acceptance Unqualified assent by the grantee to accept the delivery of the deed; receiving something from another with intent to keep it.

acceptor With negotiable instruments, drawee becomes this when he or she indicates a willingness to pay the draft.

accommodation party Party who has no original duty under the note but signs to guarantee payment.

acquisition A larger company taking over a smaller one.

agency Relationship between a principal (the person or firm that utilizes an agent) and an agent (the person or firm authorized to act on behalf of the principal with third parties).

agency by appointment Principal expressly authorizes the agent to act in a specific manner for the principal.

agency by conduct Develops when a third party is led to believe the agent has authority to act based on the actions of the principal.

agency by ratification Principal can ratify the unauthorized actions of its agent and honor or deny the contract.

agent Person or firm authorized by a principal or by law to make contracts with third parties on behalf of the principal.

alternate payee Multiple individuals or entities that are listed on an instrument as payees; the instrument can be paid to any one of them; usually signaled by the use of “or.”

apparent authority The authority an agent has when the principal’s act or words lead a third party to believe that the authority exists.

appeal Review of a specific case to determine whether it was correctly decided by a lower court.

appellate jurisdiction The power select courts have to hear appeals from other courts or administrative agencies.

arson The willful and malicious burning of another’s dwelling, which includes homes and business locations.

attractive nuisance doctrine Imposes liability on the landowner for injuries sustained by small children playing on the land when the landowner permitted the condition that reasonable people would know attracts children.

authority The permission to act on behalf of a partnership or employer.

bailee The one who accepts possession of personal property without becoming the owner of the property.

bailment Relationship that exists between owner of personal property who delivers possession of those goods to another without transferring ownership.

bailor The owner who delivers personal property to another for purposes of a bailment.

blackmail An illegal demand made by a private official.

Blanchard and Peale Three Part Test Test that allows companies and individuals to gauge the most ethical decision: Is the proposed action legal? Is the action balanced? How does the action make me feel?

blank indorsement Order paper transferred to another with an indorsement alone.

breach Failure to perform or act as called for by the terms of the contract.

bribery Individual or business gives money, property, or any other benefit to a particular person for the purpose of influencing that person’s actions and judgment in their favor.

burglary Breaking and entering the dwelling of another at night with the intent to commit a felony.

business ethics Subset of ethics that focuses on the goal of balancing profits with the values of society and individuals.

business stakeholder theory of ethics Examines situations from the viewpoint of a company’s constituencies.

case law Law expressed in the published opinions of courts.

causation The third element of negligence that requires the breach of duty to actually cause harm to the injured party.

certificates of deposit Bank’s promises to pay a set sum of deposited money back to the customer with interest when the customer surrenders the document.

choice-of-law provision Contract clause that sets which law will apply should a dispute develop.

claim As applied to patents, claims establish the technical boundaries of the patent by describing the patent in technical terms.

close corporation Held by a single or small group of shareholders; shares not traded on a public exchange.

commercial impracticability Under this theory a contract may be discharged because fulfilling the contract is unreasonable and carries an excessive cost.

common carrier Individual or organization that transports goods and is available to the general public for the purpose of shipping at a cost.

common law The body of unwritten principles that were recognized and enforced by the courts.

compensatory damages Damages designed to compensate the injured party for the injuries from the result of the breach.

concurrent condition Conditions to a contract that each party must perform simultaneously.

condition A stipulation or prerequisite in a contract, will, or other legal document.

condition precedent A condition that must occur before something else can occur.

condition subsequent A condition that, if it occurs, will terminate a contract.

conglomerate Subsidiary companies that are not engaged in the core business of the parent.

consequential damages Those not necessarily anticipated before the breach but flow from special circumstances of the injured party.

consolidation Two companies come together and a third company is born; the original companies cease to exist and a new company is created with the assets and property of the original companies.

conspiracy An agreement between two or more people to commit an unlawful act or to use unlawful means to achieve an otherwise lawful result.

construction eviction By an act or omission, the landlord substantially deprives the tenant of the use and enjoyment of the premises.

contract An agreement 1) between two or more parties 2) an offer to perform with 3) an acceptance of that offer. There must also be 4) a set time period, 5) terms for performance, and 6) valuable consideration exchanged for that performance.

contract carrier Individual or organization that transports goods and is available to those that contract with it.

contribution Requires that when one person is sued on a debt or judgment that has joint and several liability, the individual who pays more than his share can demand the other liable parties to pay him their portion of the judgment.

cooperatives Two or more people or entities come together to act through one agent for a specific purpose.

copyright The exclusive right under federal statute to the creator of a literary or artistic work to use, reproduce, or display the work.

corporation An artificial person created by the government to carry on business or other activities; it is its own legal entity separate and distinct from the people who created and invest in the company.

corporation by estoppel Arises if third parties thought the business was a corporation that would profit if the third party was allowed to deny the existence of a corporation.

corporation de jure Incorporation steps are properly followed, and corporation created by operation of law.

counterfeiting Knowingly making a document or coin that looks genuine but is not.

courts Government tribunals or bodies that hear and decide disputes and other matters brought before them.

covenant against encumbrances Guarantee the land is not subject to the rights or interests of third parties—liens, easements, etc.

covenant of further assurances The grantor will execute any additional documents that are needed to complete the conveyance.

covenant of quiet enjoyment The grantee’s possession of the land will not be disturbed by the grantor or anybody else claiming title to the property.

covenant of right to convey The grantor has the right or authority to make the conveyance (this comes into play when a third party is the owner).

covenant of seisin Guarantee that the grantor owns the property he or she conveys.

customary authority The authority to do anything that is customary in the community to complete the authorized act.

damages The fourth element of negligence, which requires the breach of duty to cause actual monetary or other harm.

de facto corporation A defect in the incorporation is so substantial it cannot be ignored, but the actions of the company or board of directors are such that the corporation will be treated as if it did in fact exist.

deed The instrument or writing by which the owner transfers an interest in land to a new owner.

deliver Actual handing of an object to another with intent to convey the deed to that person or entity.

delivery in escrow Deed is delivered to a third party to be held in trust until the grantor and grantee have complied with the terms of the contract.

design patent Granted when a new, original, and ornamental design for a manufactured item is developed; good for 14 years.

detrimental reliance A substitute for consideration that arises when one party relies on the acts or representations of another party to the first party’s detriment.

dilution The lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of 1) competition between the owner of the famous mark and other parties, or 2) likelihood of confusion, mistake, or deception.

disparate impact An employer has a facially neutral policy, but the application of that policy results in discrimination against an employee or a class of employees.

disparate treatment An employer treats a class of people differently because of their race, color, religion, sex, or national origin.

dissolution Partnership ceases to exist as a going concern, either by agreement of the partners that they no longer wish to conduct business together or by operation of law.

distribution franchise Allows the franchisor to sell its products through the franchisees.

dominant tenement The property right of the easement holder, benefited by the easement; dominant over the right of the property holder.

dormant partners Partners who have no active role in the partnership and are unknown to the public as partners.

draft One party’s order to another to pay a sum of money to a third party.

drawee Party who is to pay on the draft or note.

drawer Party who writes or creates the draft or check.

due process Principle of fairness under the law; legal procedures must be applied equally to avoid prejudicial or unequal treatment under the law.

duty The second element of damages, which requires the person who allegedly caused the harm to have an actual responsibility to the injured person.

easement The right to use somebody else’s real property for a specific purpose.

easement by implication An easement not specifically created by deed, but from the circumstances of the parties and land access and location.

easement in gross Personal right to use another’s land and is not dependent on owning the dominant tenement.

embezzlement One fraudulently coverts another’s property or money that has been entrusted to him or her.

en banc Full panel of the judges from the Court of Appeals hears the case.

ethics A system of moral principles that govern individual’s actions; the search for right and wrong; provides a framework for making decisions in all contexts.

ethics from the law Ethical framework that draws moral standards from codified law; the test of whether an action is justified is whether it is legal.

express authority The authority to take an action because the partnership agreement gives the authority to a partner or because the partners have voted to delegate that authority.

extortion The illegal demand by a public officer acting with apparent authority.

fee simple estate The owner takes the title to the real property clear and free of any other ownership claims.

fixture Personal property that becomes so attached to the real property that it cannot be separated from the real property without causing harm to the building or land.

forbearance One party to a contract gives up the right to do something they have a legal right to do.

foreign corporation Incorporated in one state but also operate inside a different state.

forgery Fraudulently making or altering an instrument that in turn creates or alters the legal liability of another.

franchise An arrangement in which the owner of a trademark, trade name, or copyright licenses others, under specified conditions or limitations, to use the trademark, trade name, or copyright in purveying goods or services.

franchisee Purchases the right to use the franchised product, idea, etc.; party receiving the franchise.

franchiser Owner of the franchised product, idea, etc.; party granting the franchise.

free enterprise A system where business is regulated by supply and demand rather than government interference through regulations and subsidies.

Freedom of Information Act Ensures the public access to public records. If a citizen requests records in writing, the federal agency must provide those records unless the request falls within one of nine exemptions.

front-page-of-the-newspaper test An ethical test which asks the following question when someone is trying to reach an ethical decision: is the result of this decision something I want to read about on the front page of The New York Times, The Wall Street Journal, or USA Today?

future interest A right in real property to receive that property at some point in the future.

general agent Given authority to transact any kind of business that can be lawfully delegated.

general jurisdiction The court can hear most disputes brought before it.

general partner Visible to the public and active in management of the partnership; must always be at least one in a general partnership or limited partnership.

goodwill The value of a business beyond the tangible assets; can include items like reputation, strong customer base, desirable location, and name.

holder Person possessing an instrument that is 1) payable to that person, 2) indorsed to that person, or 3) is bearer paper.

holder in due course Holder who takes the note for value, in good faith, and without notice and receives additional warranty protection as a result.

incidental authority Authority to perform any reasonable act necessary to execute the agent’s express authority.

incidental damages Extra expenses the injured party paid as a consequence of the breach or to mitigate damages.

indemnification The act of making someone “whole” or protected from losses.

independent contractor A person or business who works for another according to the terms of a contract; not given specific instructions and guidelines on how to complete that job.

integrated industry Subsidiary companies that are related to the parent company’s business; for example, a newspaper company may own subsidiaries that deal in paper and ink.

intellectual property Creations of the mind that include music, the arts, inventions, and designs.

intentional torts Civil wrongs that result from the intentional acts of a party.

joint and several liability Each debtor or defendant is responsible for the entire debt or amount awarded.

joint liability Two or more people are liable for a debt; the plaintiff can sue both and a defendant can demand that any person who shares joint liability is brought into the lawsuit.

joint venture Exists when two or more persons or entities combine their labor or property for the purpose of a single business undertaking.

jurisdiction The power, right, or authority of the court to hear and determine or apply the law.

landlord Owner of real property who leases it to another.

larceny The wrongful or fraudulent taking of the personal property of another.

lease An agreement between the landlord and tenant that sets the terms for the use of the property.

legislative power As to agencies, the power to make laws by promulgating regulations with public input.

license A personal and revocable privilege to perform an act on the land of another.

liens A claim or right against real property that arise in many situations.

life estate Gives the holder the right to use or occupy the land for the holder’s life.

limited liability Liability limited to the investment in the firm or partnership of the member or innocent partner.

limited liability company (LLC) Business form that combines the pass-through taxation with the limited liability protection of a corporation.

limited liability partnership (LLP) Partnership that maintains the pass-through taxation of partnerships, but provides limited liability to innocent partners; developed as a response to the success of limited liability companies.

limited partners Partners who do not participate in the management of the partnership and do not appear to the public as general partners, and because of that, do not have personal liability for the acts of the partnership or other partners beyond their investment in the partnership.

limited partnership Partnership that shields some partners from liability. To accomplish this, those partners desiring limited liability contribute capital to the endeavor but do not participate in the management of the firm.

liquidated damages Contracted for damages that take effect if the contract is breached; usually related to delays in performance or if damages are too difficult to determine without an agreement.

mailbox rule Acceptance of a contract is effective when put in the mailbox unless the offer states acceptance is only effective when received or an options contract is involved.

maker Signs the note and is responsible for payment.

manufacturing or processing franchise Grants the franchisee the right to make and sell the products of the franchisor under its trademark.

meeting of the minds Key contract term that exists when two parties to a contract have the same understanding of the terms of the contract.

members Owners of LLC who have an ownership interest in proportion to their capital contribution and the operating agreement or articles of organization.

merger Two companies combine when one offers its stock or cash to the shareholders of the other company.

money laundering Parties knowingly participate in a financial transaction which is designed to hide the origins of those funds.

most-favored-nation clause Any privilege granted to a third country after two parties have contracted on the same subject matter is extended to the other party to the treaty.

mutual mistake Each party to a contract misunderstands the other party’s intent about a material term.

natural law Standards of conduct derived from traditional moral principles and/or God’s law and will.

negligence The failure to exercise the care a reasonable or prudent person would toward another.

negotiable Note or other paper becomes negotiable when it is 1) evidenced by a record, 2) signed 3) by the maker or drawer, 4) pay a sum certain, 5) payable in money, 6) payable on demand or at a specific time, and 7) payable to order or bearer.

nominal damages Token damages awarded for breach that results in no actual loss.

nominal partners Represented to the public as partners because of something they add to the partnership, usually status or goodwill.

nonprofit corporation Formed for purpose other than making a profit.

obligee The recipient of the obligor’s promise to perform.

obligor The promisor is called this when the promise is binding with an obligation to perform.

obstruction of justice Occurs when anyone alters, destroys, conceals, covers up, falsifies, or makes a false entry with intent to impede, obstruct, or influence an investigation.

operating agreement LLC’s equivalent to a corporation’s bylaws.

original jurisdiction Authority to hear a case when it is brought before the court.

parol evidence rule Principal of contract law that evidence cannot be admitted in court if it would add to, vary, or contradict a written contract.

partially disclosed principal The agent tells the third party there is a principal, but does not reveal the principal’s identity.

partnership Two or more persons or entities that pool resources and talent with the purpose of making a profit; exists without approval of the state.

patent Provide inventors the exclusive right to use their creation for a limited period of time.

payee Named person on the note or check to receive payment.

periodic tenancy Exists when a lease has an indefinite duration, but rent is paid annually, monthly, or weekly.

perjury Knowingly giving false testimony in judicial proceedings after swearing to tell the truth.

personal jurisdiction Gives the court authority to bring the parties into court and hear the complaint against them.

personal property Includes things other than real property such as cars, clothing, and appliances; also includes intangibles such as negotiable instruments, patents, and trademarks.

plant patent Granted when a distinct and new variety of plant is invented or discovered and asexually reproduced; lasts 20 years from date of filing.

precedent A court decision that becomes the law for a particular problem in the future.

prescriptive easement Easement upon another’s real property acquired by open, notorious, continuous, and hostile and adverse use without the owner’s permission, for a period of 20 years or that mandated by statute.

price-fixing Any agreement to charge an agreed upon price or set maximum or minimum prices.

principal Person or firm who employs an agent.

private carrier Individual or organization that transports goods for its owner.

private corporation Corporation organized for charitable purposes or for business purposes.

private law The rules and regulations parties agree to in their contracts.

privity of contract Requirement that there be a connection between parties to a contract in order to enforce the terms of the contract.

procedural due process Applies to the criminal setting and limits the exercise of power by state and federal governments; has an individual been deprived of life, liberty, or property and what process should be given to that individual.

procedural law Sets the rules that must be followed to enforce rights and liabilities; deals with the procedure of the legal environment.

professional corporation Organized so members can practice a profession like law and medicine.

profit The right to take part of the soil or produce of another’s land.

promisee The person who benefits from the promisor’s promise.

promisor The person who makes the promise in the contract context.

promissory notes Written promises to pay a sum certain to the holder.

promoter Person who creates a corporation including the financing; usually the principal shareholder or member of the management team.

public authorities Companies owned by the government to provide services.

public corporation Government entities like cities and counties that are created to perform a governmental function.

puffing A nonspecific, unmeasurable statement about a product; cannot be reasonably interpreted as providing a benchmark by which the veracity of the statement can be ascertained.

punitive damages Used by a court to punish or make an example of the breaching party for its bad acts.

qualified indorsement Places a limit or disclaimer on the liability of the indorser to the maker or drawee.

quasi-public corporation Carries out a government mandate, but may have private investors; regardless of who owns stock, the corporation must carry out its government-directed duties.

quid pro quo Latin term meaning something for something. Usually used to refer to the fact that one party gives something to the other party, expecting something in return.

racketeering activity A broad crime that includes kidnapping, gambling, murder, arson, and much more.

real property Land, the air above it, and the minerals below it extending to the core of the earth.

repudiation A party to a contract indicates by words or deeds that it has no intention of performing the contract. Anticipatory repudiation means that a party who has an obligation to perform under a contract repudiates before the time of performance, giving the injured party the right to damages for total breach as well as discharging any remaining duty to perform that injured party has.

res ipsa loquitur Latin phrase for the thing speaks for itself; one is presumed negligent if injury is caused by something he or she controlled even if there is no specific evidence linking the defendant to the harm.

reservation of rights The assertion by a party that it is not waiving its right to damages for potential nonconformity even though it accepted performance that does not comply with the terms of the contract.

respondeat superior Principal or employer is vicariously liable for the unauthorized tort of an agent or employee while acting within the scope of the agency or employment.

restrictive indorsement Used to limit or restrict the way the instrument is transferred; “for deposit only.”

reversible error An error or defect made by a court of original jurisdiction that is so serious it will be set aside.

risk of loss Determines when the buyer or seller become responsible for goods that are damaged or destroyed en route between the two.

robbery Using force or the threat of force to take personal property from another.

sale of goods The sale of personal property as defined in the Uniform Commercial Code Article 2.

secret partners Partners who may be active in the partnership, but hidden to the public as partners.

securities Shares of stock, bonds, and debentures issued by corporations and governments as evidence of ownership and terms of payment of dividends or final pay-off.

service franchise Allows the franchisee to provide a service under the terms of a franchise agreement.

service mark Identifies and distinguishes the source of a service; similar to a trademark.

silent partners Not active participants in the partnership on a day-to-day basis; usually add something like money to the partnership and may be known to or hidden from the public.

situational business ethics Individuals examine the underlying situation and make decisions based on those facts; also known as moral relativism.

sole proprietorship An individual provides goods or services to others without taking steps to form a corporate entity or partnership.

special agent Authorized to handle a specific project or transaction only.

special indorsement Indorsement that contains language detailing who the indorser made the instrument payable to.

special jurisdiction Reflects the limited nature of some courts like juvenile courts and small claims courts.

special service corporation Governed by special laws because of specialized area; can include insurance, banking, and savings and loans; heavily regulated by federal and state governments and agencies.

specific performance Party who has breached a contract is required by the court to perform the actual terms of the contract because merely suing for damages is not adequate to compensate the aggrieved party.

stakeholder Those who have an interest in the activities of a corporation; may include shareholders, employees, vendors, customers, and governments.

stare decisis Latin for let the decision stand; the principle that prior case law should serve as a precedent and control future decisions of courts.

statute of frauds Requirement that certain classes of contracts be in writing to be valid and enforceable.

strict liability An absolute standard of liability imposed by statute or courts.

subchapter S-corporations The corporation will be treated as a partnership for tax purposes if it is a domestic corporation with 100 or fewer shareholders, the shareholders are individuals, estates, or exempt organizations, and it has one class of stock; must check a box on IRS Form 2553.

subject matter jurisdiction Court’s ability to hear a case based on the material covered.

substantive due process Constitutional limits placed on the content or subject matter of state and federal laws.

substantive law Establishes principles and creates, defines, and regulates rights and liabilities.

surety A person who accepts primary liablity for the debt or obligation of another, who is the principal debtor; the surety accepts an obligation that is not his or hers.

tariff Domestically a tariff is a government-approved schedule of charges that can be made by a regulated business like a carrier; internationally a tax imposed by a country on goods crossing its borders.

tenancy at sufferance Exists when a tenant stays after termination of the original lease and does not have the permission of the landlord to remain on the property.

tenancy at will Exists when the lease has an indefinite period and may be terminated at any time by either party.

tenancy for years One where the lease establishes a definite duration for weeks, months, years, or another time period.

tenant One who holds property by paying rent and the terms of a lease.

tender To present payment to another or delivery under terms of contract; tender ends a party’s obligations under the contract.

third party Anyone involved in an agency relationship who is not the agent or principal.

tort A civil wrong or wrongful act which injures another, includes negligence.

trade fixture Fixture that a tenant attaches to a rented building and uses in their trade or business; can be removed by the tenant.

trade secret Information (including a formula, pattern, compilation, program device, method, technique, or process) that derives economic value from being secret or not readily ascertainable; subject to efforts reasonable under the circumstances to maintain its secrecy.

trademark Word, phrase, symbol, or design, or a combination of words, phrases, symbols, or designs, that identifies and distinguishes the source of the good of one party from those of others.

trap A hazard that is known to the landowner but concealed to others.

treble damages When imposed, results in the party paying three times the actual amount of damages incurred.

trust Customers and other businesses can rely on the character, strength, and integrity of a company.

tying The seller forces the buyer to purchase an item it doesn’t want in order to purchase the one it does.

ultra vires Beyond powers; the corporation or officers have exceeded the powers granted by law.

undisclosed principal Principal remains hidden from the third party.

unilateral mistake Mistake about a contract made by one party; will not effect the contract when the nonmistaken party is unaware of the mistake.

unincorporated associations Two or more people come together for a specific nonprofit purpose.

universal agent Principal has delegated to the agent everything that can be lawfully delegated most often through a power of attorney.

universal standards for ethics Holds that ethics are set and cannot be changed by the shifting winds of the law; natural law sets the standards individuals should live by.

unjust enrichment A benefit is incurred to one person either by mistake, chance, or someone’s misfortune, and the person who benefits fails to pay for the benefit.

utility patent Granted to anyone who invents or discovers a new and useful process, machine, manufactured item, composition of matter, or an improvement to any of those; good for 20 years.

vicarious liability Imposing liability on one for the fault of another.

way of necessity The right to access land retained by the grantor to gain access and leave property.

white-collar crime Nonviolent crimes that involve some form of cheating or fraud.

winding up Period after termination or dissolution of partnership in which the remaining partners only have authority to finish work in progress and cannot accept new work.