Business and Personal Law

Glossary – Key Terms

acceptance  The second party's unqualified willingness to go along with the first party's proposal
accord and satisfaction  A legal way to settle contractual disputes by which one party agrees to accept less than the amount due as full payment
actual authority  The real power a principal gives to an agent
actual notice  A formal notice given directly to a party, usually using certified mail with a receipt
adhesion contract  A take-it-or-leave-it offer made by a party who holds most of the power in a bargaining session
administrative law  The body of rules created by government agencies
adultery  When one spouse has sexual relations with someone outside of marriage
affinity  Related by marriage
agency  A type of working relationship in which one person represents another person in a business transaction with a third party
agency by estoppel  When the principal's actions lead the third party to believe that the agent is working for the principal
agent  The person who has been authorized to do the work
agent's agent  An agent who is appointed by another agent without the principal's authority to do so
alimony  An allowance for support paid to one person by the former spouse in a divorce
alternative dispute resolution (ADR)  Parties try to resolve disagreements outside of the usual court system, by mediation, arbitration, conciliation, and negotiation
annual percentage rate (APR)  The true interest rate of a loan
annulment  A declaration by the court that a marriage was never valid
apparent authority  Authority that a third party believes an agent has while acting on behalf of the principal
appellate court  The U.S. courts of appeals in the federal system; hears appeals and reviews cases from the lower courts
arraignment  A formal hearing during which the defendant is read the indictment or information and is asked to plead guilty or not guilty
arrest  Occurs when a person is legally deprived of his or her freedom
articles of incorporation  A legal document filed with the state to establish a corporation
assault  Attempt to commit a battery
asset acquisition  When one corporation agrees to purchase the assets, such as property, buildings, and equipment, of a second corporation
assignment  The transfer of a right under contract
assignment  The transfer of a right under contract
assumption of risk  A defense against negligence that is raised when the plaintiff knew of the risk and still took the chance of being injured
bail  Money or other property that is left with the court to assure that a person who has been arrested, but released, will return to trial
bailment  The transfer of possession and control of personal property to another with the intent that the same property will be returned later
bankruptcy  The legal process by which a debtor can make a fresh start through the sale of assets to pay off creditors
battery  The unlawful touching of another person
beneficiary  The person named in an insurance policy to receive the proceeds of the policy
bigamy  The illegal act of having two spouses at the same time
bilateral contract  A contract that contains two promises: one party promises to do something in exchange for the other's promise to do something else
bill of sale  Formal evidence of ownership
breach of contract  When one party to a contract fails to perform the duties spelled out by the contract
burglary  Breaking and entering a house or other structure to commit a felony
capacity  The legal ability to enter into a contract
carrier  A business that transports persons, goods, or both
certificate of incorporation  A corporation's official authorization to do business in a state
Chapter 11 bankruptcy  A type of bankruptcy that allows businesses to reorganize their financial affairs and still remain in business
Chapter 12 bankruptcy  A form of bankruptcy that lets family farmers and fishing businesses create a plan for debt repayment that allows them to keep their operations running
Chapter 13 bankruptcy  A form of bankruptcy that permits individual debtors to reorganize their debts and develop payment plans
Chapter 7 bankruptcy  A type of bankruptcy that allows individual debtors to discharge all their debts and make a fresh start; ordinary bankruptcy
collateral  The property that is offered as a security interest
collective bargaining  A process in which union and management representatives get together to work out issues such as wages, working conditions, and hiring and firing policies
Commerce Clause  A statement in Article I of the Constitution giving Congress the power to regulate commerce among the states
common carrier  A carrier that is compensated for providing transportation to the general public
common law  A set of laws made by the courts that provide a series of consistent rules that later courts must follow
common-law marriage  An informal type of marriage created by the parties themselves
comparative negligence  A defense against negligence which is raised when the carelessness of each party is compared to the carelessness of the other party
compensation  Fair payment for the job performed
conglomerate  A corporation that owns many different types of companies
consanguinity  Related by blood
consideration  The exchange of benefits and detriments by the parties to a contract
consolidation  When two or more companies join together to form a new corporation
constitution  A country's formal document that spells out the principles by which its government operates
Consumer Credit Protection Act  A federal law that requires creditors to inform consumers of the costs and terms of credit; Truth in Lending Act
contract  Any agreement enforceable by law
contributory negligence  A defense against negligence when the defendant can show the victim did something to help cause his or her own injuries
copyright  A right granted to an author, composer, photographer, or artist to publish and sell an artistic or literary work
corporate director  A person elected by shareholders to make broad policy decisions in the running of a corporation
corporate officer  A person chosen by the directors to run the day-to-day affairs of a corporation
corporation  An entity with a legal authority to act as a single person distinct from its owners
counteroffer  A response to an offer in which the terms of the original offer are changed
credit  An arrangement in which one may receive cash, goods, or services now and pay in the future
creditor  The party who sells the goods on credit or lends the money
crime  An offense committed against the public good, or society
cyberblackmail  The use of information unlawfully obtained by computer to pressure a victim into granting a payoff to the blackmailer
cybercrime  Any criminal activity associated with a computer
cyberdefamation  The communication via computer or other electronic device of false data that damages a person's reputation
cyberinvasion of privacy  An unwelcome intrusion into the private matters of an individual carried out or sustained by a computer
cyberlaw  The area of law that concerns computer and computer-related crimes
cyberpiracy  A crime that involves using a computer to steal computer data stored in a digital formal
cyberspoofing  A crime in which a cybercriminal falsely adopts the identity of another computer user or creates a false identity on a computer Web site in order to commit fraud
cybertort  The invasion, theft, falsification, misuse, or deletion of data stored in a computer
cybertrespass  Any illegal activity already in the criminal code committed by using a computer
cybervandalism  Disrupting, damaging, or destroying a Web site or computer network
damages  Payment recovered in court by a person who has suffered an injury
debtor  The party who buys the goods on credit or borrows money
deed  A written instrument that transfers title of ownership of property
default  A failure in making timely payments on a loan
defendant  A person who is accused of a crime
delegation  Transferring of a duty under a contract
derivative suit  A lawsuit a shareholder can bring on behalf of the corporation to correct an injury to the corporation
detention hearing  A court session during which the judge tries to learn whether there are good reasons to keep an accused juvenile in custody
digital signature  An encoded message that appears at the end of a contract created online
direct suit  A lawsuit a shareholder can bring against a corporation for denying his or her rights as a shareholder
disaffirm  To show the intent not to live up to a contract
discharge by agreement  The act of ending contracts by mutual agreement
discrimination  The unequal treatment of individuals based on sex, age, race, nationality, or religion
disparate impact  When an employer has an employment policy that appears neutral on its surface, but has an unfair impact on members of a protected class
disparate treatment  When an employer intentionally discriminates against an individual or a group of individuals belonging to a protected class
dissociation  When a partner is no longer associated with a firm
dissolution  The breakup of a partnership or any legal entity
divorce  A declaration by the court that a valid marriage has come to an end; sometimes called dissolution of marriage
domain name  The Internet address of a business
double representation  When an agent works simultaneously for two competing principals
draft  An order to a third party to pay money
drawee  The person to whom an order is given to pay money in a draft
drawer  The person who orders money to be paid in a draft
duress  The act of destroying somebody's free will by force, threat of force, or bodily harm
easement  An irrevocable right to the limited use of another's land
e-commerce (electronic commerce)  The process of conducting business using electronic means, especially the Internet
electronic fund transfer (EFT)  A computerized system for transferring funds electronically rather than by writing checks
emancipation  Freeing someone from the control of another; especially a parent's relinquishing authority and control over a minor child
eminent domain  The right of the government to take private land for a public purpose
employment-at-will  Based on the principle that each party should be free to end the employment relationship at any time without penalty
Environmental Protection Agency (EPA)  The federal agency responsible for protecting the environment
Equal Credit Opportunity Act (ECOA)  Makes it illegal for banks and businesses to discriminate against credit applicants on the basis of their gender, race, marital status, national origin, religion, age, or because they get public assistance income
equal pay rule  A standard that states that employers working in interstate commerce must pay women the same rate of pay as men holding the same type of job
estateThe interest or right that a person has in real property
ethics  The rules used to determine the difference between right and wrong
eviction  Occurs when a landlord deprives a tenant of the possession of the premises
executor/executrix  The person named to carry out the terms of a will (executor—male; executrix—female)
express authority  Comes from the orders, commands, or instructions a principal explicitly gives an agent
express contract  A contract statement that may be oral or written
express warranty  An oral or written statement, promise, or other representation about the quality of a product
expropriation  When a government seizes a privately-owned business to be used for a public service
Fair Credit Billing Act  Requires creditors to correct billing errors brought to their attention
Fair Credit Reporting Act  A federal law that grants people the right to know what is contained in their credit reports
Fair Debt Collection Practices Act (FDCPA)  Prohibits certain practices by debt collectors
Federal Energy Regulatory Commission (FERC)  Part of the Department of Energy, this agency regulates electricity and natural gas
felony  A major crime
fiduciary relationship  A relationship based on trust
finance charge  The cost of the loan in dollars and cents
firm offer  A merchant's written promise to hold an offer open for the sale or lease of goods
fixtures  Items of personal property attached in such a way that they become real property
forbearance  The act of not doing what you have the right to do
forgery  The fraudulent making or material alteration of a writing
franchise  A license a company grants to a business or individual for the right to use its name and sell its products or services
fraud  A deliberate deception intended to secure an unfair and unlawful gain
full warranty  An assurance that a defective product will be repaired or replaced without charge within a reasonable time
garnishment  The legal procedure through which a worker's earnings are withheld for payment of a debt
general agent  An agent who has authority to perform any act within the scope of a business
genuine agreement  An agreement that is true and genuine: a valid offer is met by a valid acceptance
gratuitous bailment  A bailment for the sole benefit of the bailor
holder  A person who possesses a negotiable instrument payable to “the order of” the person holding it or to “bearer”
holder in due course  A holder who takes an instrument for value, in good faith, and without notice that the instrument is defective
identity theft  Using a computer to steal financial, employment, educational, medical, and personal data
implied authority  Additional authority that allows an agent to perform reasonable acts necessary to carry out the express authority
implied contract  A contract that comes about from the actions of the parties; a contract that exists when an employer has said, written, or done something to lead an employee to reasonably believe that he or she is not an at-will employee
implied contract  A contract that comes about from the actions of the parties; a contract that exists when an employer has said, written, or done something to lead an employee to reasonably believe that he or she is not an at-will employee
implied covenant  A legal argument that holds that any employment relationship is based on an implied promise that the employer and employee will be fair and honest with one another
implied warranty  A guarantee of quality imposed by law
impossibility of performance  When one of three situations prevent the performance of a service contract: a death or illness that prevents the performance of a personal service contract; the destruction of the exact subject matter, or the means for performance; and illegality
indemnification  Payment for losses suffered by an agent because of a principal's instructions
independent contractor  A person who works for a proprietor to perform a particular task using his or her own tools and deciding the best way to do the job
indorsement  The act of placing one's signature on an instrument, usually on the back, to transfer it to another
infraction  A minor offense that is usually punishable with a fine and not with jail time
injunction  A court order that prevents a party from performing a specific act
insider trading  When a corporate director or officer buys or sells shares in a corporation based on firsthand information about the corporation that is not available to the public
insurable interest  The financial interest a policyholder has in the person or property that is insured
insurable interest  The financial interest a policyholder has in the person or property that is insured
insurance  An agreement in which one party (the insurer) compensates another party (the insured) for any losses
intellectual property  An original work fixed in a tangible medium of expression
intentional tort  Actions that hurt, embarrass, or scare other people
interest  A fee charged by creditors for lending money or extending credit
intestate  To be without a will
invitations to negotiate  Invitations to deal, trade, or make an offer
involuntary bankruptcy  When creditors begin the proceeding instead of the debtor
joint liability  Liability shared by two or more people
jurisdiction  A court's power to hear a case and make a judgment
justice  Treating people fairly and equally
larceny  The unlawful taking of someone's personal property with the intent to keep the property away from that person
law  A system of rules of conduct established by a country's government to maintain stability and justice according to the values that are relevant to that country
lease  The contract between a tenant and a landlord
lessee  The tenant in a lease
lessor  The landlord in a lease
license  A temporary, revocable right to the limited use of another's land
lien  A legal claim against another person's property as a security for a debt or loan to ensure it will be paid
limited liability company (LLC)  An entity with the legal authority to act as a single person distinct from its owners and combines the best features of a partnership and a corporation
limited liability partnership (LLP)  A registered partnership in which each partner is not liable for the acts of the other partners
limited partnership  A partnership formed by two or more persons, with one or more general partners and one or more limited partners
limited warranty  Any written warranty that does not meet the requirements of a full warranty
majority  The status of reaching the age of adulthood, 18 in most states
maker  The person who promises to pay money in a note
manslaughter  Voluntary or involuntary killing of another person without intending to do so
marriage  Defined by most states and the federal government as the legal union of one man and one woman as husband and wife
merger  When two companies join together, with one company keeping its corporate identity and the other company losing its corporate identity
minor  A person who has not yet reached the age of adulthood
mirror image rule  The terms stated in the acceptance must exactly mirror or match the terms of the offer
misdemeanor  A less-serious crime
monopoly  A business situation in which one person, company, or group of companies controls the market for a product or service
morality  The values that govern a group's ideas about right and wrong
murder  The intentional killing of another person
mutual benefit bailment  A bailment in which both the bailor and bailee receive benefits
negligence  A tort that results when one person carelessly injures another
negotiable instrument  A written document giving legal rights that may be passed to others by endorsement or delivery; commercial paper
negotiation  The transfer of an agreement in such a way that the transferee becomes a holder
no-fault divorce  A divorce granted without either party having to prove the other party guilty of misconduct
nondelegable duty  A duty that cannot be delegated, or transferred, to another party
note  A written promise to pay money; promissory note
notice by publication  Notice usually given by publishing a notice in a local newspaper
Nuclear Regulatory Commission (NRC)  Part of the Department of Energy, this agency regulates nuclear energy
Occupational Safety and Health Administration (OSHA)  The federal government agency that regulates health and safety standards for companies in the United States
offer  A proposal by one party to another intended to create a legally binding agreement
partnership  An association of two or more persons to carry on as co-owners of a business for profit
patent  A grant giving an inventor the exclusive right to make, use, or sell an invention for a period set by Congress
payee  The person to whom the promise is made in a note
pension plan  A program established by an employer or a union to provide income to employees after they retire
personal property  Everything, other than real property, that can be owned
plaintiff  The party that accuses a person of a crime
polygamy  The illegal act of having more than two spouses at the same time
power of attorney  Any writing granting someone authority to act as an agent
premium  The amount of money an insured pays for insurance coverage
prenuptial agreement  A written and signed legal contract couples make before getting married dealing with property and support issues
principal  The person who authorizes someone to represent his or her interests
probate  The process of validating and executing a will
promissory estoppel  The principle that a promise made without consideration may nonetheless be enforced to prevent injustice
prosecutor  The government official who brings the case against the defendant
prospectus  A document that contains a detailed explanation of the stock offering for potential investors
proximate cause  When the link between negligent conduct and injury is strong enough to be recognized by the law
public policy  A legal principle that holds that nobody should be allowed to do something that harms the public
public policy  A legal principle that holds that nobody should be allowed to do something that harms the public
punitive damages  Money payments for damages that go beyond what the innocent party actually lost and that are designed to punish the wrongdoer
ratification  The act of agreeing to go along with a contract that could have been avoided
real property  The ground and everything permanently attached to it
registration statement  A general description of the securities and of the company making the offer
reimbursement  Payment for money spent by an agent on behalf of a principal
rejection  A refusal of an offer by the offeree that brings the offer to an end
remedy  A legal means of enforcing a right or correcting a wrong
repossession  When a creditor reclaims property on which it has a lien if the debtor does not make payment
respondeat superior  A legal doctrine that holds that the master is responsible for the torts of his or her servants
revocation  The taking back of an offer by the offeror
risk of loss  The responsibility for loss or damage to goods
robbery  The wrongful taking of someone's property by threatening or using violence
secured loan  A loan which is backed up by property that the creditor can take if the loan is not repaid
security  A monetary investment that seeks to make a profit solely because of another's efforts
security interest  A creditor's right to use collateral to recover a debt
self-dealing  When agents make deals that benefit themselves rather than their principal
share  A single unit of ownership in a corporation
shareholder  An individual who owns shares of a corporation
Social Security  A government program that provides continuing income to workers and their dependents when their earnings stop or are reduced because of retirement, disability, or death
sole proprietorship &A form of business that is owned and operated by one person
special agent  An agent whose authority is restricted to accomplishing only a specific job or purpose; limited agent
special bailmentí A bailment for the sole benefit of the bailee
statute  A law passed by a government body that has been made for the purpose of creating laws
Statute of Frauds  A state law that requires that certain contracts be in writing so that there is evidence that the contract exists and that it has certain definitive terms
statute of limitations  Establishes a time limit for suing in a civil case, based on the date when the breach occurred or was discovered
stock acquisition  When an individual or a corporation buys enough shares of stock in another corporation to take over control of it
straight life insurance  Life insurance that requires the payment of premiums until the face value is reached or the insured is deceased; also called ordinary life or whole life
strict liability  A legal doctrine that says some activities are so dangerous that liability will always follow any injury that results from those activities
subagent  An agent lawfully appointed by another agent
sublease  The transfer of part of the term of a lease, but not the remainder of it, to someone else
substantial performance  A situation in which a party has, in good faith, completed the major requirements of a contract, leaving only a few minor details unfinished
tenancy  An interest in the real estate they lease; leasehold estate
tender  An offer to do what you have agreed to do under a contract
term life insurance  Life insurance issued for a particular period, usually five or ten years
testamentary capacity  The mental ability (being of sound mind) to create a will
testamentary intent  The intention that the document is meant to be a last will and testament
testator/testatrix  A person who dies with a will (testator—male; testatrix—female)
third party  The person with whom the agent does business on behalf of the principal
title  The right of ownership to goods
tort  A private wrong committed by one person against another
tortfeasor  A person who commits a tort
trademark  A distinctive mark, symbol, or slogan used by a business to identify and distinguish its goods or services
trust  A legal device by which property is held by one person for the benefit of another
trustee  A person who holds title to the property for another's benefit
unconscionable contract  An agreement in which the consideration is so out of line with the actual value of the subject matter and so unfair that shocks the court's conscience
undue influence  An action or series of overly persuasive actions that make inappropriate use of one person's position of power over another person to create an agreement that is very favorable to the person with all the power
unemployment compensation  A system of government payments to people who are out of work and looking for a job
Uniform Commercial Code (UCC)  A collection of laws that governs various types of business transactions
unilateral contract  A contract that contains a promise by only one person to do something, if and when the other party performs some act
union  An organization of employees formed to promote the welfare of its members
unlimited liability  A legal duty placed on a business owner that requires the owner to be responsible for all losses experienced by the business
usury law &A law restricting the amount of interest that can be charged
vandalism  Willful or malicious damage to property
voidable title  A title that may be canceled if the injured party chooses to do so
voluntary bankruptcy  When a debtor files for bankruptcy to eliminate or reduce the burden of debt
warrantyí A guarantee, usually by a seller to a buyer, that a product will perform as promised
warranty of fitness for a particular purpose  An implied warranty that goods will be fit for a specific use
warranty of merchantability  An implied warranty that goods are fit for the ordinary purpose for which the goods are sold
will  A document that is signed during your lifetime that provides for the distribution of your property upon death
workers' compensation  An insurance program that provides income for workers who are injured on the job or develop a disability or disease as a result of their job
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