Business Law & Ethics Final Exam Flash Cards

Offer

A proposal by one party to another intended to create a legally binding agreement.

Acceptance

An agreement to the terms

Consideration

Something of value exchanged to form a contract

Capacity

Legal ability to enter into a contract (e.g, age, mental state)

Legality

The subject matter of the contract must be legal

Bilateral Contract

A contract involving mutual promises in exchanging for an act

Unilateral Contract

A contract where one party makes a promise in exchange for an act

Express Contract

A contract with clearly stated terms (written or oral)

Implied Contract

A contract formed through actions or conduct

Quasi Contract

Not a real contract, but imposed by courts to avoid unjust enrichment

Valid Contract

Meets all legal requirements and is enforceable

Void Contract

Not a contract at all due to illegality or lack of capacity

Voidable Contract

A contract that one party may legally cancel

Revocation

Offeror withdraws the offer before acceptance

Rejection

Offeree refuses the offer

Counteroffer

A response that changes the terms of the original offer

Lapse of Time

Offer expires after a reasonable or stated time

Destruction of Subject Matter

Offer terminates if the item is destroyed

Offeror Death or Insanity

Offer ends if the offeror dies or becomes insane

Illegality of Subject Matter

Offer is terminated if it becomes illegal

Mirror-Image Rule

Acceptance must exactly match the offer

Preexisting Duty

A promise to do what one already has a duty to do is not valid consideration

Prior Consideration

Something given before the agreement is not valid consideration

Gift

A voluntary transfer of property without consideration

Promissory Estoppel

Enforcing a promise when the promisee relied on it to their detriment

Legal Incapacity

Inability to enter a contract due to age or mental state

Statute of Limitations

Law setting the time limit to bring a lawsuit

Stature of Frauds

Requires certain contract to be in writting

Mutual Mistake

Both parties are mistaken about a basic fact

Unilateral Mistake

Only one party is mistaken about a fact

Undue Influence

Improper pressure to enter a contract

Impossibility

Contract cannot be performed due to unforeseen events

Impracticability

Performance is extremely difficult or costly

Frustration of Purpose

Contract’s purpose is destroyed by outside event

Duress

Forcing someone into a contract by threats

Fraudulent Inducement

Lying to persuade someone to enter a contract

Unconscionability

Contract is so unfair it is unenforceable

Parole Evidence Rule

Prevents use of oral statement to change written contracts

Six Contract That Must Be in Writting

Include contracts for real estate, over $500, marriage, longer than 1 year, etc.

Sole Proprietorship

One-person business with unlimited liability

General Partnership (GP)

Two or more people share profits and liability

Limited Partnership (LP)

One general partner and limited partners with limited liability

Limited Liability Partnership (LLP)

Limits liability for all partners

Limited Liability Company (LLC)

Hybrid entity with limited liability and pass-through taxation

Corporation

Separate legal entity; owners are shareholders

Advantages of Corporations

Limited liability, perpetual existence, raise capital

Disadvantages of Corporations

Double taxation, complex regulations

Piercing the Corporate Veil

Court disregards the corporate entity to hold individuals liable

Domestic Corporation

Incorporated in its home estate

Foreign Corporation

Incorporated in another estate

Alien Corporation

Incorporated in another country

S Corporation

Corporate Officers

Executives managing daily operations

Board of Directors

Governing body elected by shareholders

Securities

Financial instruments like stocks or bonds

Securities Act of 1933

Regulates initial public offerings

Securities Exchange Act of 1934

Regulates secondary market trading

10K, 10Q, 8K

Financial reports required by SEC (annual, quarterly, event-based)

Section 16B

Recapture of short-swing profits by insiders

Section 10b, Rule 10b5

Anti-fraud provisions for securities

Insider Trading

Trading based on non-public information

Blue Sky Laws

State securities laws

Employment at Will

Employer or employee can terminate at any time

OSHA (Occupational Safety and Health Administration)

Ensures safe working conditions

Family and Medical Leave Act (FMLA)

Provides unpaid, job-protected leave

Federal Minimum Wage

Minimum legal wage for workers

Overtime Rule

Additional pay for hours over 40/week

Employee Privacy Rights

Rights regarding personal data and monitoring

I-9 (Immigration Law)

Form to verify employment eligibility

Title VII of Civil Rights Act

Prohibits employment discrimination

Pregnancy Discrimination Act

Prohibits discrimination based on pregnancy

Equal Pay Act

Requires pay for equal work

ADEA (Age Discrimination)

Protects workers 40+ from age bias

ADA (Disabilities Act)

Requires accommodation for qualified individuals with disabilities

FTC Act

Prevents unfair business practices

Cease-and-Desist Order

FTC order to stop illegal practice

Puffing

Exaggerated sales talk not considered deceptive

Deceptive Advertising

Misleadings ads that can deceive consumers

Bait-and-Switch

Advertising a low price item to sell a more expensive one

Material Misrepresentation

False statement that influences decisions

Do Not Call Registry

Blocks telemarketing calls

Cooling-Off Rule

Allows cancellation of certain sales within 3 days

Unsolicited Merchandise

Consumer may treat as a gift

Equal Credit Opportunity Act

Prohibits credit discrimination

Consumer Product Safety Act

Ensure product safety

FDCPA (Fair Debt Collection Practices Act)

Limites abusive debt collection practices