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Legal Environment 3

Test 3 - Ch 9, 10, 17, 18, 19, 20

QuestionAnswer
In contract law, the offeree's notification to the offeror that the offeree agrees to be bound by the terms of the offeror's proposal. acceptance
A "standard-form" contract, such as that between a large retailer and a consumer, in which the stronger party dictates the terms. adhesion contract
A meeting of two or more minds in regard to the terms of a contract; usually broken down into two events-an offer by one party to form a contract, and an acceptance of the offer by the person to whom the offer is made. agreement
The act of transferring to another all or part of one's rights arising under a contract. assignment
A type of contract that arises when a promise is given in exchange for a return promise. bilateral contract
Generally, the value given in return for a promise or a performance. Must be present to make the contract legally binding, must be something of sufficient value and bargained for. consideration
An agreement that can be enforced in court; formed by two or more parties, each of whom agrees to perform or to refrain from performing some act now or in the future. contract
The threshold mental capacity required by the law for a party who enters into a contract to be bound by that contract. contractual capacity
An offeree's response to an offer in which the offeree rejects the original offer and at the same time makes a new offer. counteroffer
A contractual promise to refrain from competing with another party for a certain period of time and within a certain geographic area. covenant not to compete
The transfer of a contractual duty to a third party. The party delegating the duty (the delegator) to the third party (the delegatee) is still obliged to perform on the contract should the delegatee fail to perform. delegation
A clause that releases a contractual party from liability in the event of monetary or physical injury, no matter who is at fault. exculpatory clause
A contract that has been completely performed by both parties. executed contract
A contract that has not as yet been fully performed. executory contract
A contract in which the terms of the agreement are fully and explicitly stated in words, oral or written. express contract
A contract formed in whole or in part from the conduct of the parties (as opposed to an express contract). Also known as implied-in-fact contract. implied contract
A third party who incidentally benefits from a contract but whose benefit was not the reason the contract was formed; this has no rights in a contract and cannot sue to have the contract enforced. incidental beneficiary
A third party for whose benefit a contract is formed; this can sue the promisor if such a contract is breached. intended beneficiary
A rule providing that an acceptance of an offer becomes effective on dispatch (on being placed in a mailbox), if mail is, expressly or impliedly, an authorized means of communication of acceptance to the offeror. mailbox rule
A common law rule that requires, for a valid contractual agreement, that the terms of the offeree's acceptance adhere exactly to the terms of the offeror's offer. mirror image rule
A theory, which the intent to form a contract will be judged by outward,objective facts(what the party said,acted or appeared,and the circumstances surrounding the transaction)as interpreted by a reasonable person,rather than by the party's intentions. objective theory of contracts
A promise or commitment to perform or refrain from performing some specified act in the future. offer
A contract under which the offeror cannot revoke their offer for a stipulated time period and the offeree can accept or reject the offer during this period w/o fear that the offer will be made to another person. option contract
Something given or some act done in the past, which cannot ordinarily be consideration for a later bargain. past consideration
A person's assurance that he or she will or will not do something. promise
A doctrrine that applies when a promisor makes a clear and definite promise on which the promisee justifiably relies; such a promise is binding if justice will be better served by the enforcement of the promise. promissory estoppel
A remedy whereby a contract is canceled and the parties are returned to the positions they occupied before the contract was made; may be effected through the mutual consent of the parties, by their conduct, or by court decree. rescission
In contract law, the withdrawal of an offer by an offeror. Unless an offer is irrevocable, it can be revoked at any time prior to acceptance without liability. revocation
A state statute under which certain types of contracts must be in writing to be enforceable. Statute of Frauds
One for whose benefit a promise is made in a contract but who is not a party to the contract. third party beneficiary
A contract or clause that is void on the basis of public policy because one part as a result of his/her disproportionate bargaining power, is forced to accept terms that are unfairly burdensome and that unfairly benefit the dominating party. unconscionable
A contract that results when an offer can only be accepted by the offeree's performance. unilateral contract
The consent of both parties must be voluntary. If a contract was formed as a result of fraud, undue influence, mistake, or duress, the contract may not be enforceable. voluntary consent
An assertion or action by a party indicating that he/she will not perform an obligation that the party is contractually obligated to perform at a future time. anticipatory repudiation
The failure, without legal excuse, of a promisor to perform the obligations of a contract. breach of contract
A doctrine in which a seller may be excused from performing a contract when1.a contingency occurs2.the contingency's occurrence makes performance impracticable3.the nonoccurrence of the contingency was a basic assuumption on which the contract was made. commercial impracticability
A money award equivalent to eh actual value of injuries or damages sustained by the aggrieved party. compensatory damages
A possible future event, the occurrence or nonoccurrence of which will trigger the performance of a legal obligation or terminate an existing obligation under a contract. condition
Special damages that compensate for a loss that is not direct or immediate (for ex., lost profits). The special damages must have been reasonably foreseeable at the time the breach or injury occurred in order for the plaintiff to collect them. consequential damages
The termination of an obligation. In contract law, occurs when the parties have fully performed their contractual obligations or when events, conduct of the parties, or operation of the releases the parties from performance discharge
The release of a debtor from all debts that are provable, except those specifically excepted from discharge by statute. discharge in bankruptcy
A court-created doctrine under which a party to a contract will be relieved of his/her duty to perform when the objective purpose for performance no longer exists (due to reasons beyond that party's control). frustration of purpose
A doctrine under which a party to a contract is relieved of his/her duty to perform when performance becomes impossible or totally impracticable (through no fault of either party). impossibility of performance
A court decree ordering a person to do or refrain from doing a certain act or activity. injunction
An amount, stipulated in the contract, that the parties to a contract believe to be a reasonable estimation of the damages that will occur in the event of a breach. liquidated damages
A rule requiring a plaintiff to have done whatever was reasonable to minimize the damages caused by the defendant. mitigation of damages
An agreement between the parties to cancel their contract, releasing the parties from further obligations under the contract. The object of the agreement is to restore the parties to the positions they would have occupied had no contract ever been formed mutual rescission
A small monetary award (often one dollar) granted to a plaintiff when no actual damage was suffered or when the plaintiff is unable to show such loss with sufficient certainty. nominal damages
The substitution, by agreement, of a new contract for an old one, with the rights under the old one being terminated. Typically, there is substitution of a new person who is responsible for the contract and the removal of an original party's rights/duties novation
In contract law, the fulfillment of one's duties arising under a contract with another; the normal way of discharging one's contractual obligations. performance
A sum inserted into a contract, not as a measure of compensation for its breach but rather as punishment for a default. The agreement as to the amount will not be enforced, and recovery will be limited to actual damages. penalty
A fictional contract imposed on parties by a court in the interests of fairness and justice; usually, they are imposed to avoid the unjust enrichment of one party at the expense of another. quasi contract
A court-ordered correction of a written contract so that it reflects the true intentions of the parties. reformation
An equitable remedy under which a person is restored to his or her original position prior to loss or injury, or placed in the position he/she would have been in had the breach not occurred. restitution
An equitable remedy requiring the breaching party to perform as promised under the contract; usually granted only when money damages would be an inadequate remedy and the subject matter of the contract is unique (for ex., real property). specific performance
An unconditional offer to perform an obligation by a person who is ready, willing, and able to do so. tender
An intentional, knowing relinquishment of a legal right. waiver
A relationship between two parties in which one party (the agent) agrees to represent or act for the other (the principal). agency
AuthorityThat is onlyApparent,not real.In agency law,a person may be deemed to have had the power to act as an agent for another party if the other partys manifestations to a third party led the third party to believe that an agency existed when,it didn't apparent authority
A principal whose identity is known to a third party at the time the agent makes a contract with the third party. disclosed principal
A computer program, electronic, or other automated means used to perform specific tasks without review by an individual. e-agent
In most states, a rule stating that express authority given to an agent must be in writing if the contract to be made on behalf of the principal is required to be in writing. equal dignity rule
Authority expressly given by one party to another. An agent has express authority to act for a principal if both parties agree, orally or in writing, that an agency relationship exists in which the agent had the power to act in the place of the principal. express authority
As a non, a person having a duty created by his/her undertaking to act primarily for another's benefit in matters connected with the undertaking. As an adjective, a relationship founded on trust and confidence. fiduciary
Authority that is created by implication. This(of the agent) can be conferred by custom, inferred from the position the agent occupies, or implied by virtue of being reasonably necessary to carry out express authority. implied authority
One who works for, and receives payment from, an employer but whose working conditions and methods are not controlled by the employer. Is not an employee but may be an agent. independent contractor
A public official authorized to attest to the authenticity of signatures. notary public
A written document, which is usually notarized, authorized another to act as one's agent; can be special (specified acts only) or general(permitting the agent to transact all business for the principal). power of attorney
The act of accepting and giving legal force to an obligation that previously was not enforceable. ratification
In latin, "let the master respond." 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. respondeat superior
A principal whose identity is unknown by a third person, and the third person has no knowledge that the agent is acting for a principal at the time the agent and the third person form a contract. undisclosed principal
A principal whose identity is unknown by a third person, but the third person knows that the agent is or may be acting for a principal at the time the agent and the third person form a contract. unidentified principal
Legal responsibility placed on one person for the acts of another. vicarious liability
A designation in the US for a corporation formed in another country but doing business in the US. alien corporation
The document filed with the appropriate governmental agency, usually the secretary of state, when a business is incorporated; state statutes usually prescribe what kind of info must be contained in the this. articles of incorporation
A rule that immunizes corporate management from liability for actions that result in corporate losses or damages if the actions are undertakes in good faith and are withing both the power of the corporation and the authority of management to make. business judgment rule
A set of governing rules adopted by a corporation or other association. bylaws
A corporation whose shareholders are limited to a small group of persons, often including only family members. The rights of shareholders of this usually are restricted regarding the transfer of shares to others. closely held corporation
To put funds or goods together into one mass so that the funds or goods are so mixed they no longer have separate identities. commingle
A distribution to corporate shareholders of corporate profits or income, disbursed in proportion to the number of shares held. dividend
In a given state, a corporation that does business in, and is organized under the law of, that state. domestic corporation
In a given state, a corporation that does business in the states without being incorporated therein. foreign corporation
A company whose business activity is holding shares in another company. holding company
A person on the board of directors who is also an officer of the corporation. inside director
A person on the board of directors who does not hold a management position at the corporation. outside director
To disregard the corporate entity, which limits the liability of shareholders, and hold the shareholders personally liable for a corporate obligation. pierce the corporate veil
Rights held by shareholders that entitle them to purchase newly issued shared of a corporation's stock, equal in percentage to shares presently held, before the stock is offered to any outside buyers. Enable shareholders to maintain their % ownership. preemptive rights
In corporation law, a written agreement between a stockholder and another under which the stockholder authorizes the other to vote the stockholder's shares in a certain manner. proxy
A corporation owned by a federal, state, or municipal government-not to be confused with a publicly held corporation. public corporation
A corporation for which shares of stock have been sold to the public. publicly held corporation
The number of members of a decision-making body that must be present before business may be transacted. quorum
The portion of a corporation's profits that has not been paid out as dividends to shareholders. retained earnings
A close business corporation that has met certain requirements as set out by the Internal Revenue Code and this qualifies for special income tax treatment. Essentially, this is taxed the same as a partnership, buts its owners enjoy the privilege of LL. S corporation
A suit brought by a shareholder to enforce cause of action against a third person. shareholder's derivative suit
A certificate issued by a corporation evidencing the ownership of a specified number of shares in the corporation. stock certificate
A certificate that grants the owner the option to buy a given number of shares of stock, usually within a set time period. stock warrant
A latin term meaning "beyond the powers;" in corporate law, acts of corporation that are beyond its express and implied powers to undertake. ultra vires
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. voting trust
Shares of stock issues by a corporation for which the corporation receives, as payment, less than the fair market value of the shares. watered stock
The document filed with a designated state official by which a limited liability company is formed. articles of organization
The basic document filed with a designated state official by which a limited partnership is formed. certificate of limited partnership
In a limited partnership, a partner who assumes responsibility for the management of the partnership and liability for all partnership debts. general partner
A hybrid form of business enterprise that offers the limited liability of the corporation but the tax advantages of a partnership. limited liability company (LLC)
A type of limited partnership. The liability of all partners is limited to the amount of their investments in the firm. limited liability limited partnership (LLLP)
A form of partnership that allows professionals to enjoy the tax benefits of a partnership while limiting their personal liability for the malpractice of other partners. limited liability partnership (LLP
In a limited partnership, a partner who contributes capital to the partnership but has no right to participate in the management and operation of the business. Assumes no liability for partnership debts beyond the capital contributed. limited partner
A partnership consisting of one or more general partners and one or more limited partners. limited partnership (LP)
The term used to designate a person who has an ownership interest in a LLC. member
In a LLC, an agreement in which the members set forth the details of how the business will be manages and operated. operating agreement
A written agreement that sets forth each partner's rights and obligations with respect to the partnership. articles of partnership
The amount payable to a partner on his/her dissociation from a partnership, based on the amount distributable to that partner if the firm were wound up on that date, and offset by any damages fro wrongful dissociation. buyout price
In the context of partnerships, an express agreement made at the time of partnership formation for one or more of the partners to buy out the other or others should the situation warrant-and this provide for the smooth dissolution of the partnership. buy-sell agreement
In partnership law, an order granted by a court to a judgment creditor that entitles the creditor to attach profits or assets of a partner on dissolution of the partnership. charging order
The act of a debtor in permitting a judgment to be entered against him/her by a creditor, for an agreed sum, without the institution of legal proceedings. confession of judgment
The severance of the relationship between a partner and a partnership when the partner ceases to be associated the the carrying on of the partnership business. dissociation
The formal disbanding of a P or C.Take place by 1.acts of partners or in C, shareholders and board of directors;2.death of a partner;3.the expiration of a time period stated in a partnership agreement or a certificate of incorporation;4.judicial decree. dissolution
One who initiates and assumes the financial risks of a new enterprise and who undertakes to provide or control its management. entrepreneur
Any arrangement in which the owner of a trademark, trade name, or copyright licenses another to use the thing under specified conditions of limitations, in the selling of good and services. franchise
One receiving a license to use another's (the franchisor's)trademark, trade name, or copyright in the the sale of goods or services. franchisee
One licensing another (the franchisee) to use his/her trademark, trade name, or copyright in the sale of goods or services. franchisor
In the business context, the valuable reputation of a business viewed as an intangible asset. goodwill
A tax return submitted by a partnership that only reports the income earned by the business.The partnership as an entity does not pay taxes on the income received.A partner's profit is taxed as individual income to the individual partner. information return
In partnership law, a doctrine under which a plaintiff may sue,and collect a judgment from,one or more of the partners separately or all of the partners together.This is true even if one of the partners sued did not participate in,ratify,or know about it. joint and several liability
Shared liability. In partnership law, partners incur this for partnership obligations and debts. For ex., if a third party sues a partner on a partnership debt, the partner has the right to insist that the other partners be sued with him/her. joint liability
An agreement by two or more person to carry on,, as co-owners, a business for profit. partnership
A judicially created partnership that may,at the court'sDiscretion,be imposed for purposes of fairness.Court can prevent those who present themselves as partners(who aren't)from escaping liability if a 3rd person relies on an alleged partnership&is harmed partnership by estoppel
Any entity that does not have its income taxed at the level of that entity; examples are partnerships, S corporations, and LLC. pass-through entity
The simplest form of business, in which the owner is the business; the owner reports business income on his/her personal income tax return and is legally responsible for all debts and obligations incurred by the business. sole proprietorship
The second of two stages involved in the termination of a partnership or corporation. Once the firm is dissolved, it continues to exist legally until the process of this all business affairs(collecting and distributing the firm's assets) is complete. winding up
In agency law, a person who agrees to have another, called the agent, act on his/her behalf. principal
A person to whom a promise is made promisee
a person who makes a promise promisor
a person to whom an offer is made offeree
a person who makes an offer offeror
a person who agrees to represent or act for another, called the principal agent
The agency relationship is formed through express consent (oral or written) or implied by conduct. by agreement
The principal either by cat or by agreement ratifies the conduct of a person who is not in face an agent. (After transaction, approval) by ratification
The principal causes a third person to believe that another person is the principal's agent, and the third person acts to his/her detriment in reasonable reliance on that belief. (apparent authority) by estoppel
the agency relationship is based on a social/legal duty(support family)/formed in emergency situations when the agent is unable to contact the principal&failure to act outside the scope of the agent's authority would case the principal substantial loss. by operation of law
minor intoxication-so disoriented that they are unable to comprehend consequences insanity-comprehend nature and consequences Contractual capacity
promise act forbearance consideration
Created by: AbbyP