Business Law Dictionary

Business Law Dictionary

(Parte 1 de 12)

Business Law Dictionary

abandonment In trademark law, a situation in which the owner of a trademark or service mark does not use the mark for a long time or does not object to the unauthorized use of the mark by others. An owner who abandons a trademark loses his or her exclusive rights to it.

acceptance In contracts, agreeing verbally or in writing to the terms. This is one of the requirements for making a valid contract (i.e., an offer, an acceptance of that offer, and a consideration). A written offer can be accepted only in writing.

accord and satisfaction An agreement to accept less than is legally due in order to conclude a dispute. The new agreement (i.e., the accord) and the payment (i.e., the satisfaction, when made) replace the original obligation. See novation.

account stated A statement between a creditor and a debtor that a stated amount is owed as of a stated date. The statement may be a bill, invoice or summary of invoices that the debtor may agree to pay either in whole or in part.

accounts payable The bills or invoices that are owed by a business.

accounts receivable The bills or amounts that are due or owed to a business by customers. In general, this term refers to the total amount owed and is used in calculating the value of a business or the likelihood of the business being able to pay its own debts. Calculating receivables involves evaluating each customer’s payment history and the age of the debt.

accrue Growing or adding to, such as accumulating interest on a debt. Also, the circumstances that allow the bringing of a lawsuit. For example, the right to sue on a contract accrues only if the other party breaches or repudiates it.

act of God An unusual and unexpected natural event (e.g., hurricane, earthquake, sudden death), which may be a defense against liability for injuries or damages, or for not fulfilling a contract. Under the law of contracts, an act of God often serves as a valid excuse if one of the parties to the contract is unable to fulfill his or her duties, such as completing a construction project on time.

act of nature see Act of God. ADA see Americans with Disabilities Act. ADEA see Age Discrimination in Employment Act.

adhesion contract A contract (often a signed preprinted form) that is so much in one party’s favor that there is every appearance of its not having been bargained freely. Also called a contract of adhesion. See unconscionability.

ADR see American Depository Receipt.

advance A prepayment made in anticipation of services, such as a shipment being made or a book written. An advance is normally set against a final bill, a sales commission or an author’s royalty.

affirmative action In employment or admission to programs: a business, institution or governmental agency giving preference in hiring or advancement to ethnic minorities to make up for past discrimination. Affirmative action has been at the center of several lawsuits arguing reverse discrimination, but it has usually been upheld.

age discrimination Unfair treatment, especially in the hiring or laying off of current or potential employees aged 40 to 70 years, which is illegal under the Age Discrimination Employment Act (ADEA). The main challenge by the claimant is to prove age discrimination. See wrongful termination.

Age Discrimination in Employment Act (ADEA) A federal law prohibiting discrimination against workers older than 40 years of age in employment decisions, especially those regarding which workers should be laid off. Under the law, no worker can be forced to retire. See Older Workers Benefit Protection Act.

agent A person who, by mutual consent, is authorized to act for the benefit of and under the direction of another person when dealing with third parties. The person who appoints the agent is the principal. The agent is in a fiduciary relationship with the principal, can enter into binding agreements on behalf of the principal, and could potentially create liability for her or him. See apparent authority; ostensible agent.

agent for acceptance of service In corporations, a named individual who is authorized to accept service of lawsuits or claims against the corporation. The person is usually named in the articles of incorporation or similar documents filed with each state’s Secretary of State, and is often a professional agent representing many corporations.

agreement An understanding between two or more parties about a particular issue, covering their obligations, duties and rights. The term can also mean contract (i.e., a legally binding agreement), but it has a broader application and extends to understandings that are not legally binding.

alter ego An entity set up as a legal shield for the person actually controlling the operation. Proving that such an entity is an alter ego involves having to prove complete control by an individual. See piercing the veil.

American Depository Receipt (ADR) A receipt issued by U.S. banks to U.S. citizens as a substitute for the outright ownership of foreign shares. ADRs can be readily traded on American stock exchanges, avoiding the need to trade the actual foreign shares.

Americans with Disabilities Act (ADA) A federal law prohibiting discrimination against people with physical or mental disabilities in employment, public services, and places accommodating the public (e.g., restaurants, hotels, theaters).

annual meeting In corporations, a general meeting of shareholders or directors. Shareholders’ meetings are held to elect directors or to vote on major changes to the corporation, such as amendments to the articles of incorporation or the merging of the business with another. A meeting of directors might consider raising funds by borrowing and other financial decisions, buying property, and hiring or replacing key staff.

anticipation In patent law, a situation in which an invention is too similar to an existing invention to be considered novel—it has been anticipated. Novelty is one of the requirements for a patent, so anticipated inventions cannot be patented. See prior art.

anticipatory breach The repudiation of obligations by one party to a contract before the obligations have been fully performed. This releases the other party from his or her contractual obligations; one party cannot simultaneously repudiate obligations and demand that the other party perform. See breach of contract.

antitrust laws Acts of Congress (starting with the Sherman Antitrust Act of 1890) that forbid or restrict business practices that are deemed to be monopolistic, that restrain interstate commerce, or that are anticompetitive. See price fixing; restraint of trade.

apparent authority Appearing to be the agent of another (i.e., the employer or principal) with the power to act for her or him. Under the law of agency, the principal is liable for the acts (e.g., damage caused, contracts signed) of her or his employee (i.e., agent), and this applies to someone who only appears (to a customer, supplier or other member of the public) to have been given authority. Providing someone who is not a proper agent with, for example, stationery, forms, a company truck or an office desk could be considered granting them apparent authority, leaving the employer liable. See ostensible agent.

appraisal An estimate of the fair market value of something (e.g., real estate, valuables, shares). A professional appraiser (a neutral expert) makes an estimate by studying the property and comparing the initial purchase price with recent sales of similar property. Appraisals are often ordered by courts in probate, bankruptcy and other proceedings in which market values need to be established. Banks and mortgage companies use appraisals before making loans, and insurance companies use damage appraisals before settling claims.

appraiser A professional expert who is hired to determine the current market value or full cash value of real estate or other property.

appreciation An increase in value, particularly of property that has risen in value since it was acquired.

arm’s length The nature of an agreement when it has been made by two parties freely and independently of each other. If the parties are relatives or have a prior contract that puts one under the control of the other, the new agreement may not have been made at arm’s length and may not be enforceable.

arrears Money owed and due, but not yet paid; often the total of a series of unpaid amounts.

articles of incorporation The basic (and usually founding) charter of a corporation, setting out the name, type of business, directors, and amount and types of shares that may be issued. Each state has its own approval system and requirements for registering names and issuing shares, as well as its own criteria for registering nonprofit corporations. Articles of incorporation are usually filed for approval with a state’s Secretary of State or Corporations Commissioner.

as is Provision in a sales contract by which the buyer waives the right to complain if the property being sold is faulty: the buyer takes it “as is.” The buyer must have the right to inspect the purchase and spot deficiencies. If the seller intentionally conceals defects, the contract can be cancelled. See caveat emptor; latent defect.

assets In business, items of property that have monetary value and are shown in the company balance sheets. Such items include current assets (e.g., accounts receivable), fixed assets (e.g., equipment, supplies), and business goodwill and copyrights.

assignment Transferring an interest in a property, contract or other right from one person or company to another. In copyright law, the unconditional transfer of all rights in a copyright from the owner to another person or entity.

assignment for benefit of creditors A method of scheduling debt repayment by which a trustee receives directly a portion of a debtor’s income and uses it to pay the debtor’s bills. Compare garnishment.

audit An examination by a trained accountant of the financial records of a person or business, including notation of improper or careless practices, recommendations for improvements in keeping proper records, and a balancing of the books. An “internal audit” is done by an employee, whereas an “independent audit” is done by an outside accountant. Auditors who have not been able to examine all the supporting documents will note that the audit was based on limited information and will not guarantee the accuracy of the information provided.

author In terms of copyright protection, a person who creates a work; a person or business that pays another to create a work as part of her or his employment; or a person or business that commissions a work under a work made for hire contract. For example, a technical writer may produce a manual, but if she or he is employed by a company to do so, the company is the author of the manual for copyright purposes.

bad debt A debt that is considered uncollectible because of bankruptcy or the passage of time.

bad faith An intentional dishonest act involving the nonfulfillment of contractual obligations, misleading of another, or entrance into an agreement without the intention or means to fulfill it.

bait and switch A dishonest sales practice in which a business attracts customers by advertising a bargain price for an item and then claims that the advertised item is no longer available, attempting to switch the prospective customer to a more expensive product. Such tactics often apply to retail items (e.g., stereos, televisions), but there are also loan interest rates and other financial products that turn out to be available for very specific circumstances only. Such practices can make a business a target for a class action.

balance due The amount of a debt still owed on an account or the principal owed on a promissory note. With a promissory note, the balance due is not the sum of the remaining installments, because that amount includes interest payments, but may be the principal due without further interest.

balance sheet A statement that shows the financial position of a company in terms of its assets and liabilities at particular times (current and past); an indicator of the overall condition of the business. This differs from a profit and loss statement, which is concerned with the current operational activity of the business.

bankruptcy Proceedings under federal law whereby a debtor can discharge (i.e., wipe out) his or her debts or have protection from creditors while trying to repay them. Liquidation bankruptcy (Chapter 7) involves discharging debts by the surrender of assets. Reorganization bankruptcy (Chapter 13) involves providing the court with a plan for repaying the debts. Reorganization bankruptcy for businesses and for consumers with very large debts is called Chapter 1.

bankruptcy court The specialized federal court that deals with bankruptcy matters as detailed in the Federal Bankruptcy Act. Each state also has a number of such courts, usually covering several counties.

bankruptcy trustee A court-appointed individual who oversees the case of a person or business that has filed for bankruptcy. In a consumer Chapter 7 case, the trustee gathers the debtor’s nonexempt property, liquidates it, and distributes it proportionally to the creditors. In a Chapter 13 case, the trustee receives the debtor’s monthly payments and distributes them proportionally to the creditors.

bearer Someone who holds a negotiable instrument, such as a check, promissory note, bank draft or bond. If the document states that it is “payable to bearer,” the bearer can receive the funds due on it.

beneficial interest An individual’s right to some profit, distribution or benefit from a contract or trust. Such an interest is different from the rights of a trustee, who has responsibility for certain assets, but who does not directly share in the benefits.

benefit In contracts, any profit or acquired right. In workers’ compensation, “benefit” is the insurance payment for a fatal accident on the job (“compensation” is for nonfatal injuries). “Fringe benefits” may be part of employment compensation other than salary or wages (e.g., health insurance).

(Parte 1 de 12)

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