Business Law: Contracts, Torts, and Intellectual Property

Comprehensive vocabulary flashcards covering contract formation, classifications, elements, defenses, remedies, intentional torts, negligence, strict liability, product liability, and intellectual property doctrines.

Contract

An oral or written agreement between two parties in which one party voluntarily agrees to do something or refrain from doing something for the other party in exchange for consideration.

Offeror

The person who initiates the contract by making an offer.

Offeree

The person who receives the offer.

Promisor

The person who makes a promise in an agreement.

Promisee

The person who receives a promise in an agreement.

Consideration

Something of legal value exchanged between parties, defined as an act, promise, or forbearance proposed or offered as an inducement.

Agreement

A mutual manifestation of assent consisting of an offer plus an acceptance.

Unilateral Contract

A contract where one party makes a promise and the other party accepts through actual performance of an action (a promise for performance).

Bilateral Contract

A contract where both parties make mutual promises to each other (a promise for a promise).

Express Contract

A contract where the terms and agreement are communicated through actual words, either spoken or written.

Implied-in-fact Contract

A contract created through the conduct or actions of the parties rather than directly spoken or written words.

Implied-in-law Contract (Quasi-contract)

An equitable legal remedy imposed by law to prevent unjust enrichment where there is no communication and no conduct between the parties creating an actual agreement.

Valid Contract

A contract that possesses all required legal elements and is fully enforceable by law.

Void Contract

An agreement that is missing one or more necessary elements and is not legally enforceable.

Voidable Contract

A contract that contains all necessary elements, but one party has a legal disability or recognized reason permitting them the option to cancel or avoid the agreement.

Executed Contract

A contract in which all parties have completely performed their contractual obligations.

Executory Contract

A contract that has not yet been fully performed and performance remains outstanding.

Essential Terms of an Offer

The four required terms that make an offer sufficiently definite: Parties, Price, Performance, and Subject matter.

Objective Theory of Contracts

The doctrine determining a party's intent from the perspective of what a theoretical reasonable person would believe based on words and actions, rather than subjective personal intent.

Revocation

The withdrawal of an offer by the offeror before an effective acceptance occurs.

Firm Offer

A qualifying merchant's signed written offer to buy or sell goods held open without consideration for the applicable period under the UCC.

Option Contract

A separate agreement supported by consideration to keep an offer open for a specified period of time.

Promissory Estoppel

An equitable doctrine that enforces a promise without formal consideration when a person reasonably and detrimentally relies on the promise and injustice can only be avoided by enforcement.

Rejection

The offeree's refusal of an offer, which terminates the offer and becomes legally effective when received by the offeror.

Counteroffer

A response to an offer that changes the original terms, thereby rejecting and terminating the original offer and presenting a new proposal.

Mirror Image Rule

A common-law principle requiring that an acceptance must match the terms of the original offer exactly without modification.

Mailbox Rule

A legal rule stating that an acceptance generally becomes effective upon dispatch, rather than when it is received by the offeror.

Legal Detriment

The voluntary giving up of something of legal value by each party in a bargained-for exchange.

Pre-existing Duty Rule

A rule stating that a promise to do something that a party is already legally obligated to perform does not constitute valid new consideration.

Past Consideration

An act or benefit completed prior to a promise being made, which cannot support a subsequent promise or form a valid contract.

Illusory Promise

A statement that appears to be a promise but fails to commit the promisor to any definite action or obligation.

Release

A valid form of consideration involving an agreement to forbear from initiating litigation.

Accord and Satisfaction

A method to discharge a claim whereby the parties agree to a substituted performance (accord) and carry it out (satisfaction).

Liquidated Debt

A debt where the existence and specific amount owed are fixed, settled, or certain.

Disputed Debt

A debt where the parties disagree over the existence of the obligation or the exact amount owed.

Capacity

The legal ability of a person to enter into an enforceable contract, typically limited by minority, mental incompetence, or severe intoxication.

Disaffirmance

The legal avoidance or setting aside of a contractual obligation by a minor or protected party.

Ratification

The act of accepting and giving legal force to an obligation that was previously voidable, which can only occur after reaching the age of majority ($18$).

Usury

The illegal practice of charging interest on a loan at a rate that exceeds the maximum amount permitted by law.

Covenant Not to Compete

A contractual restriction on competition that is valid only when supported by a legitimate business purpose and reasonable limits on time and geography.

Exculpatory Clause

A contractual provision designed to relieve a party from liability for injuries or damages caused by their conduct.

Adhesion Contract

A standardized, take-it-or-leave-it agreement drafted by one dominant party that provides the other party no realistic opportunity to negotiate terms.

Regulatory License

A licensing law designed to protect public safety and competence, the lack of which renders an underlying contract void and unenforceable.

Revenue License

A licensing requirement enacted primarily to raise money for the government, the lack of which does not invalidate the underlying contract.

Sales Puffing

Exaggerated sales talk or expressions of personal opinion that reasonable consumers are not expected to rely upon as factual representations.

Latent Defect

A hidden structural or property defect that cannot be readily discovered through ordinary inspection.

Duress

Improper coercion forcing a party into a contract through fear or apprehension of violence to oneself or an immediate family member, or threats of criminal prosecution.

Undue Influence

The use of domineering psychological power or mental coercion by a trusted party to induce a vulnerable person into an unfair agreement.

Statute of Frauds

A statutory rule requiring certain types of contracts (e.g., debts of others, debts of decedents, prenuptial agreements, contracts not performable within $1$ year, real estate, and goods exceeding $\$500$) to be in writing to be enforceable.

Parol Evidence Rule

A doctrine stating that a final, integrated written contract generally cannot be contradicted or altered by prior or contemporaneous oral statements.

Assignment

The transfer of contractual rights from one party to a third party.

Novation

A mutual agreement that substitutes a third party for an original contracting party, completely terminating the original party's obligations and liability.

Creditor Beneficiary

A third party who is intended to benefit from a contract specifically designed to satisfy an existing legal debt owed to them.

Donee Beneficiary

A third party intended to receive the performance of a contract as a gift.

Incidental Beneficiary

A third party who benefits indirectly from a contract but was not intended to have legal rights, leaving them unable to enforce the contract.

Condition Precedent

A future event that must occur before a party's contractual duty to perform arises.

Condition Subsequent

A condition whose occurrence immediately terminates an existing duty to perform.

Compensatory Damages

Monetary damages designed to make the injured party whole by placing them in the economic position they would have enjoyed had the contract been performed.

Liquidated Damages

An agreed amount or formula specified in a written contract to establish damages payable in the event of a breach.

Nominal Damages

A small monetary award granted when a legal right was violated but no actual measurable financial injury was proven.

Specific Performance

An equitable remedy wherein a court orders a breaching party to complete the promised performance, typically applied when money damages are inadequate, such as for unique real estate.

Duty of Mitigation

The legal obligation requiring an injured party to take reasonable affirmative steps to limit or minimize their losses following a breach.

Tort

A civil, non-contractual wrongful act or omission that results in injury to another person or damage to their property.

Assault

An intentional act causing another person to experience fear or apprehension of imminent harmful or offensive physical contact.

Battery

An intentional, unauthorized, or improper physical contact with another person without legally valid consent.

Infliction of Mental Distress

An intentional tort involving extreme and outrageous conduct calculated to cause severe psychological trauma or distress.

False Imprisonment

The intentional and unlawful restraint or confinement of another person's freedom of movement without consent or legal justification.

Shopkeeper's Privilege

An affirmative defense allowing retail merchants to reasonably detain suspected shoplifters for a reasonable duration and investigation.

Malicious Prosecution

Improperly and maliciously causing someone to face baseless criminal proceedings without probable cause.

Abuse of Process

The improper use or perversion of a civil legal proceeding or court procedure for an illegitimate, collateral purpose.

Trespass to Real Property

Entering or remaining on another individual's land or real property without consent or legal permission.

Conversion

Wrongfully asserting unauthorized dominion, control, or retention over another person's personal property.

Slander

The oral or spoken communication of false factual statements to a third party that damages an individual's reputation.

Libel

Defamation that is written, printed, or recorded and published to a third party, causing reputational harm.

Actual Malice

A constitutional standard in defamation requiring proof that a statement was made with knowledge of its falsity or with reckless disregard for whether it was false.

Product Disparagement

Communicating false statements of fact concerning a business's products or services that damages commercial reputation.

Negligence

A careless act or omission falling below societal standards of reasonable care that results in injury or property damage.

Four Elements of Negligence

The four required elements to establish a negligence claim: Duty, Breach of duty, Proximate cause, and Injury/damage.

Proximate Cause

A legal cause requiring both factual causation (the 'but-for' test) and reasonable foreseeability of the resulting injury.

Contributory Negligence

A common-law defense barring an injured plaintiff from any recovery if their own negligence contributed in any amount to the injury.

Comparative Negligence

A defense that apportions liability and reduces a plaintiff's financial recovery proportionally based on their percentage of fault.

Assumption of Risk

An affirmative defense asserting that the plaintiff had actual knowledge of a specific risk and voluntarily chose to encounter it.

Product Liability

A modern tort doctrine holding commercial merchants in the distribution chain liable for damages caused by defective consumer products without requiring proof of negligence or intent.

Caveat Emptor

A traditional common-law doctrine meaning 'let the buyer beware,' historically placing the responsibility of product inspection upon the purchaser.

Strict Liability

Tort liability imposed without fault or proof of negligence when injury is caused by engaging in legally recognized ultra-hazardous activities.

No-Fault Tort

An administrative or insurance-based compensation system (e.g., workers' compensation) that compensates injured parties without determining negligence, intent, or fault.

Trade Secret

Valuable, confidential business information, formulas, methods, or customer lists that remain legally protected as long as reasonable efforts are taken to maintain secrecy.

Utility Patent

A patent granted for new, useful machines, processes, or procedures, providing legally protected exclusive rights for a period of $20$ years.

Design Patent

A patent protecting a new, original, and ornamental design for an article of manufacture, lasting for a period of $15$ years.

Plant Patent

A patent protecting a qualifying distinct and new variety of cultivated plant species for a term of $20$ years.

Registered Mask Work

An intellectual property protection granted for semiconductor computer-chip layouts lasting for a period of $10$ years.

Shop Right Doctrine

A legal rule granting an employer a non-exclusive, royalty-free license to use an employee's invention developed using company facilities, time, and resources.

Trademark

A distinctive word, phrase, symbol, or design used to identify the source of goods or services, prevent consumer confusion, and enjoy potentially indefinite legal protection.

Copyright

An intellectual property right protecting original artistic and creative works fixed in a tangible medium, lasting for the author's lifetime plus $70$ years, or $95$ years from publication / $120$ years from creation for company-created works.