ACC205 EXAM 2 WORDLIST YORDY

10b-5

SEC rule prohibiting fraud and insider trading in connection with buying or selling securities.

acceptance

Agreement to an offer that creates a binding contract.

accord and satisfaction

Settlement of a dispute where one party agrees to accept different performance than originally agreed.

Adequacy of Consideration

Refers to whether the value exchanged in a contract is fair; generally, courts don't question it.

anticipatory repudiation

When one party indicates they won't perform their contractual duties before the performance is due.

battle of the forms

Under UCC, when merchants exchange forms with differing terms but still form a valid contract.

bilateral mistake

When both parties are mistaken about a material fact

blue sky laws

State laws regulate the sale of securities to protect investors from fraud

bond

A debt investment where an investor loans money to an entity.

breach

Failure to perform a contractual duty.

Business Judgment Rule (BJR)

Protects corporate directors from liability for honest mistakes in judgment.

C corporation

A standard corporation is taxed separately from its owners.

capacity

The legal ability to enter into a binding contract; minors, intoxicated persons, and those lacking mental competence may lack capacity

capitalization

The total amount of securities a corporation issues to raise money.

close corporation

A small corporation with limited shareholders; shares not publicly traded

closely held corporation

Corporation owned by a small group of shareholders, often family-run.

commercial impracticability

A UCC doctrine excusing performance if unforeseen events make it unreasonably difficult.

commingle

Mixing personal funds with business funds improperly.

common stock

Basic ownership share in a corporation with voting rights.

compensatory damages

Money awarded to compensate for actual losses.

consequential damages

Indirect damages resulting from breach, such as lost

consideration

Something of value exchanged between parties that the law recognizes; needed to form a valid contract.

contract

A legally enforceable agreement between two or more parties.

control/management

The power to make decisions and direct business operations.

The authority to make business decisions and direct company operations; typically exercised by officers, directors, or managing partners.

corporation

A legal entity separate from its owners, offering limited liability.

counteroffer

A response to an offer that changes its terms; acts as a rejection.

damages

Monetary compensation for loss or injury.

directors

Individuals elected by shareholders to oversee corporate management.

disaffirmance

A minor's right to cancel or void a contract they entered into while underage

discharge

Termination of contractual duties.

dividends

Payments made by a corporation to its shareholders.

duress

When someone is forced into a contract through threats or wrongful pressure, it renders the contract voidable.

duty of care

Obligation of corporate officers/directors to act prudently and in good faith

duty of loyalty

Obligation to act in the best interests of the corporation, avoiding conflicts of interest

express contract

Contract with clearly stated terms (oral or written)

fiduciary

A person in a position of trust who must act for another's benefit.

fiduciary duties

Duties of loyalty and care owed by officers and directors to the company

formation

The process of legally creating a contract or business entity, including meeting requirements for offer, acceptance, and consideration (for contracts) or filing and compliance (for entities).

franchise relationship

An agreement allowing one party to operate under another's business model and brand.

fruad

Intentional misrepresentation of a material fact.

general partner

Partner with full management rights and personal liability.

illusory promise

A promise that lacks commitment and is not enforceable. A promise that appears to be a commitment but does not actually bind the promisor, so it cannot form a contract

implied contract

A contract formed by the parties' conduct, not written or spoken words.

impossibility

When performance becomes objectively impossible due to unforeseen events.

inadequate consideration

When what's exchanged lacks sufficient value; may make a contract unenforceable.

insider trading

Buying or selling stock using nonpublic, material information.

internal controls

Company procedures are designed to ensure accurate financial reporting, prevent fraud, and protect assets.

legality

The subject matter of the contract must be lawful.

legally sufficient

Consideration must have legal value and be bargained for/

Consideration that the law recognizes as having value, sufficient to support a valid contract.

liability

Legal responsibility for one's acts or debts.

Limited Liability Company (LLC)

Business structure offering limited liability and pass-through taxation

limited liability partnership (LLP)

Partnership where partners have limited personal liability.

limited partners

Partners who invest but don't manage and have limited liability.

limited partnership

Partnership with at least one general and one limited partner.

liquidated damages

Agreed-upon damages stated in a contract.

mailbox rule

Acceptance is effective when sent, not when received.

merchant

A person who deals in goods of the kind sold (UCC definition).

minor

A person under the age of legal adulthood.A person under the age of majority (18) who generally lacks legal capacity to enter binding contracts; contracts with minors are voidable at the minor's option.

mirror image rule

Acceptance must exactly match the offer's terms.

mistake

An incorrect belief about a material fact in a contract.

mitigation

Duty to reduce damages after a breach.

mixed contracts (source of law)

Contracts involving both goods and services; UCC applies if goods dominate.

Contracts involving both goods and services; governed by UCC if goods predominate, common law if services predominate.

nominal damages

Small monetary award recognizing a legal wrong without major loss

novation

Substitution of a new contract or party, discharging the old one.

Objective theory of contracts

Intent to form a contract is judged by outward actions, not secret intent

offer

Proposal showing intent to be bound upon acceptance.

officers

Corporate executives managing day-to-day operations.

open terms

Under the UCC, contracts may leave some terms open (like price or delivery) if the parties clearly intend to contract; courts can supply reasonable terms if needed.

output contract

Seller agrees to sell all output to a specific buyer.

partnership

Two or more people co-owning a business for profit.

partnership agreement

Document outlining partners' rights and responsibilities.

past performance

An act or service already performed; generally cannot count as valid consideration for a new contract

penalty

A contract clause imposing excessive damages; not enforceable.

pierce the corporate veil

Holding owners personally liable when the corporate form is misused.

predominant factor test

Determines whether UCC or common law applies to a mixed contract

preexisting duty

A promise to do what one is already legally obligated to do; not valid consideration.

A promise to do something one is already legally obligated to do; not valid consideration for a new contract.

preferred stock

Stock with priority over common stock for dividends and assets

private corporation

Corporation whose shares are not publicly traded.

professional corporation

Formed by licensed professionals like doctors or lawyers.

promise

A declaration that one will or will not do something.

prospectus

Disclosure document given to investors under securities law.

proxy

Authorization for one person to vote on another's behalf at a shareholders' meeting.

public corporation

Government-owned or publicly traded company

quasi contract

A legal remedy imposed by a court to prevent unjust enrichment when no actual contract exists.

quorum

Minimum number of members needed to conduct business.

ratification

Approving or confirming an act already done.

reformation

Court modification of a contract to reflect true intent.

Registration Statement

Document filed with the SEC disclosing all material information before offering securities to the public, under the Securities Act of 1933

rejection

Refusal of an offer, ending it.

remedies

Legal solutions for breach of contract, including damages, specific performance, rescission, or restitution.

required terms under UCC

Quantity is the only term that must be stated to form a contract.

requirements contract

Buyer agrees to purchase all needs from a seller.

rescission

Canceling a contract and returning parties to pre-contract position

restitution

Returning goods or money to restore parties after rescission.

revocation

Withdrawal of an offer by the offeror.

S corporation

Corporation taxed like a partnership, avoiding double taxation.

sale of goods

Transfer of ownership of tangible personal property for a price.

Sarbanes-Oxley Act

Law improving corporate accountability and internal controls.

Section 10-b

Prohibits fraud in securities transactions under the 1934 Act.

securities

Investment instruments like stocks and bonds.