settle, but has the power to issue a binding decision.
Administrative Procedures Act (APA )  Created as a major limitation on how agencies are run; contains very specific guidelines on rule making by agencies.
admission  A statement made in court, under oath, or at some stage during a legal proceeding, where a party against whom charges have been brought admits an oral contract existed, even though the contract was required to be in writing.
advance directives  A variety of legal instruments a person can use to express his or her wishes without efforts to prolong life.
adversarial negotiation  Negotiation where each party seeks to maximize its own gain.
adverse possession  A means of involuntarily transferring property whereby a person acquires ownership of property by treating a piece of real property as his or her own, without protest or permission from the owner.
affiliate  A business enterprise that is directly or indirectly owned and controlled by another enterprise.
affirm  A term used to refer to an appellate court's accepting a lower court's judgment in a case that has been appealed.
affirmative defense  A defendant's response to a plaintiff 's claim in which a defendant takes the offense and responds to the allegations by attacking the plaintiff 's legal right to bring the action rather than attacking the fact of the claim or making excuses for unlawful behavior. Some of the most common defenses include expiration of the statute of limitation, mistake of fact, intoxication, insanity, duress, and entrapment.
after-acquired property  Property acquired by the debtor after the security arrangement is made.
Age Discrimination in Employment Act of 1967 (ADEA)  Federal law that prohibits employers from refusing to hire, discharging, or discriminating in terms and conditions of employment on the basis of an employee's or applicant's being age 40 or older.
agency  "Fiduciary relation that results from the manifestation of consent by one person to another that the other shall act in his behalf and subject to his control, and consent by the other so to act." The Restatement of Agency
agency by estoppel  An agency relationship created by operation of law when one party, by his actions, causes a third party to believe someone is his agent when that person actually has no authority; also called apparent agency.
agency coupled with an interest  An agency relationship created for the benefit of the agent, not the principal.
agency relationship  The association between one party and an agent who acts on behalf of that party.
agent  A party who has the authority to act on behalf of and bind another party.
agreement  One of the four elements necessary for a contract; consists of an offer made by one party, the offeror, and the acceptance of the offer by another party, the offeree.
alien corporation  A business incorporated in a foreign country.
allonge  Accompanying a negotiable instrument, an allonge provides room for an endorsement if such room is not available on the negotiable instrument.
alterations  Changes that affect the condition of the premises.
alternative dispute resolution (ADR)  The resolution of legal problems through other methods besides litigation.
ambulatory  The ability to be changed by a testator.
Americans with Disabilities Act (ADA)  Federal law that prohibits discrimination against employees and job applicants with disabilities.
anatomical gifts  Parts of an individual's body that the individual wishes to donate to a hospital, university, organ bank, etc.
answer  The response of the defendant to the plaintiff 's complaint.
antidumping duties  Special tariffs imposed on imported goods in order to offset illegal dumping.
antilapse clause  States that the insured has a grace period in which to make an overdue payment.
apparent agency  An agency relationship created by operation of law when one party, by his actions, causes a third party to believe someone is his agent when that person actually has no authority; also called agency by estoppel.
appeal  The act or fact of challenging the decision of a trial court after final judgment or other legal ruling by taking the matter to the appropriate appellate court, and in some cases to the U.S. Supreme Court, in an attempt to reverse the decision.
appraisal right  A dissenting shareholder's right to have his or her shares appraised and to receive monetary compensation from the corporation for their value.
appropriation for commercial gain  A privacy tort that occurs when someone uses a person's name, likeness, voice, identity, or other identifying characteristics for commercial gain without that person's permission.
arbitration  A type of alternative dispute resolution wherein disputes are submitted for resolution to private nonofficial persons selected in a manner provided by law or the agreement of the parties.
arraignment  The first appearance in court by the defendant in which he or she is advised of the pending charges, the right to counsel, and the right to trial by jury and to plea to the charge.
arrest  The action of the police, or person acting under the law, to seize, hold, or take an individual into custody.
arson  Crime of setting fire to another's property.
articles of incorporation  A document a corporation files with the state, explaining its organization.
articles of partnership  The written agreement that creates a partnership.
artisan's lien  A claim on personal property to satisfy a person's debt related to the property.
assault  A civil wrong that occurs when one person intentionally and voluntarily places another in fear or apprehension of an immediate or offensive physical harm. Assault does not require an actual contact.
assignee  In a contract, the party who receives the rights of another party to collect what was contractually agreed upon in the first contract.
assignment (1)  A transfer of a tenant's entire interest in the leased property.
assignment (2)  When a party to a contract (an assignor) transfers his or her rights to a contract to a third party (an assignee); i.e., the assignor gives to an assignee the right to collect what was contractually agreed upon in the first contract.
assignor  In a contract, the party who transfers his or her rights to a contract to a third party (an assignee), giving the assignee the right to collect what was contractually agreed upon in the first contract.
assumption of the risk (defense)  A defense whereby the defendant must prove that the plaintiff voluntarily assumed the risk the defendant caused.
attachment  The point at which the creditor becomes the secured party who has a security interest in the collateral.
attempt to monopolize  An intention to gain market by excluding competitors and thereby gain monopoly power.
automated teller machines  Machines connected to banking computers allowing customers to conduct transactions without having to enter their bank.
automatic stay  After bankruptcy has been filed, the automatic stay acts as a shield to prevent creditors from taking further action against the debtor or his or her property.
bail  A thing of value such as a money bail bond or any other form of property that is given to the court to temporarily allow a person's release from jail and to ensure his or her appearance in court.
bailment of personal property  A relationship that arises when one party, the bailer, gives possession of personal property to another, the bailee, for an agreed-upon time period, with an agreed-upon compensation, if any, and the bailee's treatment of the property to be agreed upon in advance.
bait-and-switch advertising  When a seller advertises a low-priced item, generally unavailable to the consumer, then pushes the consumer to buy a more expensive item.
Bankruptcy Abuse Prevention and Consumer Protection Act of 2005  A renovation in the system of bankruptcy to address: increased numbers of bankruptcy filings, significant losses associated with bankruptcy filings, loopholes and incentives that allowed for abuse, and the financial ability of debtors.
bankruptcy estate  The assets that are collected from a debtor in the event that he or she files for bankruptcy.
battery  A civil wrong that occurs when one person intentionally and voluntarily brings about a nonconsented harmful or offensive contact with a person or to something closely associated with him/her. Battery requires an actual contact.
beachhead acquisition  When an aggressor gradually accumulates the target company's shares.
bearer instrument  An instrument payable to cash or whomever is in possession of the instrument.
bench trial  Refers to trial before a judge in which the defendant has waived his/her right to a jury trial and the judgment is decided by means of a judge rather than a jury.
beneficiaries  Those who can expect to benefit from a relationship.
beneficiary  The person who receives, or will receive, the proceeds from an insurance policy or a will.
bid rigging  An agreement among firms to not bid against one another or to submit a certain level of bid.
bilateral contract  A promise exchanged for a promise.
bilateral trade agreements  An international agreement between two states relating to trade between them.
bill of lading  A document issued by a person engaged in the business of transporting goods that verifies receipt of the goods for shipment.
binder  An agreement that gives temporary insurance until the company decides to accept or reject the insurance application.
binding arbitration clause  A provision in a contract mandating that all disputes arising under the contract must be settled by arbitration.
blank endorsement  A payee's or last endorsee's signature on a negotiable instrument.
blank qualified endorsement  The mode of endorsement wherein the name of the payee or beneficiary of the instrument is not mentioned so as to make it freely transferable on delivery, and the words recourse limit the liability of the endorser.
blue-sky laws  Laws that regulate the offering and sale of purely intrastate securities.
booking  A procedure during which the name of the defendant, after he/she was arrested, is recorded in the investigating agency or police department's records.
bounty payments  Government rewards for acts beneficial to the public.
boycott  A refusal to deal with, purchase goods from, or work for a business.
bribery  A corrupt and illegal activity in which a person offers or receives money, services, or soliciting of any thing of value in order to gain an illicit advantage.
brief  A brief or factum is a written legal document that is presented to a court arguing why the party to the case should prevail.
burden of proof  The duty of the plaintiff or prosecution to establish a claim or allegation by admissible evidence and to prove that the defendant committed all the essential elements of the crime to the jury's or court's satisfaction beyond any reasonable doubt, in order to convict the defendant.
burglary  When someone unlawfully enters a building with intention to commit a felony or theft.
business ethics  The use of ethics and ethical principles to solve business dilemmas.
business law  The enforceable rules of conduct that govern the actions of buyers and sellers in market exchanges.
business trust  A business organization governed by a group of trustees, who in turn operate the trust for beneficiaries.
buyer in the ordinary course of business  A person who routinely buys goods in good faith from a person who routinely sells these goods.
bylaws  Rules or regulations that govern a corporation's internal management.
capacity  The legal ability to enter into a binding contract.
case law  The collection of legal interpretations made by judges; they are considered to be law unless otherwise revoked by a statutory law. (Also known as common law.)
case or controversy  A term used in the United States Constitution to describe the structure and the requirement of conflicting claims of individuals that could be brought before a federal court for resolution. It is also referred to as a justifiable controversy that is required to consist of an actual dispute between parties over their legal rights that remain in conflict at the time the case is presented and must be a proper matter for judicial determination.
cash tender offer  Where cash is paid for current shareholders' stocks.
cashier's check  A check produced in which both drawer and drawee are the same bank.
casualty insurance  Insurance that protects a party from accidental injury.
categorical imperative  The principle that an act is ethical when we would wish for all people to act according to its dictates.
cease-and-desist order  An FTC order requiring that a company stop its illegal behavior.
certificate of deposit  A document whereby a bank promises to pay a payee a certain amount of money at a future time.
certificate of incorporation  A document certifying that the corporation is incorporated in the state and is authorized to conduct business.
certificate of limited partnership  A document signed upon the formation of a limited partnership and filed with the secretary of state.
certified check  Any check accepted by the bank from which the funds are drawn.
chain-style business operation  A type of franchise where the franchise operates under the franchisor's business name and is required to follow the franchisor's standards and methods of business operation.
charging order  The entitling of a creditor to a partner's profits.
chattel paper  A writing that indicates both monetary obligations and security interest in specific goods.
check  A special draft ordering that a bank (the drawee) pay a specified sum of money to the drawer.
choice-of-law clause  A contractual clause wherein the parties choose the law of a certain state to apply to the interpretation of the contract or in the event of a dispute.
chose in action  The surviving corporation's right to sue for debt and damages on behalf of the absorbed corporation.
Circuit Court of Appeal  A court that hears appeals from the district courts located within its circuit, as well as appeals from decisions of federal administrative agencies. Also called Federal District Court of Appeal.
civil law  Those laws that govern the rights and responsibilities either between persons or between persons and their government.
closely held corporation  A corporation that does not sell stock to the general public.
closing  The meeting at which the transfer of title actually takes place. It is the meeting at which the seller signs over the deed, and the buyer gives the seller a check for the amount due.
codicil  The document by which a testator changes his or her will.
collateral  The property that is subject to the secured interest.
collecting bank  Any bank, with the exception of the payor bank, that handles a check during the check collection.
collective bargaining  The process whereby workers organize collectively and bargain with employers regarding the workplace.
commerce clause  Clause 3 of Article I, Section 8 of the United States Constitution authorizes and empowers the United States Congress "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes."
commercial general liability policy  A policy that generally provides protection for the insured for bodily injury as well as property injury to third parties.
commercial insurance  Insurance that covers some type of business risk.
commercial reasonableness  Reasonable commercial standards of fair dealing, required of merchants in addition to honesty in fact.
commercial speech  Speech made by business about commercial matters such as sale of goods and services is protected by the First Amendment.
common areas  Areas that are used by all tenants.
common-carrier delivery contract  A type of contract in which purchased goods are delivered to the buyer via an independent contractor, such as a trucking line.
common carriers  Carriers that are licensed to provide transportation services to the public.
common law  See case law.
common stock  A portion of the shares of a corporation that do not include any preference.
communication  In a contract, an offer made to the offeree or the offeree's agent.
comparative law  The study of the legal systems of different states.
compensatory damages  Money awarded to the plaintiff according to the amount of actual damage or harm to property, lost wages or profits, pain and suffering, medical expenses, disability, etc.
complaint  A formal written document that begins a civil lawsuit, which contains the plaintiff 's list of allegations against the defendant, along with the damages the plaintiff.
complete performance  When all aspects of the parties' duties under the contract are carried out perfectly.
computer crime  Crime committed using a computer.
concealment  The active hiding of the truth about a material fact.
concurrent condition  In a contract, when each party's performance is conditioned on the performance of the other, occurring only when the parties are required to perform for each other simultaneously.
condemnation  The legal process by which a transfer of property is made against the protest of the property owner.
condition precedent  The first thing that must occur when an entire contract is conditioned upon that something first occurring.
condition subsequent  In a contract, a future event that terminates the obligations of the parties when it occurs.
conditional contract  A contract that becomes enforceable only upon the happening or termination of a specified condition.
conditional endorsement  An endorsement whereby payment can be made only upon fulfillment of a predecided condition, e.g., painting one's house.
conditional estate  Gives the holder the same interest as that of a fee simple absolute, only this interest is subject to a condition.
conditional privilege  A special right, immunity, permission, or benefit given to an individual to make any statement, right or false, about someone without being held liable for defamation for any false statements made without actual malice.
conditional sales contract  Type of contract in which the sale itself is contingent on approval: either a sale-onapproval contract or a sale-or-return contract.
conforming goods  Goods that conform to contract specifications.
conglomerate merger  When a company merges with another company that is not a competitor or a buyer or seller to the company.
consent decree  An agreement that binds the violating party to cease his or her illegal behavior.
consent order  A statement where a company agrees to stop disputed behavior, but does not admit it broke the law.
consequential damages  In a contract, foreseeable damages that arise due to special facts and circumstances arising outside the contract itself; damages must be within the contemplation of the parties at the time the breach occurs.
consequentialism  The ethical theory based on consequences. It states that in considering what action is ethical, the only thing that matters is its consequences.
consideration  The bargain for exchange; what each party gets in exchange for his/her promise under the contract.
Consolidated Omnibus Budget Reconciliation Act (COBRA)  Federal law that ensures that when employees lose their jobs or have their hours reduced to a level at which they would not be eligible to receive medical, dental, or optical benefits from their employer, the employees will be able to continue receiving benefits under the employer's policy for up to 18 months by paying the premiums for the policy.
constitutional law  The general limits and powers of a government as interpreted from its written constitution.
constructive eviction  When a property has become unsuitable for use due to the unlivable quality of the property.
constructive notice  The manner in which notice of agency termination is announced.
constructive trust (1)  An implied trust where a party is named to hold the trust for its rightful owner.
constructive trust (2)  An equitable trust imposed on one who wrongfully obtains or holds legal right to property he or she should not possess.
consumer good  A good used or bought for use primarily for personal, family, or household purposes.
consumer lease  A lease that has a value of $25,000 or less and exists between a lessor regularly engaged in the business of leasing or selling and a lessee who leases the goods primarily for a personal, family, or household purpose.
contract  A promise or 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.
contract clause  The clause that prohibits the government from unreasonably interfering with an existing contract.
contract under seal  A contract that has a seal to make it legal.
contractual capacity  The legal ability to enter into a binding agreement.
contributory negligence  A defense to negligence whereby the defendant can escape all liability by proving that the plaintiff failed to act in such a way as to protect him or herself from an unreasonable risk of harm, and that negligent behavior contributed in any way to the plaintiff 's accident.
Convention on the International Sale of Goods  An international agreement applicable to transactions involving the commercial sale of goods.
conversion  The permanent interference with another's use and enjoyment of his or her personal property.
co-ownership  When multiple individuals possess ownership interests in a property.
cooperative  An organization formed by individuals to market new products. Individuals in a cooperative pool their resources together to gain an advantage in the market.
copyright  The protection of a creative work that has been placed in a fixed form.
corporation  A legal entity formed by issuing stock to investors, who are the owners of the corporation.
corporation by estoppel  A corporation that has conducted business with a third party and thereby cannot deny its status as a corporation.
corrective advertising (counteradvertising)  Running advertisements in which the company explicitly states that the formerly advertised claims were untrue.
cost-benefit analysis  An economic school of jurisprudence where all costs and benefits to a law are given monetary values. Those laws with the highest ratio of benefits to costs are then preferable to those with lesser ratios.
counterclaim  A claim by the defendant against the plaintiff that is filed along with the defendant's answer.
counteroffer  An offer made by an offeree to the offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer.
countervailing duties  Special tariffs imposed on subsidized goods in order to offset the beneficial effect of an illegal subsidy.
course of dealing  Previous commercial transactions between the same parties.
course of performance  The history of dealings between the parties in the particular contract at issue.
court of appellate jurisdiction (appellate court)  A higher court usually consisting of more than one judge, which reviews the decisions and results of a lower court (either a trial court or a lower-level appellate court) when a losing party files for an appeal. Appellate courts do not hold trials but may request additional oral and written arguments from each party. Appellate courts issue written decisions, which collectively constitute case law or the common law.
covenant of quiet enjoyment  A promise that the tenant has the right to quietly enjoy the land.
covenants not to compete  Agreement not to compete for a party for a set period of time.
cover  A buyer's right to substitute goods for those due under the sales or lease agreement when the seller provides nonconforming goods.
creditor  An entity to which a debtor owes money.
creditor beneficiary  A third party who benefits from a contract where the promisor agrees to pay the promisee's debt.
creditor's meeting  A meeting of all the creditors listed in the Chapter 7 required schedule for liquidation.
criminal fraud  A crime or an offense encompassing a variety of means by which an individual intentionally uses some sort of misrepresentation to gain an advantage over another person.
criminal law  A classification of law involving the rights and responsibilities an individual has with respect to the public as a whole.
criteria air pollutant  One of the six air pollutants that are subject to the National Ambient Air Quality Standards under the Clean Air Act.
critical thinking skills  The ability to understand the structure and worth of an argument by evaluating the facts, issue, reasons, and conclusion of that argument.
cross-licensing  A contractual arrangement between two or more parties who own intellectual property under which each party grants to the other a license of specified intellectual property.
cure  The breaching party's right to provide conforming goods when nonconforming goods were initially delivered; subject to a reasonable time test.
customary international law  A general and consistent practice by states accepted as binding law.
customs union  A free trade area with the additional feature of a common external tariff on products originating from outside the union.
cyber terrorist  A hacker whose intention is the exploitation of a target computer or network to create a serious impact, such as the crippling of a communications network or the sabotage of a business or organization, which may have an impact on millions of citizens if the terrorist's attack is successful.
cyberlaw  A classification of law regulating business activities that are conducted online.
de facto corporation  A corporation that has not met the requirements of the state incorporation statutes.
de jure corporation  A corporation that has received its certificate of incorporation.
debt securities  Securities that represent loans to a company.
debtor  An entity that owes money to another entity.
deceptive advertising  The practice of advertising using claims that mislead or could mislead a reasonable consumer.
defamation  A false statement or actions of another that harm the reputation or character of an individual, business, product, group, government, or nation.
default  Failure to make payments on a loan.
default judgment  Judgment for the plaintiff when the defendant fails to respond to the complaint.
defective corporation  A corporation in which an error or omission has been made during its incorporation process.
defendant  The person, party, or entity against whom a civil or criminal lawsuit is filed in a court of law.
definite and certain terms  Requirement under common law that calls for the clearly defined terms of a contract to include all material terms.
definite term lease  A lease that expires at the end of a specified term.
delegatee  The third party who although not part of the original contract yet is transferred duties from one of the parties (a delegator).
delegation  Occurs when a party to a contract (a delegator) transfers his or her duty to perform to a third party who is not part of the original contract (a delegatee).
delegator  Party in a contract who transfers his or her duties to perform to a third party who is not a part of the original contract (a delegatee).
demand instrument  A type of draft where the payee can demand payment at any time from a holder.
deontology  The ethical theory that states that an action can be determined ethical regardless of its consequences.
depositary bank  The first bank that receives a check for payment.
depositions  A pretrial sworn and recorded testimony of a witness that is acquired out of court with no judge present.
design defect  When all products of a particular design are defective and dangerous.
digital cash  Money stored electronically in place of physical currency.
direct deposit  The process, preauthorized by a customer, allowing funds to be received into or paid from the customer's bank account(s).
directed verdict  A ruling by the judge after the plaintiff has put forward his or her case, but before any evidence was put forward by the defendant, in favor of the defendant because the plaintiff has failed to put forward the minimum amount of evidence necessary to establish his or her claim.
discharge  A written federal court order signed by a bankruptcy judge stating that the debtor is immune from creditor actions to collect debt, i.e., a release from liability.
disclosed principal  Making a third party aware that the agent is making an agreement on behalf of a principal, where the third party knows the identity of the principal.
discovery  The pretrial phase in a lawsuit during which each party requests relevant documents and other evidence from the other side in an attempt to "discover" pertinent facts and to avoid any surprises in the courtroom during the trial. Discovery tools include requests for admissions, interrogatories, depositions, requests for inspection, and document production requests.
dishonored  Payment that has been refused despite a holder's presenting an instrument in a timely and proper manner.
dishonored instrument  An instrument that a party has refused to pay.
disparagement  A business tort that a statement is intentionally used to defame a business product or service.
disparate impact  Arises when an employee attempts to establish that, while an employer's policy or practice appears to apply to everyone equally, its actual effect is that it disproportionately limits employment opportunities for a protected class.
disparate treatment  If an employee has been hired, fired, denied a promotion, etc. based on membership in that protected class, this is a form of intentional discrimination; proving disparate treatment is a three step process: (1) the employee must demonstrate a prima facie case of discrimination; (2) the employer must articulate a legitimate, nondiscriminatory business reason for the action; and (3) the employee must show that the reason given by the employer is a mere pretext.
dispute settlement understanding  An agreement that is part of the WTO system whereby recognized governments of WTO member states may bring an action alleging a violation of the GATT by other member states.
dissolution  The change in the relation of the partners caused by any partner's ceasing to be associated with the activity of completing unfinished partnership business, collecting and paying debts, collecting partnership assets, and taking inventory.
distributor  A merchant who purchases goods from a seller for resale in a foreign market.
distributorship  A type of franchise where the franchisor manufactures a product and licenses a dealer to sell the product in an exclusive territory.
district court  A trial court in the federal system.
dividend  A distribution of corporate profits or income ordered by the directors and paid to the shareholders.
document of title  A transport document that, when appropriately made out, entitles the bearer to claim the goods from the carrier.
domestic corporation  A corporation lying within the borders of some state.
donee beneficiary  Third party who benefits from a contract where a promisor agrees to give a gift to the third party.
dormant commerce clause  Refers to the negative implications of the commerce clause of the United States Constitution on states. The power given to the United States Congress to enact legislation that affects interstate commerce implies a negative converse and restriction that prohibit a state from passing legislation that improperly burdens interstate commerce.
draft  An instrument validating an order by a drawer to a drawee to pay a payee.
dram shop acts  Regulations that allow bartenders to be held liable for injuries caused by individuals who become intoxicated in their bar.
drawee  The party who must obey an order. In the context of banking, the drawee is the bank that must pay the funds ordered by a customer's check.
drawer  The party who writes an order, or the person who writes a check.
due diligence defense  When a defendant argues that he or she applied the appropriate degree of attention, care or research expected of a party in a given situation and had reasonable grounds to believe that certain facts and statements were accurate and had no omission of material facts.
due process clause  A clause in the Fifth Amendment of the United States Constitution providing that the government cannot deprive an individual of life, liberty, or property without a fair and just hearing.
durable power of attorney  Specifies that an agent's authority is intended to continue beyond the principal's incapacitation.
duress  Any unlawful act or threat exercised upon a person whereby he/she is forced to enter into an agreement or to perform some other act against his/her will.
duty  The standard of care a defendant must meet so as to not subject a person in the position of the plaintiff to an unreasonable risk of harm.
duty of loyalty  The expectation that an agent will act in the interest of the principal.
duty of notification  The expectation that an agent will inform the principal of his or her actions as agent to that principal.
duty to compensate  Required payment to an agent for his or her services.
e-money  Electronic, nonphysical forms of currency.
easement  An irrevocable right to use some part of another's land for a specific purpose, without taking anything from it.
easement by prescription  Created by state law when certain conditions are met, most frequently by openly using a portion of another's property for a statutory period of time (usually 25 years).
effective date  The date that insurance takes effect.
efficiency  Getting the most output from the least input.
Electronic Communications Privacy Act (ECPA) of 1986  Federal law that extended employees' privacy rights to electronic forms of communication including e-mail and cellular phones. ECPA outlaws the intentional interception of electronic communications and the intentional disclosure or use of the information obtained through such interception.
electronic fund transfer (EFT)  Any funds transmitted by an electronic terminal, telephone, or computer.
embezzlement  A wrongful conversion of another's funds or property by one who is lawfully in possession of those funds or that property.
Employee Retirement Income Security Act (ERISA)  Federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans.
employment-at-will standard  Permits either the employer or employee to terminate the employment relationship at any time.
enabling legislation  A statute that specifies the name, functions, and specific powers of the administrative agency; and grants the agency broad powers for the purpose of serving the "public interest, convenience, and necessity."
endorsee  The person receiving an endorsement.
endorsement for deposit/ collection only  The most common type of endorsement, providing that the instrument can only be deposited into an account.
endorsement to prohibit further endorsement  An endorsement allowing increased protection to the endorsee.
endorser  One who issues an endorsement.
English rule  States the first assignee to give notice of assignment to the obligor is the party with rights to the contract.
entrapment  A relatively common defense that claims the defendant would not have committed the crime or broken the law if not induced or tricked by law enforcement officials.
entrustment  The transfer of goods to a merchant who ordinarily deals in that type of goods, who may subsequently sell them to a good-faith third-party purchaser who acquires then good title to the goods.
environmental impact statement  A document containing a detailed statement of 1. The environmental impact of the proposed action 2. Any adverse environmental effects that cannot be avoided should the proposal be implemented 3. Alternatives to the proposed action 4. The relationship between local short-term uses of the human environment and the maintenance and enhancement of long-term productivity 5. Any irreversible and irretrievable commitments of resources that would be involved in the proposed activity should it be implemented that must be filed whenever there is a major, federal activity that may have a significant impact on the environment.
equal dignity rule  Requires contracts that would normally fall under a statute and require a writing if negotiated by the principal to be in writing even if negotiated by an agent.
Equal Pay Act of 1963 (EPA)  Prohibits an employer from paying workers of one gender less than the wages paid to employees of the opposite gender for work that requires equal skill, effort, and responsibility.
Equal Protection Clause  A clause in the Fourteenth Amendment of the United States Constitution that prevents states from denying "the equal protection of the laws" to any citizen. This clause implies that all citizens are created equal.
equity securities  Securities that represent ownership in a corporation.
Establishment Clause  One of two provisions in the First Amendment of the United States Constitution that protect citizens' freedom of religion. It prohibits (1) the establishment of a national religion by Congress and (2) the preference of one religion over another or of religion over nonreligious philosophies in general.
estate planning  The process whereby an individual decides what to do with his or her real and personal property during and after life.
ethical dilemma  A question about how one should behave that requires one to reflect about the advantages and disadvantages of the optional choices for various stakeholders.
ethical guideline  A simple tool to help determine whether an action is moral.
ethical relativism  The ethical theory that denies the existence of an ultimate ethical system. According to this theory, a decision must be determined ethical on the basis of its own context.
ethics  The study and practice of decisions about what is good or right.
ethics of care  The ethical theory that places its emphasis on human interaction. According to this theory, what makes a decision ethical is how well it builds and promotes human relationships.
European Union  A customs union consisting of an association of states with a basis in international law formed for the purpose of forging closer ties among the peoples of Europe.
exchange tender offer  In a takeover, the aggressor offers to exchange the target shareholders' current stock for stock in the aggressor's corporation.
exclusive-dealing contract  An agreement where a seller requires that a buyer buy products supplied only by that seller.
exculpatory clause  A clause in a contract that basically frees one party (usually the drafter of the agreement) from all liability arising out of performance of that contract, generally based on factors such as consumer ignorance or a great deal of unexplained fine print, that serve to deprive the less powerful party of a meaningful choice.
executive agency  The administrative head of an executive agency is appointed by the president with the advice and consent of the U.S. Senate and may be discharged by the president at any time, for any reason. Executive agencies are generally located within the executive branch, under one of the cabinet-level departments (and thus are referred to as cabinet-level agencies ). Examples are the Federal Aviation Agency (FAA) and the Food and Drug Administration (FDA).
executed  When all of the terms of the contract have been fully performed.
executive order  Dictates that have the force of law, but are issued by a Governor or the President.
executory  A contract in which not all of the terms have been fully performed.
exemplary damages  Monetary damages and can include compensatory, punitive, nominal, and liquidated damages.
exempted rule making  The APA contains an exemption from rule making that allows an agency to decide whether public participation will be allowed. Exemptions include rule-making proceedings with regard to "military or foreign affairs," "agency management or personnel," and "public property, loans, grants, benefits or contracts" of an agency.
express condition  A condition specifically and explicitly stated in the contract and usually preceded by words such as conditioned on, if, provided that, or when.
express contract  A contract in which all the terms are clearly set forth in either written or spoken words.
express trust  A trust created either while the settlor is alive or by will.
express warranty  Any description of a good's physical nature or its use, either in general or specific circumstances, that becomes part of the contract.
expressed agency  An agency created in written or oral agreement.
extortion (blackmail)  A criminal offense that occurs when a person obtains money, property, and/or services from another by wrongfully threatening or inflicting harm to his person, property, or reputation.
failure to provide adequate warnings  A defect whereby the product is not labeled to indicate that it can be dangerous.
fair-use doctrine  The lawful use of a limited, noncommercial portion of another's work for purposes of criticism, comment, news reporting, teaching, scholarship, or research.
Fair Labor Standards Act (FLSA)  Requires that a minimum wage of a specified amount be paid to all employees in covered industries; mandates that employees who work more than 40 hours in a week be paid no less than 1½ times their regular wage for all the hours beyond 40 that they work during a given week.
False Claims Act  An act that allows employees to sue employers on behalf of the federal government for fraud against the government. The employee retains a share of the recovery as a reward for his/her efforts.
false imprisonment  Unlawful restraint of another against the person's will.
false light  A privacy tort that occurs when highly offensive information is published about an individual that is not valid or places the person in a false light.
false pretense  Materially false representations of an existing fact, with knowledge of the falsity of the representations, with the intention to defraud.
Family and Medical Leave Act (FMLA)  Federal act requiring that employers establish a policy that provides all eligible employees with up to 12 weeks of leave during any 12-month period for several family-related occurrences (e.g., birth of a child or a sick spouse).
family incentive trust  Trusts designed to take effect upon the completion of specified behavior.
federal preemption  A principle asserting the supremacy of the federal over the state legislation over the same subject matter.
Federal Register   An agency initiates informal rule making by publishing the proposed rule in the Federal Register , along with an explanation of the legal authority for issuing the rule and a description of how the public can participate in the rule-making process.
Federal Unemployment Tax Act (FUTA)  Passed in 1935 to created a state system to provide unemployment compensation to qualified employees who lose their jobs.
federalism  A system of government where power is divided between a central authority and constituent political units.
fee simple absolute  The most comprehensive ownership interest, which gives exclusive rights to ownership and possession of the land to the holder.
fellow servant rule  Outdated defense that prohibited an employee from suing an employer for negligence if the employee's injury was caused by another employee.
felony  A serious crime, such as murder, rape, or robbery, which is punishable by imprisonment for more than one year or death.
fictitious payees (rule)  A UCC rule governing the liability of companies and their endorsed checks. A fictitious payee is someone having no right to payment. Any check made out to a fictitious payee and endorsed must be honored and is not considered a forgery.
finance lease  Lease in which the lessor does not select, manufacture, or supply the goods, but acquires title to the goods or the right to their possession and use in connection with the terms of the lease.
financing statement  Lists the names and addresses of all those parties involved, a description of the collateral, and the signature of the debtor.
fire insurance  Protects property from losses caused by any damages by fire.
firm offer  An offer made in writing and giving assurances that it will be irrevocable for a period of time not longer than three months despite a lack of consideration for the irrevocability.
first appearance  The initial appearance of an arrested individual before a judge, who determines whether or not there was probable cause for the arrest. If the judge ascertains that probable cause did not exist, the individual is freed.
first assignment in time rule  States the first party granted the assignment is the party correctly entitled to the contractual right.
fixture  An item that was originally a piece of personal property, but becomes part of the realty after it is permanently attached to the real property in question.
food disparagement  A tort that provides ranchers and farmers a cause of action when someone spreads false information about the safety of a food product.
for-profit corporation  A corporation whose objects are to make a profit.
foreign corporation  A corporation that conducts business in a state but is not incorporated.
Foreign Corrupt Practices Act  A U.S. federal statute prohibiting U.S. companies from offering or paying bribes to foreign government officials, political parties, and candidates for office for the purpose of obtaining or retaining business.
foreign sales representative  An agent who distributes, represents, or sells goods on behalf of a foreign seller, usually in return for the payment of a commission.
forfeiture  A party's forfeiting his or her interest in the premises.
forgery  A criminal falsification by imitating, impersonating, or altering a real document with the intent to deceive or defraud.
formal contract  A contract that must have a special form or must be created in a specific manner.
formal rule making  Under APA, all rules must be enacted by an agency as part of a formal hearing process that includes a complete transcript, begins with publication of a notice of proposed rule making by the agency in the Federal Register, followed by a public hearing at which witnesses give testimony on the pros and cons of the proposed rule and are subject to cross-examination. The agency makes and publishes formal findings. If a regulation is adopted, the final rule is published in the Federal Register.
Forum selection agreement  A contractual clause wherein the parties choose the location where disputes between them will be resolved.
franchise  A business form that exists because of an arrangement between an owner of a trade name or trademark, and a person who sells goods or services under the trade name or trademark.
franchise agreement  A contract whereby a company (known as the franchisor) grants permission (a license) to another entity (known as a franchisee) to utilize the franchisor's name, trademark, or copyright in the operation of a business and associated sale of goods in return for payment.
franchisee  The seller of goods or services under a trade name or trademark in a franchise.
franchisor  Owner of the trade name or trademark in a franchise.
fraud  An intentional deception that causes harm to another. As a basis for contesting a will, this occurs when the testator relied on false statements when he or she made a will.
fraud in the factum  When a party signs a negotiable instrument without knowing that it is a negotiable instrument.
fraudulent misrepresentation  Occurs when the representation is made with intent to facilitate personal gain and with the knowledge that it is false.
fraudulent transfers  A transfer made with intent to defraud creditors or made for an amount significantly lower than its fair market value within two years of filing for bankruptcy.
free exercise clause  One of two clauses in the First Amendment of the United States Constitution. It states that government (state and federal) cannot make a law "prohibiting the free exercise" of religion. This clause is interpreted to include absolute freedom to believe and freedom to act that may face state restriction.
free trade agreement  An international agreement between two or more states wherein tariffs and other trade barriers are reduced and gradually eliminated.
Freedom of Information Act ( FOIA)  Passed in 1966, requires that federal agencies publish in the Federal Register places where the public can get information from the agencies. Any individual or business may make an FOIA request to a federal government agency. Information may be obtained regarding how the agency gets and spends its money; statistics and/or information collected by the agency on a given topic are available; and citizens are entitled to any records that the government has about them. Exemptions to FOIA include, but are not limited to, national security, internal agency matters (e.g., personnel issues), criminal investigations, financial institutions, and an individual's private life.
friendly fire  A fire contained in a place where it is intended to burn.
full eviction  When a landlord physically prevents a lessee from entering the leased premises.
full faith and credit clause  The clause of the United States Constitution (Article IV, Section 1) that addresses the duty that the various states must recognize, respect, and enforce public records, legislative acts, and judicial decisions of the other states within the United States.
future interest  A person's present right to property ownership and possession in the future.
garnishment order  An order that satisfies a debt by seizing a debtor's property that is being held by a third party.
General Agreement on Tariffs and Trade  A comprehensive multilateral trading system designed to achieve distortion-free international trade through the minimization of tariffs and removal of artificial barriers.
general partnership  An agreement that the partners who own a business will divide profits, management responsibility, and share unlimited personal liability for the business.
general personal jurisdiction  A doctrine permitting adjudication of any claims against a defendant regardless of whether the claim has anything to do with the forum.
general power of attorney  Allows the agent to conduct all business for the principal.
general warranty deed  A deed containing a covenant whereby the seller agrees to protect the buyer against being dispossessed because of any adverse claim against the land.
geographic market  An area in which a company competes with others in the relevant product market.
gift causa mortis  A gift that is made in contemplation of one's immediate death.
Golden Rule  The idea that we should act in the way that we would like others to act toward us.
good faith  Honesty in fact.
good Samaritan statute  A statute that exempts from liability a person, such as a physician passer-by, who voluntarily renders aid to an injured person but who negligently, but not unreasonably negligently, causes injury while rendering the aid.
good title  Title acquired from someone who already owns the goods free and clear.
goods  All physically existing things that are movable at the time of identification to the contract for sale.
goods-in-bailment contract  Type of contract in which the purchased goods are in some kind of storage under the control of a third party, such as a warehouseman.
Government in Sunshine Act  Requires that agency business meetings be open to the public if the agency is headed by a collegiate body (i.e., two or more persons, the majority of whom are appointed by the president with the advice and consent of the Senate); the law also requires that agencies keep records of closed meetings.
green taxes  Taxes imposed on environmentally harmful activities.
gross negligence  Acting with extreme reckless disregard for the property or life of another person.
group boycott  When two or more competitors agree to refuse to deal with a certain person or company.
group insurance  A policy purchased by neither the insured party nor the insurer.
guaranty  Similar to a suretyship, but this type of contract ensures that the third party is secondarily liable for the debt to be paid.
hacker  A person who illegally accesses or enters another person's or company's computer system to obtain information or to steal money.
Hague evidence convention  A multilateral convention establishing procedures for transnational discovery between private persons in different states.
half-truth  Information presented to be true, but which is not complete.
health care proxy  An agent commissioned to make medical decisions for a principal who is unable to participate in medical decisions.
historical school/tradition  A school of jurisprudence where traditions are used as the model for future laws and behavior.
holder  A party in possession of a negotiable instrument.
holders in due course  An individual who acquires a negotiable instrument in good faith.
homestead exemption  An exemption allowing a debtor to retain all or a portion of the family home so that the family will retain some form of shelter when he is declared bankrupt.
horizontal division of market  An agreement between two or more competitors to divide markets among themselves by geography, customers, or products.
horizontal merger  Merger between two or more competitors producing the same or similar products.
horizontal restraint of trade  When two competitors in the same market make an agreement to restrain trade.
hostile fire  A fire that occurs in a place where it was not intended to burn.
hostile takeover  A takeover where the management of the target corporation objects.
hybrid agencies  Some agencies do not fall clearly into one classification or the other. These agencies are typically referred to as hybrid agencies. Created as one type of agency, the body may share characteristics of the other. The EPA, for example, was created as an independent agency, not located within any department of the executive branch.
hybrid rule making  An attempt to combine the best features of formal and informal rule making; the starting point is publication in the Federal Register, followed by the opportunity for submission of written comments, and then an informal public hearing with a more restricted opportunity for cross-examination than in formal rule making.
identification with the vulnerable  A school of jurisprudence where fairness is sought. Particular attention is therefore paid to the poor, the ill, and the elderly.
illusory promise  Not consideration at all; when a party appears to commit, but really has not committed to anything.
implied authority  The relationship that is inferred from the conduct of the parties.
implied covenant of good faith and fair dealing exception  An exception to the employment at-will doctrine that imposes a duty on the employer to treat employees fairly with respect to termination.
implied conditions  Those that are not specifically and explicitly stated, but which are inferred from the nature and language of the contract.
implied contract  A contract that arises not from words of agreement but rather from the conduct of the parties.
implied-contract exception  An exception to the employment at-will doctrine that arises when the employer has taken steps to make it appear as if the employee has a contract to not be fired unless certain conditions occur. An employee handbook or statements of the employer can create the implied contract.
implied trust  Trusts created by courts when (1) an express trust fails and the court can imply a trust from certain behavior and (2) the law steps in to protect someone from fraud or other wrongdoing.
implied warranty of fitness for a particular purpose  An assurance inferred in a UCC sale that when a seller or lessor knows or has reason to know why the buyer or lessee is purchasing or leasing the goods in question, then the buyer or lessee is relying on him or her to make the selection and has an enforceable warranty if such assurance is false.
implied warranty of habitability  A requirement that the premises be fit for ordinary residential purposes.
implied warranty of merchantability  An assurance inferred in every sale, unless clearly disclaimed, that merchantable goods will conform to a reasonable performance expectation; the purchaser must have purchased or leased the good from a merchant.
implied warranty of trade usage  An assurance created in the context of a UCC sale, dependent on the circumstances, that can be created through a well-accepted course of dealing or trade usage.
imposter rule  If one obtains a negotiable instrument by impersonating another, and endorses it with the impersonated party's signature, the loss falls on the drawer of the instrument.
in pari delicto   In equal fault.
in personam jurisdiction (jurisdiction in personam)  Also called personal jurisdiction. The power of a court to require a party (usually the defendant) or a witness to come before the court. The court must have personal jurisdiction to enforce its judgments or orders against a party. In personam jurisdiction extends only to the state's borders in the state court system and across the court's geographic district in the federal system.
in rem jurisdiction  The power of a court over property or a status of an out-of-state defendant located within the court's jurisdiction area.
incidental beneficiary  One who unintentionally gains a benefit from a contract between other parties.
incorporator  An individual who applies for incorporation on behalf of a corporation.
independent agencies  Governed by a board of commissioners; the President appoints the commissioners with the advice and consent of the Senate; commissioners serve fixed terms and cannot be removed except for cause; no more than a simple majority of an independent agency can be members of any single political party.
indictment  Finding by the grand jury that there is evidence to charge the defendant and bring him to trial.
individual insurance  A policy where the insured party is an individual.
industry guides  Interpretations of consumer laws to encourage businesses to stop unlawful behavior.
infant  A person who is not legally an adult is considered to be an infant under the law. The legal definition of entering adulthood usually varies between ages 15–21. However, reaching the age of 18 makes a child a legal adult in most the U.S. localities. Those who have not reached adulthood typically are considered to lack the mental capabilities of an adult, and thus infancy can be used as a partial defense to defuse the guilty mind requirement of a crime.
informal contracts  Contracts that require no formalities.
informal rule making  A proposed APA rule, published in the Federal Register available for public comment.
information  Finding by a magistrate that there is enough evidence to charge the defendant and bring him to trial.
informational picketing  Picketing designed to truthfully inform the public of a labor dispute between an employer and the employees.
injunction  An order either forcing a party to do something or prohibiting the party from doing something.
inland marine policy  A policy that protects against loss of ship and cargo from "perils of the sea" when a ship is traveling on inland waterways.
innkeepers  Entities that are regularly in the business of making lodging available to the public.
innocent misrepresentation  Results from a false statement about a fact material to an agreement that the person making the statement believed to be true, when the person who made the false statement had no knowledge of the falsity of the claim.
insanity  An affirmative defense claiming that the defendant had a severe mental illness extant at the time the crime was committed that substantially impaired the defendant's capacity to understand and appreciate the moral wrongfulness of the act.
insider trading  Illegal buying or selling of a corporation's stock or other securities by corporate insiders such as officers and directors in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about the security.
insolvent debtor  A debtor who cannot pay debts in a timely fashion.
instruments  Writings that serve as evidence of rights to payment of money.
insurable interest  A party who has interest in property or life.
insurance  A contract in which the insured party makes payments to the insurer in exchange for the insurer's promise to make payment or transfer goods to another party in the event of injury or destruction to the insured party's property or life.
insured party  The party who makes a payment in exchange for payment in the event of damage or injury to property or person.
insurer  The party who receives payments from the insured party and makes the payment to the beneficiary.
integrated contracts  Written contracts intended to be the complete and final representation of the parties' agreement.
intellectual property  Intangible property that is the product of one's mind and not one's hands.
intended beneficiary  Third party to a contract whom the contracting parties intended to benefit directly from their contact.
intent  The intended purpose or goal of an action, especially in a contract.
intentional inflection of emotional distress  The defendant intentionally engages in extreme conduct designed to cause the plaintiff emotional distress.
intentional interference with contract  Intentionally taking an action that will cause a person to breach a contract that he has with another.
intentional misrepresentation  In a contract, when the party making the misrepresentation either knows or believes that the factual claim is false, or he or she knows that there is no basis for the assertion, and scienter is clear.
intentional tort  A civil wrong resulting from an intentional act committed upon a person, property, or economic interest of another. Intentional torts include: assault, battery, conversion, false imprisonment, intentional infliction of emotional distress, trespass to land, and trespass to chattels.
inter vivos gift  A gift that is made by a person during his or her lifetime.
intermediary bank  Any bank that is not a payor or depository bank that transfers a check during the check collection process.
intermediate scrutiny  A standard of review under which the law must be necessary to achieve a substantial, or important, governmental interest, and it must be narrowly tailored to that interest.
international agreement  A written agreement between two or more states governed by international law and relating to an international subject matter.
International Labor Organization  An international organization operating under the principle that "labor should not be regarded merely as a commodity or article of commerce" implemented through the drafting of declarations and conventions.
international law  Laws governing the conduct of states and international organizations and their relations with one another and natural and juridical persons.
interpretive rules  Rules that do not create any new rights or duties, but are merely a detailed statement of the agency's interpretation of an existing law. They are generally very detailed, step-by-step statements of what actions a party is to take to be considered in compliance with an existing law.
interrogatories  Also called requests for further information. A formal set of written questions to a party to a lawsuit asked by the opposing party as part of the pretrial discovery process in order to clarify matters of evidence and help to determine in advance what facts will be presented at any trial in the case. These questions are required to be answered in writing under oath or under penalty of perjury within a specified time.
Interstate Commerce Commission (ICC)  The first federal administrative agency; created to regulate the anticompetitive conduct of railroads.
intestacy statutes  Statutes that outline how a person's property will be handled if that person dies without a will.
intestate  The state of dying without a will.
intrusion on an individual's affairs or seclusion  A physical, electronic, or mechanical intrusion that occurs for the purpose of invading someone else's solitude, seclusion, or personal affairs when he or she has the right to expect privacy. The legal wrong occurs at the time of the intrusion; no publication is necessary.
involuntary intoxication  Intoxication is involuntary if the defendant took the intoxicant without awareness of its likely effect or mistook its identity, or if the intoxicant was taken under force.
involuntary intoxication defense  An affirmative defense claming that the defendant took the intoxicant without awareness of its likely effect, mistook its identity, or the intoxicant was taken under force.
Islamic law  A legal system based upon the fundamental tenet that law is derived from and interpreted in harmony with Shari'a (God's law) and the Koran.
joint and several liability  In this arrangement of liability, a third party has the ability to sue the partners separately or all partners jointly in one action.
joint stock company  A partnership agreement whereby company members hold transferable shares while all the goods of the company are held in the names of the partners.
joint tenancy  A form of co-ownership in which owners may sell their shares without the consent of the other owners and have their interest attached by creditors. However, joint tenants all own equal shares of the property, and upon the death of one tenant, the property is divided equally among the surviving joint owners.
joint tenants  Parties who hold property in joint tenancy.
joint venture  An association between two or more parties wherein the parties share profits and management responsibilities with respect to a specific project.
jointly liable  Shared liability for the partnership's debts.
judicial lien  Legal action taken by a creditor to satisfy his debt through property of the debtor.
judicial review  The power of a court to review legislative and executive actions such as a law or an official act of a government employee or agent to determine whether they are constitutional.
jurisdiction  The power of a court to hear cases and resolve disputes.
justifiable use of force  Use of force is necessary to prevent imminent death or great bodily harm to ones' self or to another or to prevent the imminent commission of a forcible felony.
lack of genuine assent  A defense to the agreement of a contract in which one party claims the offeror secured the agreement through improper means, such as duress, fraud, undue influence, or misrepresentation.
landlord  Owner of the property being leased.
landlord's lien  The right to some or all of the tenant's personal property.
Landrum-Griffin Act  Primarily governs the internal operations of labor unions; requires certain financial disclosures by unions, and establishes civil and criminal penalties for financial abuses by union officials; includes "Labor's Bill of Rights," to protect employees from their own unions.
larceny  Unlawful taking, attempting to take, carrying, leading, or riding away of another person's property with intent to deprive the rightful owner of property permanently.
last-clear-chance doctrine  Doctrine used by the plaintiff when the defendant establishes contributory negligence. If the plaintiff can establish that the defendant had the last opportunity to avoid the accident, the plaintiff may still recover, despite being contributorilly negligent.
lease  "A transfer of the right to possession and use of goods for a term in return for consideration." (UCC Section 2A-103(j))
leasehold interest  A possessory interest, but not an ownership interest transferred by contract.
leasehold estate  The leased property.
legal assent  A promise to buy or sell that the courts will require the parties to obey.
legal positivism  The school of jurisprudence that insists that because society requires authority, a legal and authoritarian hierarchy should exist. When a law is made, therefore, obedience is expected because authority created it.
legal realism  The school of jurisprudence that dictates that context must be considered as well as law. Context includes factors such as economic conditions and social conditions.
lessee  A person who acquires the right to possession and use of goods under a lease.
lessor  A person who transfers the right to possession and use of goods under a lease.
letter of credit  A binding document that a buyer can request from his bank to guarantee that the payment for goods will be made to the seller.
leveraged buyout  Strategy involving the acquisition of another company using a significant amount of borrowed money (bonds or loans).
lex mercatoria  The "law of merchants" as defined by customs or trade usages developed by merchants to facilitate business transactions.
liability insurance  Insurance that protects a business from tort liability to third parties.
liability without fault (strict liability)  A legal term that imposes responsibility for damages regardless of the existence of negligence.
license  The right to temporarily use another's property.
licensing agreement  A contract whereby one company (known as the licensor) grants permission to a company (known as the licensee) to utilize the licensor's intellectual property in return for payment.
lien  A claim to property.
life estate  Grants the holder the right to possess the property until death.
Limited liability company  Similar to a limited liability partnership, but the LLC is taxed like a partnership, where the members pay personal income taxes.
limited liability partnership  In this type of partnership all partners assume liability for one partner's professional malpractice to the extent of the partnership's assets.
limited partnership  An agreement between general partners and limited partners in a company where the general partners assume all liability for the company, and where the limited partners assume no responsibility beyond their originally invested capital.
liquidated damages  Damages identified as a term of the contract before a breach of contract occurs.
liquidated debt  When there is no dispute between the parties about the fact that money is owed and the amount of money owed.
liquidation  When a debtor turns over all assets to a trustee.
living will  The document that allows someone to express his or her advance directives.
long-arm statute  A statute that enables a court to obtain jurisdiction against an out-of-state defendant as long as the defendant has sufficient minimum contacts within the state such as committing a tort or doing business in the state.
mailbox rule  An acceptance is valid when it is placed in the mailbox, whereas a revocation is effective only when received by the offeree; in some jurisdictions the mailbox rule has been expanded to faxes.
maker  A person promising to pay a set sum to the holder of a promissory note or certificate of deposit.
malicious prosecution (action for)  Action brought against a defendant who is responsible for the institution of a criminal proceeding against the plaintiff without probable cause, who was subsequently exonerated, for the sole purpose of causing problems for the plaintiff.
malpractice actions  An action filed against a professional person for failure to act in accordance with prevailing professional standards.
manifests  Document that records possession of hazardous waste from inception to disposal.
manufacturing agreement  A type of franchise where the franchisor provides the franchisee with the formula or necessary ingredient to manufacture a product.
manufacturing defect  When an individual product has a defect making it more dangerous than other, identical products.
marine insurance  Protects against loss of ships and cargo from the "perils of the sea."
market share  A firm's fractional share of the relevant market.
marketable title  Title for property to which the seller in fact has legal title, and against which there are no liens or restrictions of which the buyer is not aware.
material breach  A substantial breach of a significant term or terms of a contract that excuses the nonbreaching party from further performance under the contract and gives the nonbreaching party the right to recover damages.
material terms  Those terms that would allow a court to determine what the damages would be in the event that one of the parties was to breach the contract, including the subject matter, quantity, price, quality, and parties.
mechanic's lien  A claim against real property to satisfy a debt incurred to make improvements to that real property.
med-arb  A type of dispute resolution process where both parties start out in mediation and, if successful, agree to arbitration.
mediation  A type of intensive negotiation where parties select a neutral party to help facilitate communication and suggest ways for the parties to solve their dispute.
meeting-the-competition defense  A defense to the Clayton Act where one firm engages in price discrimination to compete in good faith with another seller's low price.
members  Owners of a limited liability company.
mens rea   Latin words for "guilty mind." It refers to the mental state accompanying the wrongful behavior.
merchant  "A person who deals in goods of the kind, or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction, or to whom such knowledge or skill may be attributed by his employment of an agent or broker or other intermediary who, by his occupation, holds himself out as having such knowledge or skill." (UCC Section 2-104(1))
merger  The acquisition of one company by another.
merger clause  A clause parties include in a written agreement within the statute of frauds that states the written agreement accurately reflects the final, complete version of the agreement.
minitrial  A type of conflict resolution where lawyers present each side to a neutral adviser who offers an opinion as to what the verdict would be if it were a trial. This decision is not binding.
Miranda rights  The rights that are given to an arrested individual by a law enforcement agent before he/she is asked questions relating to the commission of a crime.
mirror-image rule  The terms of the acceptance must mirror the terms of the offer; if the terms of the acceptance do not mirror the terms of the offer, then no contract is formed; instead, the attempted acceptance is a counteroffer.
misappropriation theory  A theory of insider trading that holds that if an individual wrongfully acquires (misappropriates) and uses inside information for trading for his or her personal gain, that person is liable for insider trading.
misdemeanor  A crime that is less serious than a felony and that is punishable by fine and/or imprisonment for less than one year.
misrepresentation  An untruthful assertion by one of the parties about a material fact.
mistake  An erroneous belief about the facts of the contract at the time the contract is concluded, when legal assent is absent.
mistake of fact  A mistake that is not caused by the neglect of a legal duty by the person committing the mistake but rather consists of an unconscious ignorance of a past or present material event or circumstance.
mistake-of-fact defense  An affirmative defense that tries to prove a defendant made an honest and reasonable mistake that negates the "guilty mind" element of a crime.
mixed sale  A contract that combines a good(s) with a service(s).
mock trial  A contrived or imitation trial with a jury consisting of volunteers that attorneys preparing for a real trial might use to test theories or experiment with arguments to try to predict the outcome of the real trial.
model law  See uniform law.
modified comparative negligence defense  A defense accepted in some states whereby the defendant is not liable for the percentage of harm that he/she can prove can be attributed to the plaintiff 's own negligence if the plaintiff 's own negligence is responsible for less than 50 percent of the plaintiff 's harm; if the defendant establishes that the plaintiff 's own negligence caused more than 50 percent of the plaintiff 's harm, the defendant has no liability.
modify  When an appellate court grants an alternative remedy in a case when the court finds that the decision of the lower court was correct, but the remedy was not.
monetary damages  Money claimed by or ordered paid to a party to compensate for injury or loss caused by the wrong of the opposite party.
money order  A way to transfer funds between two parties. A money order is a signed document indicating that funds are to be paid from the drawee to the drawer.
monopoly or market power  The ability to control price and drive competitors out of the market.
motion  An application by a party to a judge or a court in a civil case requesting an order in favor of the applicant.
motion for judgment on the pleadings  A request by a party to a judge or a court, after pleadings have been entered in a civil case, to issue a judgment.
motion for summary judgment  A request by either party in a civil litigation to promptly and expeditiously dispose of a case without a trial. Any evidence or information that would be admissible at trial under the rules of evidence such as affidavits, interrogatories, depositions, and admissions may be considered on a motion for summary judgment. A court may hold oral arguments or decide the motion on the basis of the parties' briefs and supporting documentation alone.
motion to dismiss or demurrer  A request to a judge or a court in a civil case by the defendant to dismiss the case because even if all the allegations are true, the plaintiff is not entitled to any legal relief.
movability  The quality of a negotiable instrument that ensures it is mobile and available.
multilateral trade agreement  An international agreement between three or more states relating to trade between them.
multiple-product orders  A form of cease-and-desist order issued by the FTC that applies not only to a specified product, but also to others produced by the same firm.
mutual mistake  The result of an error by both parties about a material fact, i.e., one that is important in the context of a particular contract.
National Labor Relations Board (NLRB)  Created by the Wagner Act to interpret and enforce the National Labor Relations Act (NLRA).
national treatment  A principle of law prohibiting states from regulating, taxing, or otherwise treating imported products any differently than domestically produced products.
natural law  A school of jurisprudence that recognizes the existence of higher law, or law that is morally superior to human laws.
necessity defense  The defendant was acting to prevent imminent harm, and there was no legal alternative to the action he took.
negligence  Behavior that creates an unreasonable risk of harm to others.
negligence per se  Allows a judge or jury to infer duty and breach of duty from the fact that a defendant violated a criminal statute that was designed to prevent the type of harm that the defendant incurred.
negligent misrepresentation  In a contract, when one party makes a statement of material fact that he/she thinks is true, but is negligent in making the assertion; also results when the party making the statement would have known the truth about the fact had he/she used reasonable care to discover or reveal the fact.
negligent tort  A civil wrong that occurs when the defendant fails to act and thereby subjects other people to an unreasonable risk of harm. In other words, the defendant is careless, to someone else's detriment. It is usually used to achieve compensation for accidents and injuries.
negotiable instrument  An acceptable medium to exchange value from one person to another.
negotiation (1)  A bargaining process in which disputing parties interact informally to attempt to resolve their dispute.
negotiation (2)  Transferring the rights to a negotiable instrument from one party to another.
New York Convention  An international agreement governing the use of arbitration as a method of resolving private international disputes.
no-par shares  Shares without par value.
nolo contendere  A plea in which the defendant does not admit guilt, but agrees not to contest the charges.
nominal damages  Monetary damages awarded to a plaintiff in a very small amount, typically $1 to $5, which serve to signify that the plaintiff has been wronged by the defendant.
nondisclosure  A failure to provide pertinent information about a projected contract.
nonprobate property  Property that is not part of the probate estate.
nonprofit corporation  An organization incorporated under state laws and approved by both the state's Secretary of State and its taxing authority as operating for educational, charitable, social, religious, civic or humanitarian purposes.
nontariff barrier  Any impediment to international trade other than tariffs.
normal trade relations  A principle of law requiring states to treat like goods coming from other states on an equal basis.
North American Free Trade Agreement  An international agreement between the United States, Canada, and Mexico wherein tariffs and other trade barriers are reduced and gradually eliminated.
note  A promise by the maker of the note to pay the payee of the note.
notice-and-comment rule making  See informal rule making.
novation  In a contract, when the parties to the agreement wish to replace one of the parties with a third party; the original duties remain the same under the contract, but one party is discharged and the third party now takes that original party's place.
nuisance  The use by one person of his or her property in a manner that unreasonably interferes with another's use and enjoyment of his or her land.
objective impossibility of performance  In a contract, when it is in fact not possible to lawfully carry out one's contractual obligations.
obligees  Contractual parties who agreed to receive something from the other party.
obligors  Contractual parties who agreed to do something for the other party.
ocean marine policy  A policy that protects against loss of ship and cargo from "perils of the sea" when a ship is traveling on the ocean.
Occupational Safety and Health Act of 1970 (OSHA)  Federal law that established the Occupational Safety and Health Administration, the agency responsible for setting safety standards under the act, as well as enforcing the act through inspections and the levying of fines against violators.
offer  A key element of a contract consisting of the terms and conditions set by one party, the offeror, and presented to another party, the offeree.
Omnibus Crime Control and Safe Streets Act of 1968  Federal statute banning employers from listening to the private telephone conversations of employees or disclosing the contents of these conversations. Employers may, however, ban personal calls and monitor calls for compliance, as long as they discontinue listening to any conversation once they determine it is personal.
option contract  An agreement whereby the offeree gives the offeror a piece of consideration in exchange for the offeror's agreement to hold the offer open for the specified period of time.
order  An order to appear and bring specified documents.
order instrument  An instrument payable to a specific, named payee.
order of relief  An order that bankruptcy proceedings can continue.
organ donor card  A document that expresses a party's wishes to donate organs or tissue.
output contract  An agreement whereby the seller guarantees to sell everything he/she produces to one buyer and no quantity is stated; valid under the Uniform Commercial Code (UCC), but not under common law.
overdraft  A bank's action to pay an amount specified on a check, without there being sufficient funds in its customer's account.
par-value shares  Shares that have a fixed face value noted on the stock certificate.
parol evidence rule  A common law rule specifically addressing the admissibility of oral evidence as it relates to written contracts; states that oral evidence of an agreement made prior to or contemporaneously with the written agreement is inadmissible when the parties intend for a written agreement to be the complete and final version of their agreement.
partial eviction  When a landlord prevents a tenant from entering part of the leased premises.
partial performance  When portions of an agreement have been fulfilled by one or both parties absent of an agreement in writing; partial performance can prove that an oral contract exists between two parties.
partially disclosed principal  Making a third party aware that the agent is making an agreement on behalf of a principal, but the third party is unaware of the identity of the principal.
partnership  A voluntary association between two or more people who co-own a business for profit.
past consideration  Work done in the past, by definition, has already been performed. As such, nothing has been given in exchange, and the court will not enforce the promise.
patent  Protects a product, process, invention, or machine, or a plant produced by asexual reproduction.
payee  The party that receives the benefit of an order (check, etc.).
payor bank  The bank responsible for disbursing the funds indicated on a check.
per se violations  Those where the very existence of a condition carries with it liability, as opposed to actions violative of a rule of reason.
peremptory challenge  The right of the plaintiff and the defendant in jury selection in a jury trial to reject a certain number of potential jurors who appear to have an unfavorable bias, without stating a reason.
perfect tender rule  Requirement that the seller deliver the goods in conformity with the contract, down to the last detail.
perfection  The series of legal steps a secured party takes to protect its right in the collateral from the other creditors who wish to have their debt returned through the same collateral.
periodic tenancy  A lease created for a recurring term.
personal defenses  A defense to liability not applicable to holders.
personal insurance  A policy that covers an individual's health or life.
personal jurisdiction  The power of the court over the persons appearing before it.
personal property  Any property that is not land or permanently affixed to the land.
personal representative  The person chosen by the testator to collect the testator's property, pay the debt and taxes, and make sure the remainder of the estate gets distributed.
personal service  When an officer of the court hands legal documents such as a summons and complaint to the defendant.
petit jury  A group to six or twelve citizens who are summoned to and sworn by the court to hear evidence presented by both sides and render a verdict in a trial.
petty offense  A minor crime that is punishable by a small fine and/or imprisonment for less than six months in prison.
picketing  When individuals place themselves outside an employer's place of business for the purpose of informing passers-by of the facts of a labor dispute.
plain-meaning rule  When interpreting words in a contract, these should be given their ordinary meaning.
plaintiff  The person or party who initiates a lawsuit (also known as an action) before a court by filing a complaint with the clerk of the court against the defendant(s); also known as a claimant or a complainant.
plea bargain  An agreement in which the prosecutor agrees to reduce charges, drop charges, or recommend a certain sentence if the defendant pleads guilty. Plea bargaining benefits both parties: the defendant gets a lesser sentence and the prosecution saves time and resources by not trying the case.
pledge  The transfer of the collateral to the secured party.
point-of-sale system  An EFT system allowing consumers to directly transfer funds from a banking account to a merchant.
police power  Retained power of the state to pass laws to protect health, safety, and welfare of citizens.
policy statements  General statements about directions in which any agency intends to proceed with respect to its rule making or enforcement activities, having no binding impact on anyone.
policy  The insurance document signed by the insured party and the insurer.
political speech  Speech that is used to support political candidates or referenda. Political speech is given a high level of protection by the First Amendment as compared to other types of speech.
posteffective period  Begins when the SEC declares the registration statement effective and ends when the issuer sells all securities offered or withdraws them from sale.
posttrial motions  A request filed after a trial is over by either party to the trial court. A motion for new trial, a motion for judgment notwithstanding the verdict (JNOV), or a motion to amend or nullify the judgment are types of posttrial motions.
power of attorney  A specific form of express authority, granting an agent specific powers.
precedent  A tool used by judges to make rulings on cases based on key similarities to previous cases.
predatory pricing  When a company prices one product below normal cost until competitors are eliminated and then sharply increases the price.
preexisting duty  A promise to do something that one is already obligated to do; is not considered valid consideration.
preferential payments  Payments made by an insolvent debtor that give preferential treatment to one creditor over another.
preferred stock  Stock that enjoys preferences with respect to assets and dividends.
prefiling period  Begins when an issuer begins to think about issuing securities and ends when the issuer files the registration statement and prospectus with the SEC.
Pregnancy Discrimination Act of 1987 (PDA)  Amended Title VII of the Civil Rights Act of 1964 (CRA) to expand the definition of sex discrimination to include discrimination based on pregnancy.
prejudicial error of law  An error of law that was so significant that it affects the outcome of the case.
premium  An insurance payment.
prenuptial agreement  An agreement two parties enter into before marriage that clearly states the ownership rights each party enjoys in the other party's property; to be enforceable, prenuptial agreements must be in writing.
presentment  Making a demand for the drawee to pay.
presentment warranty  A warranty covering the parties accepting instrument for payment. These are created to ensure the accepting or paying parties are paying the proper party.
pretrial  An event that includes consultation with attorneys, pleadings, the discovery process, and the pretrial conference.
price discrimination  Selling the same goods to different buyers at different prices.
price fixing  When two or more competitors agree to set prices for a product or service.
prima facie  Latin for "at first view"; means that the evidence is sufficient to raise a presumption that a wrong occurred.
primarily liable  The party who must pay the amount designated on an instrument when it is presented for payment.
primary boycott  A boycott against an employer with whom the union is directly engaged in a labor dispute.
primary-line injuries  Injury to competitors of a seller who offers a discriminatory price.
principal  The party that an agent's authority can bind or act on behalf of.
principle of rights  The principle that judges the morality of a decision on the basis of how it affects the rights of all those involved.
Privacy Act  Under the Privacy Act, a federal agency may not disclose information about an individual to other agencies or organizations without that individual's written consent.
privacy tort  A wrongful act or damage to an individual due to invasion of privacy for which a civil action can be brought. Four distinct torts to protect the individual's right to keep certain things out of the public view, even if they are true, are: false light, public disclosure of private facts, appropriation for commercial gain, and intrusion on an individual's affairs or seclusion.
private corporation  Corporations that do not have government duties.
private law  Involves suits between private individuals or groups.
private nuisance  A nuisance that affects only a single or very limited number of individuals.
private placement exemption  When private offerings of securities are exempt from the registration process normally required by the SEC because the offerings are being made to private accredited investors and cannot be advertised to the general public.
private trial  An ADR method where a referee is selected and paid by the disputing parties to offer a legally binding judgment in a dispute.
privileges and immunities clause  Clause that requires the state to grant citizens of other states the same legal benefits that it grants its own citizens.
privity of contract  The relationship that exists between parties to a contract.
probable cause  Refers to the essential elements and standards by which a lawful officer may make a valid arrest, conduct a personal or property search, or obtain a warrant.
probate  The process of settling an estate.
problem-solving negotiation  Negotiation where the parties seek to achieve joint gain.
procedural due process  The steps a government must take before depriving a person of his or her life, liberty, or property.
procedural unconscionability  The unconscionability that derives from the process of making a contract.
proceeds  What is exchanged for a debtor's sold collateral.
product liability insurance  Insurance that protects a company from liability in the event that its customers suffer injury.
product market  A market in which all products identical to or substitutes for a company's product are sold.
professional insurance  Insurance that protects professionals from suits by third parties who claim negligent job performance.
profit  The right to go onto someone's land and take part of the land or a product of it away from the land.
promisee  In a third-party beneficiary contract, the party to the contract who owes something to the promisor in exchange for the promise made to the third-party beneficiary.
promisor  In a third-party beneficiary contract, the party to the contract who made the promise that benefits the third party.
promissory estoppel  Legal enforcement of an otherwise unenforceable contract due to a party's detrimental reliance upon the contract.
promoters  Those who begin the corporate creation and organization process.
property insurance  Insurance that protects property from loss or damages.
prospectus  An advertising tool that is a written document containing a description of a security and other financial information regarding the company offering the security; contains most of the same information as the registration statement.
proximate cause  The extent to which, as a matter of policy, a defendant may be held liable for the consequences of his/her actions; in the majority of states, proximate cause requires that the defendant and the type of injury suffered by the defendant were foreseeable at the time of the accident. In the minority of states, proximate cause exists if the defendant's actions led to the plaintiff's harm.
proxy  A writing signed by a shareholder that authorizes the individual named in the writing to exercise the shareholder's votes (corresponding to his or her shares of stock) at a shareholders' meeting.
proxy solicitation  The process of obtaining authority to vote on behalf of shareholders.
public corporation  A corporation created by government to help administer law.
public disclosure of private facts  A privacy tort that occurs when a person publishes a highly offensive private fact, such as information about one's sex life or failure to pay debts, about someone who did not waive his or her right to privacy.
public disclosure test  The ethical guideline that urges us to consider how others may view our actions when making a decision.
public figure privilege  A special right, immunity, or permission given to people to make any statement about public figures, typically politicians and entertainers, without being held liable for defamation for any false statements made about them.
public law  Involves suits between private individuals or groups and their governments.
public policy exception  An exception to the employment at-will doctrine that prohibits the employee for being fired for doing something that is consistent with furthering public policy.
publicly held corporation  A corporation available to the public.
puffing  The use of generalities and clear exaggerations.
punitive damages  A compensation that is awarded to a plaintiff beyond the actual harms or damages to punish the defendant and deter such conduct in the future.
purchase-money security interest  A security interest formed when a debtor uses borrowed money from the secured party to buy the collateral.
pure comparative negligence defense  A defense accepted in some states whereby the defendant is not liable for the percentage of harm that he/she can prove can be attributed to the plaintiff's own negligence.
qualified endorsement  An endorsement that does not bind the endorser to the negotiable instrument in the event that the creator does not honor that instrument.
quantitative restrictions  Limitations upon imported goods imposed on the basis of number of units, weight, or value.
quasi-contracts  A court-imposed contractual obligation to prevent unjust enrichment.
quasi in rem jurisdiction or attachment jurisdiction  A type of jurisdiction exercised by a court over an out-of-state defendant's property within the jurisdictional boundaries of the court. It applies to personal suits against the defendant, where the property is not the source of the conflict but is sought as compensation by the plaintiff.
"quick-look" standard  Allows a defendant in a restraint of trade case to offer justification for his or her per se violation.
quitclaim deed  A deed that carries no warranties; the grantor simply conveys whatever interests he or she holds.
ratify  Approve an unauthorized agent's signature on an instrument.
rational-basis test  The lowest standard of review; it requires that the law is designed to protect a legitimate state interest and is rationally related to that interest.
reaffirmation agreement  An agreement where the debtor agrees to pay a debt even though it could have been discharged.
real defense  A defense to liability able to be universally applied.
reasonable person standard  A measurement of the way members of society expect an individual to act in a given situation.
recognizances  When a party acknowledges in court that he or she will perform some specified act or pay.
recording  Filing the deed, with any other related documents, such as mortgages, with the appropriate county office, thereby giving official notice of the transfer to all interested parties.
red herring prospectus  A prospectus with a warning written in red print at the top of the page telling investors that the registration has been filed with the SEC but not yet approved.
refusal to deal  See group boycott.
reg-neg  Each concerned interest group and the agency itself send a representative to bargaining sessions led by a mediator; if the parties achieve a consensus, that agreement is forwarded to the agency and the agency is then expected to publish the compromise as a proposed rule in the Federal Register and follow through with the appropriate rule making procedures. If the agency does not agree with the proposal the group negotiated, the agency is free to try to promulgate a completely different rule or a modification of the one obtained through the negotiation.
registration statement  A description of the securities offered for sale, including an explanation of how proceeds from the sale of the securities will be used, a description of the registrant's business and properties, information about the management of the company, a description of any pending lawsuits in which the registrant is involved, and financial statements certified by an independent public accountant.
rejection  In a contract, when an offeree does not accept the offer or terms of a contract, thereby terminating the contract.
relative permanence  The quality of a negotiable instrument that ensures its longevity.
remand  The act of an appellate court that decides an error was committed that may have affected the outcome of a case and that therefore the case must be returned to the trial court for a new trial or for limited hearing on a specified subject matter.
rent  The compensation paid to the landlord for the tenant's right to possession and exclusive use of the premises.
rent escalation clause  A clause permitting the landlord to increase the rent in association with increases in costs of living, property taxes, or the tenant's commercial business.
requests to produce documents  In a lawsuit, the right of a party to examine and copy the opposing party's papers that are relevant to the case. A legal request may be made and the categories of the documents must be stated to allow the other party to know what documents he/she must produce.
requirement contract  An agreement whereby the buyer agrees to purchase all his/her goods from one seller and no quantity is stated in the contract; is valid under Uniform Commercial Code (UCC), but not under common law.
reply  Response of the plaintiff to the defendant's counterclaim.
res ipsa loquitur  A doctrine that allows the judge or jury to infer that, more likely than not, the defendant's negligence was the cause of the plaintiff's harm, when there is no direct evidence of the defendant's lack of due care.
resale-price maintenance agreement  An agreement through which a manufacturer and retailer set a specific price for the resale of products.
rescind  To cancel a contract,
rescission  The termination of a contract.
respondeat superior  The principle by which liability is held by the principal.
restatement of the law  Summaries of common law rules in a particular area of the law. Restatements do not carry the weight of law, but can be used to guide interpretations of particular cases.
restitution  Restoration of anything to the one to whom it properly belongs.
restricted securities  Securities that have limited transferability and are usually issued in a private placement.
restrictive covenants  Promises to use or not to use one's land in particular ways.
restrictive endorsement  Endorsements aimed to limit the transferability of the instrument or control the manner of payment under the instrument.
retained earnings  Profits that a corporation keeps.
reverses  When an appellate court decision overturns the judgment of a lower court, concluding that the lower court was incorrect and cannot be allowed to stand.
revocation  In a contract, when an offeror takes back the initial offer and annuls the opportunity for the offeree to accept the offer.
RICO Act  Stands for Racketeer Influenced and Corrupt Organizations Act, a United States law that provides for extended penalties for criminal acts performed as part of an ongoing criminal organization.
right of first refusal  A method of restricting stock transferability whereby a corporation or its shareholders have the right to purchase any shares of stock offered for resale by a shareholder within a specified time frame.
right of survivorship  The right that specific partnership property will pass on to the surviving partner(s).
right to die  Refers to a person's right to place limits on other people's efforts to prolong that person's life.
rightfully dissolved  A dissolution of a partnership that does not violate its partnership agreement.
ripeness  The readiness of a case for a decision to be made. The goal is to prevent premature litigation for a dispute that is insufficiently developed. A claim is not ripe for litigation if it rests upon contingent future events that may not occur as anticipated, or indeed may not occur at all.
risk  A potential loss.
risk management  The transfer and distribution of risk.
robbery  Taking or attempting to take personal property of a person by force or threat of force or violence and/or by putting the victim in fear.
rule-of-reason analysis  An inquiry into the competitive effects of a company's behavior to determine whether the benefits of the behavior outweigh the harm of the anticompetitive behavior, considering the following: (1) the nature and purpose of the restraint on trade, (2) the scope of the restraint, (3) the effect of the restraint on business and competition, and (4) the intent of the restraint.
rule utilitarianism  A subset of utilitarianism that proposes a number of rules for determining generally what creates the most happiness.
S corporation  A corporation that enjoys the tax status of a partnership.
Sabbath laws  Laws that require certain activities to be prohibited on the Sabbath.
sale  The passing of title from the seller to the buyer for a price.
sale-on-approval contract  The seller allows the buyer to take possession of the goods before deciding whether to complete the contract by making the purchase.
sale-or-return contract  The buyer and seller agree that the buyer may return the goods at a later time.
Sarbanes-Oxley Act  An act that criminalizes specific nonaudit services when provided by a registered accounting firm to an audit client. Also increases the punishment for a number of white collar offenses. Also known as the Public Company Accounting Reform and Investor Protection Act of 2002.
scienter  Deliberately or knowingly.
search warrant  A court order that authorizes law enforcement agents to search for or seize items specifically described in the warrant.
secondarily liable  The party that must pay the amount designated on an instrument should the primarily liable party default.
secondary boycotts  Occurs when unionized employees have a labor dispute with their employer and boycott another employer to force it to cease doing business with their employer.
secondary-line injuries  Injuries created when preferential treatment is granted to specific buyers.
secured interest  "Interest in personal property or fixtures which secures payment or performance" to a creditor. (UCC §1-201(37))
secured party  The party who holds the interest in the secured property.
secured transaction  Transaction in which the payment of a debt is guaranteed by personal property owned by the debtor.
security  Any financial instrument designated as a note, stock, bond, or other instrument named in the Securities Act of 1933.
security agreement  The arrangement where the debtor gives the secured interest to the secured party.
self-dealing  When directors or officers violate their duty of loyalty.
self-tender offer  When a target corporation offers to buy its shareholders' stock to resist a takeover.
service of process  The procedure by which a court delivers copies of the statement of claim or other legal documents such as a summons, complaint, or subpoena to the defendant.
settler  A person who creates a trust.
sexual harassment  Unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature that implicitly or explicitly makes submission a term or condition of employment; makes employment decisions related to the individual dependent on submission to or rejection of such conduct; or has the purpose or effect of creating an intimidating, hostile, or offensive work environment. There are two kinds of sexual harassment: hostile environment and quid pro quo.
shadow jury  Also called mock jury. Jury selection firms set up mock trials by recruiting individuals who are demographically matched to the real jury to listen to attorneys' arguments and witnesses' testimony before presenting their case to the actual jury.
shareholders  Investors in a corporation who, in turn, own the corporation.
shareholder's derivative suit  The ability of a shareholder to file a lawsuit on behalf of the corporation.
shelter principle  The principal dictating that when an item is transferred, the transferee acquires all of the rights the transferor had to the item.
short-form merger (parent-subsidiary merger)  When a parent corporation merges with a subsidiary corporation.
short-swing profits  Profits made from the sale of company stock within any six-month period by a statutory insider.
signal picketing  An unprotected form of picketing in which services and/or deliveries to the employer are cut off.
signature liability  Liability attributed because of a party's signature on an instrument.
simple delivery contract  Type of contract in which purchased goods are transferred to the buyer from the seller at either the time of the sale or sometime later by the seller's delivery.
situational ethics  A branch of ethical relativism that urges us to envision ourselves in the shoes of others, yet allows us to judge the decisions of others.
slander of quality  A business tort occurs when false statements criticize a business product or service and result in a loss of sales.
slander of title  A business tort occurs when false published statements are related to the ownership of the business property.
smart card  Similar to a check or ATM card, a smart card is a way to electronically transfer funds. Smart cards use computer chips to store information on a card, where check and ATM cards use magnetic strips.
social responsibility of business  The expectations that a community places on the actions of firms inside that community's borders.
Socialist law  A legal system based upon the premise that the rights of society as a whole outweigh the rights of the individual.
sole proprietor  The single person at the head of a sole proprietorship.
sole proprietorship  A business in which one person (sole proprietor) is in control of the management and profits.
special damages  Consequential damages.
special endorsement  An endorser's signature accompanying the name of the endorsee.
special power of attorney  Grants the agent express authority over specifically outlined acts.
special qualified endorsement  An endorsement containing an item that somehow limits the enforceability of the check, such as the term without recourse (which means the endorser will not be liable).
special warranty deed  A deed that the seller warrants against defects in title since he/she has had possession of the property, but not before that time.
specific performance  An order of the court ordering a person to do something.
specific personal jurisdiction  A doctrine permitting adjudication of claims arising from or relating to the defendant's activities in the forum.
stakeholders  The groups of people affected by a firm's decisions.
stale check  A check that is not presented to a bank within six months of its date.
standing  The legal right of a party or an individual to bring a lawsuit by demonstrating to the court sufficient connection to and harm from the law or action challenged. In other words, the plaintiff has to demonstrate that the plaintiff is harmed or will be harmed. Otherwise, the court will dismiss the case, ruling that the plaintiff "lacks standing" to bring the suit.
stare decisis  "Standing by the decision." A principle stating that rulings made in higher courts are binding precedent for lower courts.
statute of frauds  State-level legislation that addresses the enforceability of contracts that fail to meet the requirements set forth in the statute; serves to protect promisors from poorly considered oral contracts by requiring certain contracts to be in writing.
statutory insiders  Certain large stockholders, executive officers, and directors that are determined to be insiders according to the Securities Exchange Act of 1934.
statutory law  The assortment of rules and regulations put forth by legislatures.
stock certificates  Proof of ownership of a corporation.
stock warrants  A type of security issued by a corporation (usually together with a bond or preferred stock) that gives the holder the right to purchase a certain amount of common stock at a stated price.
stop-payment order  An order by a drawer to its drawee bank not to pay an issued check.
stored-value card  Plastic cards that carry a customer's information, allowing EFTs to be made.
strict-liability offenses  Offense for which no mens rea is required.
strict liability tort  A civil wrong that occurs when the defendant takes an action that is inherently dangerous, and cannot ever be undertaken safely, no matter what precautions the defendant takes. In such situations a defendant is liable for plaintiff's damages without any requirement that the plaintiff prove that the defendant was negligent.
strict scrutiny  The most exacting standard of review used by the court in determining the constitutionality of a statute; requires a compelling government interest and the least restrictive means of attaining that objective.
strike  A temporary, concerted withdrawal of labor.
subject-matter jurisdiction  The power of a court over the type of case presented to it.
subjective impossibility of performance  In a contract, when it would be very difficult for a party to carry out his or her contractual obligations.
sublease  A transfer of less than all of the interest of a lease to a lease property.
submission agreement  A contract that a specific conflict will be resolved in arbitration.
subpoena  An order to appear at a particular time and place and provide testimony.
subpoena duces tecum  An order to appear and bring specified documents.
subscribers  Investors who agree to purchase stock in a new corporation.
subscription agreements  An agreement between those raising capital for a new corporation and investors, who agree to purchase stock in the new corporation.
subsidy  A financial contribution by a government that confers a benefit upon a specific industry or enterprise.
substantial impairment  A concept used to modify the perfect tender rule in cases of the buyer revoking acceptance of goods; and an installment contract if the buyer/lessee rejects an installment of a particular item.
substantial performance  Occurs when nearly all of the terms of an agreement have been met, there has been an honest effort to complete all terms, and there has been no willful departure from the terms of the agreement.
substantive due process  The requirement that laws depriving an individual of life, liberty, or property be fair and not arbitrary.
substantive unconscionability  A finding that a contract's terms are so one-sided, unjust, or overly harsh that the contract should not be enforced.
summary jury trial  An abbreviated trial that leads to a nonbinding jury verdict.
summons  A legal document that is issued by a court and addressed to a defendant to notify him or her of the lawsuit and how and when to respond to the complaint. A summons may be used in both civil and criminal proceedings.
supremacy clause  Article VI, Paragraph 2 of the United States Constitution, which states that the United States Constitution and all laws and treaties of the United States constitute the supreme law of the land. This means any state or local law that directly conflicts with the U.S. Constitution or federal laws or treaties is void.
suretyship  A contract between a creditor and a third party who agrees to pay another person's debt.
surrender  A mutual agreement between a landlord and tenant where a lessee returns his or her interest in the premises to the landlord.
syndicate  An investment group that comes together for the explicit purpose of financing a specific large project.
Taft-Hartley Act  Also known as the Labor-Management Relations Act, was designed to curtail some of the powers the unions had acquired under the Wagner Act by designating certain union actions as unfair.
takings clause (just compensation clause)  A clause in the Fifth Amendment of the United States Constitution requiring that when government uses its power to take private property for public use, it must pay the owner just compensation, or fair market value, for his/her property.
tariff  A tax levied on imported goods.
teller's check  A check in which the drawer and drawee are separate banks.
tenancy at sufferance  A tenant who was lawfully in possession of a leased property remains in possession of that property unlawfully after the lease ends because the person with the power to evict him failed to do so.
tenancy at will  A lease that may be terminated at any time.
tenancy by the entirety  Available to married couples only. Co-ownership shares are equal and pass to the spouse upon death.
tenancy in common  Co-ownership interest in which each tenant has the right to sell his or her interest without the consent of the other owners, may own an unequal share of the property, and may have a creditor attach his or her interest.
tenant  Person who assumes the temporary legal right to possess the property.
tender  An offer of a party in a contract to be ready, willing and able to perform a duty outlined in that contract.
tender of delivery  Requirement that the seller/lessor have and hold conforming goods at the disposal of the buyer/lessee and give the buyer/lessee reasonable notification to enable him or her to take delivery.
tender offer  The offering to shareholders of a price above their stock's current market value.
term-life insurance  Life insurance that provides coverage for a specified term.
termination  In a contract, when an offer can no longer be accepted as part of a binding agreement, or when an offeree no longer has the power to form a legally binding contract by accepting the offer; an offer can terminate in one of five ways: revocation by the offeror; rejection by the offeree; death or incapacity of offeror; destruction or subsequent illegality of subject matter of the offer; or lapse of time or failure of other condition stated in the offer.
termination statement  An amendment to a financing statement that states that a debtor has no obligation to the secured party.
tertiary-line injuries  When someone who is given an illegally low price passes his or her savings to the customers.
testamentary capacity  The minimum age required to write a legal will and be of sound mind.
testator  A person who writes a will.
testamentary trusts  An express trust created by a will.
third-party beneficiary  Created when two parties enter into a contract with the effect of benefiting a third party.
time instrument  A type of draft allowing the payee to collect payment only at a specific time in the future.
tippee  One who receives confidential information from an insider.
tipper  An insider who gives inside information to someone.
tipper/tippee theory  A theory of insider trading that holds that any individual who acquires material inside information as a result of an insider's breach of duty has engaged in insider trading. The individual who has received a tip from an insider is called a tippee; the insider who gives the inside tip is called the tipper.
Title VII of The Civil Rights Act of 1964 (CRA) (as amended by the Civil Rights Act of 1991)  Federal law that protects employees against discrimination based on race, color, religion, national origin, and sex. Also prohibits harassment based on the same protected categories.
tombstone advertisement  Print advertisement announcing a forthcoming sale of securities with a layout and format similar to a tombstone.
tort  A violation of another person's rights or a civil wrongdoing that does not arise out of a contract or statute. Torts are most commonly classified as intentional, negligent, or strict liability torts.
tort feasor  A person who commits an intentional or through-negligence tort that causes a harm or loss for which a civil remedy may be sought.
trade dress  The overall appearance and image of a product.
trade libel  A business tort that occurs when false published-in-printed-form statements are criticisms of a business product or service that resulted in a loss of sales.
trade secret  A process, product, method of operation, or compilation of information that gives a businessperson an advantage over his or her competitors.
trademark  A distinctive mark, word, design, picture, or arrangement used by a seller in conjunction with a product and tending to cause the consumer to identify the product with the producer.
trademark dilution  The use of "distinctive" or "famous" trademarks, such as McDonald's, in such a manner as to diminish the value of the mark.
transfer warrant  A warranty created by a party who transfers a negotiable instrument regarding the instrument and the transfer.
traveler's check  An order that is payable on demand, is drawn on or through a bank, is designated by "traveler's check," and requires a countersignature. A traveler's check contains a copy of the customer's signature and requires a countersignature for verification.
treaty  A binding agreement between two states or international organizations.
trespass to personality  The temporary interference with another's use or enjoyment of his or her personal property.
trespass to realty  A tort that occurs when someone goes on another's property without permission, or places something on another's property without permission.
trial  An event in which parties to a dispute present evidence in court, before a judge or a jury, in order to achieve a resolution to their dispute.
trial court (court of original jurisdiction)  Also called court of first instance; a court in which most civil or criminal cases start when they first enter the legal system. In these courts, the parties present evidence and call witnesses to testify. Trial courts are referred to as courts of common pleas or county courts in state court systems and district courts in the federal system.
trust  A business arrangement in which stock owners appoint beneficiaries and place their securities with trustees, who manage the company and pay a share of their earnings to the stockholders.
trust endorsement  An endorsement that allows the endorser rights of a holder by virtue of the trust endorsement.
trustee  In bankruptcy proceeding, an individual who takes over administration of debtor's estate.
trustees  Those who operate a trust for beneficiaries in a business trust.
tying arrangement  When the sale of one product is tied to the sale of another.
unconscionability  When one party has so much more bargaining power than another party that he or she dictates the terms of an agreement and eliminates the other party's free will.
underwriter  The party who receives the payments from the insured party and makes the payment to the beneficiary.
undisclosed principal  When a third party does not know an agent is acting on behalf of a principal.
undue influence  When one party has taken advantage of his or her dominant position in a relationship to unduly persuade the other party and when the persuasive efforts of the dominant party have interfered with the ability of the other party to make his or her own decision.
unemployment compensation  State system, created by the Federal Unemployment Tax Act (FUTA), that provides unemployment compensation to qualified employees who lose their jobs.
unenforceable  When a law prohibits a court from enforcing the terms of a contract.
unfair competition  Competing with another for the sole purpose of driving that other out of business and not to make a profit.
unfortunate accident  An incident that simply could not be avoided, even with reasonable care.
unidentified principal  A principal whose relationship with the agent has not been made known.
Uniform Commercial Code (UCC)  A statutory source of contract law in the United States applicable to transactions involving the sale of goods. Code was created in 1952 and adopted by all 50 states, the District of Columbia, and Virgin Islands; may be modified by each state to reflect the wishes of the state legislature.
uniform law  Laws created to account for the variability of laws among states. These laws serve to standardize the otherwise different interstate laws (also called model law).
unilateral contract  A promise exchanged for an act.
unilateral mistake  The result of an error by one party about a material fact, i.e., one that is important in the context of a particular contract.
United Nations Convention on Contracts for the International
Sale of Goods (CISG)  		The legal structure for international sales, including business-to-business sales contracts.
universalization test  The ethical guideline that urges us to consider, before we do an action, what the world would be like if everyone acted in this way.
unliquidated debt  When the parties either dispute the fact that any money is owed or agree that some money is owed but dispute the amount.
unqualified opinion letter  Letter issued by an auditor when the financial statements presented are free of material misstatements and are in accordance with GAAP.
unprotected speech  Although the First Amendment gives the right to free speech, limited types of speech are not protected by the First Amendment including hate speech, insulting or fighting words, defamation, or speech that harms the reputation of another.
usage of trade  Any practice that members of an industry expect to be part of their dealings.
usury  Charging an exorbitant or unlawful rate of interest.
utilitarianism  The ethical principle that urges individuals to act in a way the creates the most happiness for the largest number of people.
valid  An enforceable contract that includes all four elements of a contract: an offer and agreement, consideration, contractual capacity, and a legal object.
values  Positive abstractions that capture our sense of what is good and desirable.
venue (1)  The place where a hearing takes place. Its geographic location is determined by each state's statutes and based on where the parties live or where the event occurred or the alleged wrong was committed.
venue (2)  A legal doctrine relating to the selection of a court with subject-matter and personal jurisdiction that is the most appropriate geographical location for the resolution of the dispute.
vertical merger  When a company at one level of the manufacturing-distribution system acquires a company at another level of the system.
vertical restraint against trade  When two parties at different levels in the manufacturing-distribution system make an agreement that restrains trade.
vest  The maturing of rights such that a party can legally act upon the rights.
vicarious liability  The liability or responsibility of a person, a party, or an organization for damages caused by another. It is most commonly used in relation to employment, where the employer is vicariously held liable for the damages caused by its employees.
virtue ethics  The ethical system concerned with the development of character traits. This system proposes that a decision is ethical when it promotes positive character traits like honesty, courage, or fairness.
virus  A computer program that rearranges, damages, destroys, or replaces computer data.
void  Contract that is not valid because its object is illegal or it has some defect that is too serious.
void title  Not true title; as when someone knowingly or unknowingly purchases stolen goods.
voidable  When one or both parties has the ability to either withdraw from a contract or enforce it.
voidable title  Occurs in situations where the contract between the original parties would be void but the goods have already been sold to a third party.
voir dire  Process of questioning potential jurors to ensure that the jury will be made up of nonbiased individuals.
waiting period  The period after an issuer files a registration statement and prospectus with the Securities and Exchange Commission requesting to offer a security and before the offer is approved by the SEC, which is a minimum of 20 days.
Wagner Act  The first major piece of federal legislation adopted explicitly to encourage the formation of labor unions and provide for collective bargaining between employers and unions as a means of obtaining the peaceful settlement of labor disputes.
warehouse receipt  A receipt issued by one who is engaged in the business of storing goods for compensation.
warranties  Assurances, either express or implied, by one party that the other party can rely on its representations of fact.
warranties of title  An assurance inferred in every UCC sales transaction that the seller has good and valid title to the goods and has the right to transfer title free and clear of any liens, judgments, or infringements of intellectual property rights of which the buyer does not have knowledge.
warranty  A binding promise regarding a product in the event that the product does not meet the manufacturer's or seller's promises.
warranty liable  Liability attributed when the transfer of an instrument breaches a warranty associated with an instrument.
waste  Permanent and substantial injury to the landlord's property.
watered stock  Stock issued to individuals below its fair market value.
white-collar crime  Crimes performed by white-collar employees.
whole-life insurance  Life insurance that provides protection for the entire life of the insured.
will  A legal document that outlines how a person wants his or her property distributed upon death.
winding up  The act of completing unfinished partnership business.
workers' compensation laws  State laws that provide for financial compensation to employees or their dependents when the covered employee is injured on the job.
workers' compensation policy  Provides payment to employees who are injured through an employment-related accident.
working papers  The various documents used and developed during an audit, including notes, calculations, copies, memorandums, and other papers constituting the accountant's work product.
World Trade Organization  An international organization facilitating international cooperation in opening markets and providing a forum for future trade negotiations and the settlement of international trade disputes.
WPH process of ethical decision making  A set of ethical guidelines that urges us to consider: whom the action affects, the purpose of an action, and how we view its morality (whether by utilitarian ethics, deontology, etc).
writ of certiorari  A decision by the Supreme Court to hear an appeal and order the lower court to send to the Supreme Court the record of the appealed case.
writ of execution  A court order authorizing a local law officer to seize and sell any of the debtor's real or personal nonexempt property within the court's geographic jurisdiction to enforce a judgment awarded by the court.
writing  A type of documentation showing contractual intent that can satisfy the statute of frauds requirement.
wrongful civil proceedings  A civil action brought against a person with no justifiable basis for the action.
wrongful dissolution  A dissolution of a partnership in violation of its partnership agreement.
Zoning  Restrictions placed by the government on the use of property to allow for the orderly growth and development of a community and to protect the health, safety, and welfare of its citizens.





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