Business Law Terminology

Acceptance

An agreement to an offer resulting in a contract

Accord and Satisfaction

An agreement made and executed in fulfillment of the rights one has from a previous contract

Agent

The party appointed by the principal to enter into a contract with a third-party on behalf of the principal

Answer

Official document responding to the plaintiff’s complaint

Antitrust Law

Laws which seek to promote competition among businesses

Apparent Authority

The rights an agent is believed to have by third parties because of the principal’s behavior

Appeal

Request to a higher court to review a lower court’s decision

Appellate Courts

Courts that hear cases appealed from a lower court

Assignee

A third-party to whom rights in a contract are assigned

Assignment

A means whereby one party in a contract conveys rights to another, who is not a party of the original contract

Assignor

The party assigning rights in a contract to a third-party

Authority

Power to act for someone else

Bailee

The party who acquires possession, but not the title, of another’s personal property, under agreement

Bailment

The transfer of possession, but not the title of another’s personal property, under agreement

Bailor

The party who gives up possession, but not the title, of personal property, in a bailment

Beneficiary

Recipient of the proceeds of a life insurance policy

Bilateral Contract

A legally enforceable agreement which consists of mutual promises to perform future acts

Bill of Lading

The contract existing between the consignor and the carrier

Bill of Sale

A document that conveys or evidences title to tangible personal property

Board of Directors

A body of persons elected by the stockholders to define and establish corporate policy

Breach of Contract

Failure or refusal to perform contractual obligations

Business Law

Rule of conduct for the performance of business transactions

Cashier’s Check

A check drawn on a bank’s own funds and signed by a responsible bank official

Certified Check

A check for which the bank assures that the drawer has sufficient funds to make payment

Check

An order by a depositor to the bank to pay a sum of money to a payee

Civil Law

The body of law concerned with private or personal rights

Close (closely held) Corporation

A corporation in which outstanding shares of stock and managerial control are held by a limited number of stockholders and is not publicly traded

Common Law

The body of law derived from judicial decisions, rather than from statutes or constitutions

Compensatory Damages

An award paid to the injured party to cover the exact amount of their loss, but no more

Complaint

The document which initiates a civil lawsuit

Consideration

The bargained-for exchange in a contract

Consignee

One who receives goods shipped by common carrier

Consignor

One who ships goods by common carrier

Contract

A legally enforceable agreement

Contract to Sell

An agreement to sell goods at a future time

Contactual Capacity

The legal ability to enter into a contract

Corporation

A business entity created by statute and owned by stockholders

Counteroffer

A changer to an original offer that rejects that offer and becomes a new offer

Creditor Beneficiary

A third-party beneficiary owed a debt by a party to a contract

Crime

An offense which is injurious to society as a whole

Criminal Law

Laws dealing with crimes and the punishment of wrongdoers

Damages

Money that a wrongdoer must pay as a result of a legal action

Deed

Document conveying title to real property

Defendant

The party against whom legal action is brought

Delegation

Transfer of contractual duties to a third-party

Disaffirmance

Election to avoid a voidable contract

Discharge

Any method by which a legal duty is extinguished

Discovery

The formal and informal exchange of information between sides in a lawsuit

Domestic Corporation

A business organization that operates in the state that granted the charter

Donee Beneficiary

A third-party beneficiary to whom no legal duty is owed and performance is a gift

Drawee

The person, company, or financial institution ordered to pay a check

Drawer

The person who executes any check

Duress

Removing one’s free will and obtaining consent by means of a threat

Employee

A person hired to perform work that is directed and controlled by the employer

Employer

The party who hires employees to do certain work

Executed Contract

A legally enforceable agreement in which the terms have been fulfilled

Execution

The carrying out or completion of some task

Executory Contract

A legally enforceable agreement in which the terms have not been completely executed or fulfilled

Existing Goods

Goods which are, at the time of the contract, in existence and owned by the seller

Express Authority

Rights of an agent stated in the agreement creating the agency

Express Contract

An agreement in which the parties communicate their intentions wither verbally or in writing

Express Warranty

The actual and definite statement of a seller, either verbally or in writing, at the time of the sale

Federal Trade Commission (FTC)

An agency of federal government to promote free and fair competition by prevention of trade restraints, price fixing, false advertising, and other unfair methods of competition

Felony

Serious criminal offense punishable by imprisonment for more than one year or death

Fiduciary

A person in relationship of trust and confidence

Fixture

Objects permanently attached to real property

FOB Destination

A sales contract term where title and risk of loss passes to the buyer when the goods are delivered to the buyer

FOB Shipment

A sales contract term where risk of loss passes to the buyer when the goods are delivered to the shipper and transportation arrangements are made

Foreign Corporation

A corporation that operates in a state other than where it is chartered

Fraud

Inducing another to contract as a result of an intentionally or recklessly false statement of a material fact

Future Goods

Goods not in existence or not yet owned by the seller at the time the contract was created

General Agent

One who is given broad authority to conduct the principal’s business

General Partner

Individual actively and openly engaged in the business and held to everyone as a partner

Goods

Movable and tangible personal property

Identified Goods

The goods specified by the buyer and seller

Implied Authority

An agent’s authority to do things in order to carry out express authority

Implied Contract

A legally enforceable agreement in which the terms are set by acts or conduct of the parties rather than expressed verbally or in writing

Implied Warranties

Protections imposed by law, arising automatically because the sale has been made

Independent Contractor

One who contracts to do jobs and is controlled only by the contract as to how performance is to be rendered

Injunction

A judicial order or decree forbidding certain conduct

Intangible Personal Property

Personal property that lacks a physical presence

Judgment

A decision of a court

Law

Governmental rule prescribing conduct and carrying a penalty for violation

Limited Liability Company (LLC)

A business organization that features liability protection and pass-through taxation

Limited Partner

Partner whose liability for the firm’s debts is limited to the amount of their investment

Liquidated Damages

Resonable damages stipulated in a contract to be paid in the event of a breach

Mailbox Rule

A mailed acceptance to an offer is effective when posted

Merchant

A person who deals in good of the kind or otherwise by occupation purports to have knowledge or skill peculiar to the practices or goods involved in the transaction

Minor

Those persons under legal age; for most states, the standard is under the age of 18

Misdemeanor

A less serious crime punishable by fine and/or imprisonment of less than 1 year

Misrepresentation

False statement of a material fact

Necessaries

Items required for living at a reasonable standard (i.e. food, clothing, shelter)

Negligence

Failure to exercise reasonable care

Negotiable Instrument

A writing drawn in a special form which can be transferred as a substitute for money or as an instrument of credit

Negotiation

The act of transferring ownership of a negotiable instrument to another party

Nominal Damages

Small amount awarded when there is a technical breach but no injury

Offer

A proposal to make a contract

Offeree

The party to whom an offer is made

Offeror

The party who initiates or makes an offer

Ordinance

Law enacted by a local unit of government