Exam 2 Vocab

breach

when one party does not perform as promised in a contract

capacity

the ability to understand both the nature and consequences of one’s acts

consideration

something of value given by both parties to a contract that induces them to agree to exchange mutual preferences

contract

a binding agreement between two or more parties

disaffirm

to revoke or deny a contract

express contract

a contract which specifically states all of its elements, either orally or in writing

implied in fact contract

a contract agreed upon by non-verbal conduct, rather than by explicit words

legality

the state of being in accordance with the law

mirror image rule

the requirement that a contract be accepted exactly as it is, without modifications

mutual assent

an agreement by both parties to enter into a contract

restatement of contracts

A compilation of the general principles of contract common law

UCC

A set of suggested laws concerning commerce with the intent to provide uniformity across states to simplify business activity

valid contract

A contract that complies with the four essentials of a contract and is binding and enforceable on all parties

copyright

The exclusive rights to reproduce, publish, sell, or distribute the matter and form of an artistic effort

design patent

a patent that offers protection for the way a product looks

fair-use doctrine

Permits limited use of copyrighted material without acquiring permission from the rights holder

infringe

to encroach upon in a way that violates the law or the rights of another

intellectual property

Non-physical property that is the product of original thought and the law may protect

novelty, utility, non-obviousness

the three criteria that must be met to qualify for patent protection

misappropriation

The unauthorized use of another’s name, likeness, or identity without permission, resulting in harm to that entity

patent

An exclusive right granted by law to an inventor to make, use, and sell an invention for a limited period – 20 years from the date the patent application is filed

reverse engineering

The process of taking apart an object to see how it works to duplicate the object. It is legal to acquire a trade secret through reverse engineering

trademarks

A distinctive mark or feature that is particularly characteristic of or identified with an entity, \n product, or brand

trade secrets

Any business information that is proprietary and gives the business a competitive advantage

utility patent

a patent that protects the way an invention is used and works

at-will employment

The contractual employment relationship where the business can fire a worker without warning and justification

BFOQ

Employment qualifications that employers are allowed to consider while making decisions about hiring and retaining employees

business necessity

A legitimate business purpose that justifies an employment practice as valid and necessary for the business

disparate impact

A discriminatory employment practice that has a greater impact on one group over another

disparate treatment

A discriminatory employment practice where an employee is treated differently than other employees who were in a similar situation

hostile environment sexual harassment

Occurs when a supervisor or other employee makes sexually suggestive comments, gestures, advances, pictures, text, touch, or humor that unreasonably interferes with work performance

quid pro quo sexual harassment

Occurs when a more senior manager or employee demands sexual favors in exchange for some workplace benefit

sexual harassment

Unwelcome sexual advances, requests for favors, and other verbal or physical harassment of a sexual nature

actual cause

refers to a cause or action without which the event could not have occurred

assumption of risk

A defense in the law of torts that reduces a plaintiff’s right to recovery if the defendant can demonstrate that the plaintiff voluntarily and knowingly assumed the risks associated with the activity at issue

breach of duty

\n Occurs when one person or company has a duty of care owed towards another person or company but fails to live up to that standard

deep pockets theory

In tort law, employers will often be held liable for the actions of a negligent employee. Since employers usually have more money than the employee to pay for negligence, they would be in a better position to pay the victims

defamation

Intentionally making untrue statements about an individual in the presence of another or communicated to a third party that has the effect of lessening the individual’s reputation in the community

design defect

A problem with the product’s design that makes the product inherently dangerous or useless, even if it is manufactured perfectly with the best quality materials

disparagement

intentionally making false statements about the quality or ownership of someone’s goods

duty

a legal obligation that entails conduct or performance

express warranty

A verbal or written statement that guarantees that a product is of a certain quality or will work in a certain way or for a certain amount of time

failure to adequately package

Relates to a duty the manufacturer has to package products appropriately and safely for the consumer

failure to adequately warn

A party will be held liable for injuries caused to another, where the party had the opportunity to warn of any dangers of the product but failed to do so

implied warranty

A guarantee that the item sold is merchantable and fit for the purpose intended. An implied warranty is in addition to an express warranty provided at the time of sale to protect consumers \n who might otherwise pay for products that are not as represented by the merchant

intentional tort

a civil wrong resulting from an intentional act of the defendant

manufacturing defect

A defect in a product resulting from a departure from its design specifications during production

negligence

Failure to use reasonable care, resulting in damage or injury to another. It has four key requirements

negligence action

Harm done to a party through the unreasonable and foreseeable risky actions of the defendant

palming off

misrepresenting someone else’s goods or services as one’s own in business

product liability

The area of law in which manufacturers, distributors, suppliers, retailers, and others \n who make products available to the public are held responsible for the injuries those products cause

proximate cause

Determining whether or not an event is sufficiently related to an injury to be held as the cause of that injury

respondent superior

A legal doctrine which states that an employer is responsible for the actions of employees performed within the course of their employment

strict liability

A legal doctrine that makes a person or company responsible for their actions or products which causes damages regardless of any negligence or fault on their part

tort

A civil wrong which unfairly causes someone else to suffer loss or harm resulting in legal liability for \n the person who commits the wrongful act

tortfeasor

An individual who commits a wrongful act that injures another and which the law provides a \n legal right to seek relief

vicarious liability

A legal doctrine that assigns liability for an injury to a person who did not cause the injury but who has a particular legal relationship (e.g., the employer-employee relationship) to the person who did act negligently

APA

A federal statute that governs how administrative agencies of the government of the United States may propose and establish regulations

administrative law judge

A judge who both presides and issues judgment over the claims and disputes involving administrative laws and agencies

due process of law

A fundamental, constitutional guarantee that proceedings will be fair, the government will notify affected parties of the proceedings, and the parties have the opportunity to be heard before the government acts to take away their rights

enabling statute

Congress delegates its rulemaking authority to agencies via enabling statutes. These statutes establish and authorize administrative agencies to issue specific rules and regulations and carry out other activities to fulfill broad aims defined by Congress

federal register

The official daily publication for rules, proposed rules, and notices of federal agencies and organizations, as well as executive orders and other presidential documents

quasi-judicial authority

The powers granted to a public administrative agency to objectively determine facts and draw conclusions from them to provide the basis of an official action, often resembling the procedures of a court of law

quasi-legislative authority

When an administrative agency exercises its rule-making authority. Administrative agencies acquire this authority to make rules and regulations that affect legal rights through statutes. This authority is an exception to the general principle that laws affecting rights should be passed only by elected lawmakers.

APR

nominal simple interest rate that banks are required by law to state on all loans

APY

A nominal interest rate that reflects all the compound interest paid or earned in one year

basis point

a unit that is equal to 1/100th of 1%

CD

A savings certificate issued by a bank entitling the holder to receive interest for a specified term

compound interest

Interest earned on both the initial principal and the reinvested interest earned in prior periods

consistent

In TVM calculations, the periodic rate and the number of periods are both defined over the same unit of time

continuously compounded interest

Interest paid constantly, and immediately begins earning interest on itself

decimal form

Interest rates expressed as a percentage must be converted into decimal form when using \n mathematical formulas or Excel spreadsheets for TVM calculations.

discounting

determining the present value of an expected future cash flow using the discount rate

effective rate

A low-frequency rate that is equivalent to a high-frequency rate

future value

the value of a cash flow that occurs later than the present value

inflation

A general increase in prices and a fall in the purchasing power of money

interest-on-interest

the interest earned on prior interest payments becoming principal

IRR

The discount rate used in capital budgeting that makes the net present value of all cash flows from an investment equal to zero. The IRR is the rate of return you expect to receive if you put your money into a project

Internal rate of return rule

A capital budgeting rule that accept projects when the IRR is greater than the opportunity cost, rejects if less

lump sum

a single amount of money at a particular time

NPV

The difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyze the profitability of an investment or project

net present value rule

A capital budgeting rule that accepts all investments that are positive NPV because they create value, and rejects all projects that are negative NPV because they destroy value

nominal interest rate

It is the percentage change in dollars per period. The nominal interest rate is approximately the desired real rate of return plus an adjustment for inflation

number of periods

the number of periods between the two lump sum and is consistent with the periodic rate

percentage form

It is used to input interest rates when solving TVM calculations with a financial calculator

periodic rate

The interest rate defined in a contract that specifically states how much interest is earned \n or paid over an interval of time

present value

the value of a cash flow that occurs earlier than the future value

real interest rate

The percentage change in purchasing power for a given period. The real rate of interest is approximately the nominal interest rate minus the inflation rate

simple interest

the interest an investment earns on the original principal only

treasury bill

A short-term debt obligation issued and backed by the U.S. government with a maturity of less than one year

amortized loan

A loan that has identical payments throughout the contract. Payments are applied first towards reducing the interest balance, and any remaining sum towards the principal balance. As a consequence, the proportion of each payment that pays interest decreases while the proportion applied to principal increases over the course of the loan

annuity due

A finite stream of identical recurring payments whose payments occur at the beginning of each period

growing annuity

An annuity whose payments grow at a constant rate per period for the length of the contract

growing perpetuity

A type of perpetuity where the regularly occurring cash flows grow at a fixed rate per period forever. Every cash flow in the stream is different from every other, but they are related through the constant growth rate

loan amortization schedule

a breakdown of the interest and principal payments on an amortized loan

ordinary annuity

A finite stream of identical recurring payments whose payments occur at the end of each period

perpetuity

An infinite stream of cash flows that are paid or received with a regular frequency. In general, the word perpetuity is used to refer to a stream where all the cash flows are the same

trial and error

The process by which we solve for the internal rate of return (IRR). We try various discount rates until one the rate that sets the net present value (NPV) of an investment’s cash flows equal to zero

account payable

An obligation to pay a short-term debt to a company’s creditors or suppliers. It appears in the current liabilities section of the balance sheet.

accounts receivable

Money owed to a business by customers for goods or services delivered. It appears in the current assets section of the balance sheet