Business Law

Common Law

laws that existed in England and 13 colonies pre American Revolution

Case Law

the rules of law announced in court decisions

Statutory Law

Law passed by the U.S. Congress or state legislatures

Stare Decisis

Let the decision stand; decisions are based on precedents from previous cases

Copyright

exclusive rights to works of authorship such as movies, novels, software, etc.

Patent

exclusive right to an idea or discovery

Trademark

exclusive right to use a name, logo, or specific branding

Sole Proprietorship

a business owned by one person, not a separate entity

Partnership

a business owned by two or more people, not a separate entity

Corporation

separate entity created by state statute

Limited Partnership (LP)

a partnership consisting of one or more general partners and one or more limited partners

Franchise

owner of intellectual property licenses others to use it in the selling of goods or services

Franchisee

the purchaser of a franchise

Franchisor

the seller of the franchise

Distributorship

a manufacturer (the franchisor) licenses a dealer (the franchisee) to sell its product

Chain-Style Business Operation

a franchise operates under a franchisor's trade name and is identified as a member of a select group of dealers that engage in the franchisor's business

Manufacturing / Processing Plant Arrangement

the franchisor transmits to the franchisee the essential ingredients or formula to make a particular product

Pass-Through Entity

A business entity that has no tax liability. The entity's income is passed through to the owners, and they pay taxes on the income.

Articles of Partnership

a partnership agreement that spells out each partner's rights and responsibilities

Partnership for a Term

a partnership created for a fixed duration

Partnership at Will

A partnership with no fixed duration can be dissolved with no liability

Partnership by Estoppel

when a third party has reasonably and detrimentally relied on the representation that a non-partner was part of a partnership

Partnership Capital

money and other assets that a partner contributes to start the business

Partnership Property

anything owned by the partnership, including initial contributions

Joint Liability

a third party must sue all of the partners as a group, but each partner can be held liable for the full amount

Joint and Several Liability

a third party has the option of suing all of the partners together (jointly) or one or more of the partners separately (severally)

Dissociation

change in relationship between the partners, one partner ceases to be associated in the carrying of the partnership

Dissolution

termination of a business

Winding Up

the actual process of collecting, liquidating, and distributing the partnership assets

Buy-Sell Agreement

provides one or more partners the right to buy out the others

Limited Liability Partnerships (LLP)

hybrid form of business designed mostly for professionals who normally do business as partners in a partnership ( accountants, lawyers, etc)

Family Limited Liability Partnership ( FLLP)

limited liability partnership in which the partners are related to each other

General Partner

assumes management responsibility for the partnership and has full responsibility for the partnership and for all its debts

Limited Partner

contributes cash or other property and owns an interest in the firm but does not undertake any management responsibilities and is not personally liable for partnership debts beyond the amount of his or her investment

Limited Liability Limited Partnership (LLLP)

A type of limited partnership in which the liability of the general partner is the same as the liability of the limited partners—that is, the liability of all partners is limited to the amount of their investments in the firm.

Limited Liability Company (LLC)

a hybrid that combines the limited liability aspects of a corporation and the tax advantages of a partnership

Articles of Organization

documents filed with the secretary of state's office to recognize an LLC

Diversity Jurisdiction

when parties to a suit are from different jurisdictions (states or nations), it may create a basis for having a case heard in federal court

Member-Managed

all of the members participate in management, and decisions are made by majority vote

Manager-Managed

the members designate a group of persons to manage the firm

Operating Agreement

In a limited liability company, an agreement in which the members set forth the details of how the business will be managed and operated. Not required

Joint Venture

two or more persons or business entities combine their efforts or their property for a single transaction or series of transactions.

Syndicate

several individuals or firms join together to finance a particular project

Joint Stock Company

a true hybrid between a partnership and a corporation, but are not considered to be each other's agents.

Business Trust

created by a written trust agreement that sets forth the interests of the beneficiaries and the obligations and powers of the trustees

Cooperative ( Co-Op)

an association that is organized to provide an economic service to its members.

Board of Directors

a group of persons elected by the stockholders to manage a corporation

Holding Company

a company whose primary business is owning a controlling share of stock in other companies

Respondent Superior

A doctrine under which a principal or an employer is held liable for the wrongful acts committed by agents or employees while acting within the course and scope of their agency or employment.

Domestic Corporation

a corporation in the state in which it is incorporated

Foreign Corporation

a corporation in any state in which it does business except the one in which it is incorporated

Alien Corporation

a corporation chartered by a foreign government and conducting business in the United States

Public Corporation

a corporation formed by the government to meet some political or governmental purpose (Amtrak or USPS)

Publicly Held Corporation

a corporation who's shares are publicly traded in a securities market such as NYSE or NASDAQ

Nonprofit Corporation

A corporation formed for purposes other than making a profit ( educational institutions, private hospitals)

Close Corporation

A corporation whose shareholders are limited to a small group of persons, often family members.

Shareholder Agreement

An agreement between shareholders that restricts the transferability of shares, often entered into for the purpose of maintaining proportionate control of a close corporation.

S Corporation

A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships

Benefit Corporation

a profit-seeking corporation whose charter specifies a social or environmental goal that the company must pursue in addition to profit

Articles of Incorporation

a written legal document that defines ownership and operating procedures and conditions for the business

De Jure Corporation

Latin for "lawful corporation"; a corporation that has met the mandatory statutory provisions and thus received its certificate of incorporation.

De Facto Corporation

Corporation that has not met the requirements of state incorporation statute, but courts recognize it as a corporation for most purposes to avoid unfairness to third parties who reasonably believed it was properly incorporated

Corporation by Estoppel

a defective corporation that has conducted business with a third party and therefore cannot deny its status as a corporation to escape liability

Ultra Vires

A Latin term meaning "beyond the powers"; in corporate law, acts of a corporation that are beyond its express and implied powers to undertake.

Piercing the Corporate Veil

The action of a court to disregard the corporate entity and hold the shareholders personally liable for corporate debts and obligations.

Alter Ego Theory

one method used by courts to pierce the corporate veil when a shareholder fails to treat the corporate organization as a separate legal entity

Securities

stocks, bonds, and mutual funds representing secured, or asset-based, claims by investors against issuers

Bonds

Certificates of debt that carry a promise to buy back the bonds at a higher price at a later date

Stocks

Securities that represent part ownership or equity in a corporation

Common Stock

the most basic form of ownership, including voting rights on major issues, in a company

Preferred Stock

stock that entitles the holder to a fixed dividend, whose payment takes priority over that of common-stock dividends often don't have voting rights

Venture Capital

capital provided to new businesses by professional outside investors

Private Equity Capital

Funds invested by a private equity firm that pools funds from wealthy investors

Crowdfunding

the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.

Quorum

The minimum number of members who must be present for business to be validly transacted

Business Judgement Rule

A rule that immunizes corporate management from liability for actions that result in corporate losses or damages if the actions are undertaken in good faith and are within both the power of the corporation and the authority of management to make.

Proxy

an agent, substitute; a written permission allowing one person to act in another's place, vote on their shares of stock

Voting Trust

An agreement (trust contract) under which legal title to shares of corporate stock is transferred to a trustee who is authorized by the shareholders to vote the shares on their behalf.

Stock Certificates

evidenced ownership of a specified number of shares in the corporation

Preemptive Rights

a shareholder receives a preference over all other purchasers to subscribe to or purchase a prorated share of a new issue of stock

Stock Warrants

rights given by a company to buy stock at a stated price by a specified date

Shareholder's Derivative Suit

a lawsuit filed by a shareholder on behalf of the corporation

Watered Stock

when a corporation issues shares for less than their fair market value

Merger

when two or more companies join to form a single firm A + B = A

Articles of Merger

A document, filed with the secretary of state, that sets forth the terms and conditions of the merger.

Consolidation

two or more companies combine in a way that each firm ceases to exist and a new firm emerges

Share Exchange

some or all of the shares of one corporation are exchanged for some or all of the shares of another corporation, but both corporations continue to exist

Parent Company

A company that controls or owns another company or companies.

Subsidiary Company

a company that is controlled by another corporation

Short-Form Merger

A merger between a subsidiary corporation and a parent corporation that owns at least 90 percent of the outstanding shares of each class of stock issued by the subsidiary corporation. Short-form mergers can be accomplished without the approval of the shareholders of either corporation.

Appraisal Right

a dissenting shareholder's right to have his or her shares appraised and to receive monetary compensation from the corporation for their value

Takeover

an act of taking control of a company by buying most of its shares

Tender Offer

an offer to purchase the stock of a firm targeted for acquisition at a price just high enough to tempt stockholders to sell their shares

Real Property

Land and everything permanently attached to it

Personal Property

All property not classified as real property

Gift

voluntary transfer of ownership without consideration

Constructive Delivery

the right to take possession ( rather than actual possession) of the object in question. I.e. giving the keys to a boat

Dominion

power, ownership rights

Gift Inter Vivos

a gift made during the donor's lifetime

Gift Causa Mortis

A gift made in contemplation of death. If the donor does not die of that ailment, the gift is revoked. Can be revoked at any time. Not the donee's unless the person dies of that specific ailment.