question

Accepted check

answer

A check that the drawee bank has signed. This signature is a promise that the bank will pay the checkout of its own funds. (Chapter 24)

question

Accession

answer

The use of labor and/or materials to add value to the personal property of another. (Chapter 46)

question

Accommodation party

answer

Someone who does not benefit from an instrument but agrees to guarantee its payment. (Chapter 24)

question

Accord and satisfaction

answer

An agreement to settle a debt for less than the sum claimed. (Chapter 12)

question

Accounts

answer

Any right to receive payment for goods sold or leased, other than rights covered by chattel paper or instruments. (Chapter 26)

question

Accredited investor

answer

Under the Securities Act of 1933, an accredited investor is an institution (such as a bank or insurance company) or any individual with a net worth of more than $1 million or an annual income of more than $200,000. (Chapter 37)

question

Acquit

answer

To find the defendant not guilty of the crime for which he was tried. (Chapter 8)

question

Act of State doctrine

answer

A rule requiring American courts to abstain from cases if a court order would interfere with the ability of the President or Congress to conduct foreign policy. (Chapter 9)

question

Actus reus

answer

The guilty act. The prosecution must show that a criminal defendant committed some proscribed act. In a murder prosecution, taking another person's life is the actus reus. (Chapter 8)

question

Adhesion contract

answer

A standard form contract prepared by one party and presented to the other on a "take it or leave it" basis. (Chapter 13)

question

Adjudicate

answer

To hold a formal hearing in a disputed matter and issue an official decision. (Chapter 4)

question

Administrative law

answer

Concerns all agencies, boards, commissions, and other entities created by a federal or state legislature and charged with investigating, regulating, and adjudicating a particular industry or issue. (Chapter 1)

question

Administrator

answer

A person appointed by the court to oversee the probate process for someone who has died intestate (that is, without a will). (Chapter 47)

question

Administratrix

answer

A female administrator. (Chapter 47)

question

Adverse possession

answer

A means of gaining ownership of land belonging to another by entering upon the property, openly and notoriously, and claiming exclusive use of it for a period of years. (Chapter 44)

question

Affidavit

answer

A written statement signed under oath. (Chapter 8)

question

Affirm

answer

A decision by an appellate court to uphold the judgment of a lower court. (Chapter 1)

question

Affirmative action

answer

A plan introduced in a workplace for the purpose of either remedying the effects of past discrimination or achieving equitable representation of minorities and women. (Chapter 30)

question

After-acquired property

answer

Items that a debtor obtains after making a security agreement with the secured party. (Chapter 26)

question

Agent

answer

A person who acts for a principal. (Chapter 8)

question

Alternative dispute resolution

answer

Any method of resolving a legal conflict other than litigation, such as: negotiation, arbitration, mediation, mini-trials, and summary jury trials. (Chapter 3)

question

Amendment

answer

Any addition to a legal document. The constitutional amendments, the first ten of which are known collectively as the Bill of Rights, secure numerous liberties and protections directly for the people. (Chapter 1)

question

Annual report

answer

Each year, public companies must send their shareholders an annual report that contains detailed financial data. (Chapter 36)

question

Answer

answer

The pleading, filed by the defendant in court and served on the plaintiff, which responds to each allegation in the plaintiff's complaint. (Chapter 3)

question

Apparent authority

answer

A situation in which conduct of a principal causes a third party to believe that the principal consents to have an act done on his behalf by a person purporting to act for him when, in fact, that person is not acting for the principal. (Chapter 29)

question

Appellant

answer

The party who appeals a lower court decision to a higher court. (Chapter 3)

question

Appellate court

answer

Any court in a state or federal system that reviews cases that have already been tried. (Chapter 3)

question

Appellee

answer

The party opposing an appeal from a lower court to a higher court. (Chapter 3)

question

Arbitration

answer

A form of alternative dispute resolution in which the parties hire a neutral third party to hear their respective arguments, receive evidence, and then make a binding decision. (Chapter 3)

question

Arson

answer

Malicious use of fire or explosives to damage or destroy real estate or personal property. (Chapter 8)

question

Assault

answer

An intentional act that causes the plaintiff to fear an imminent battery. (Chapter 6)

question

Assignee

answer

The party who receives an assignment of contract rights from a party to the contract. (Chapter 16)

question

Assignment

answer

The act by which a party transfers contract rights to a third person. (Chapter 16)

question

Assignor

answer

The party who assigns contract rights to a third person. (Chapter 16)

question

Attachment

answer

A court order seizing property of a party to a civil action, so that there will be sufficient assets available to pay the judgment. (Chapter 5)

question

Authorized and unissued stock

answer

Stock that has been approved by the corporation's charter, but has not yet been sold. (Chapter 34)

question

Authorized and issued stock

answer

Stock that has been approved by the corporation's charter and subsequently sold. (Chapter 34)

question

Bailee

answer

A person who rightfully possesses goods belonging to another. (Chapter 13)

question

Bailment

answer

Giving possession and control of personal property to another person. (Chapter 13)

question

Bailor

answer

One who creates a bailment by delivering goods to another. (Chapter 13)

question

Battery

answer

The intentional touching of another person in a way that is unwanted or offensive. (Chapter 6)

question

Bearer paper

answer

An instrument payable "to bearer." Any holder in due course can demand payment. (Chapter 23)

question

Bilateral contract

answer

A binding agreement in which each party has made a promise to the other. (Chapter 10)

question

Bill of lading

answer

A receipt for goods, given by a carrier such as a ship, that minutely describes the merchandise being shipped. A negotiable bill of lading may be transferred to other parties, and entitles any holder to collect the goods. (Chapter 9)

question

Bill of Rights

answer

The first ten amendments to the Constitution. (Chapter 5)

question

Bill

answer

A proposed statute that has been submitted for consideration to Congress or a state legislature. (Chapter 4)

question

Blue sky laws

answer

State securities laws. (Chapter 37)

question

Bona fide occupational qualification

answer

A job requirement that would otherwise be discriminatory is permitted in situations in which it is essential to the position in question. (Chapter 30)

question

Bona fide purchaser

answer

Someone who buys goods in good faith, for value, typically from a seller who has merely voidable title. (Chapter 20)

question

Bonds

answer

Long-term debt secured by some of the issuing company's assets. (Chapter 34)

question

Brief

answer

The written legal argument that an attorney files with an appeal court. (Chapter 3)

question

Bulk sale

answer

A transfer of most or all of a merchant's assets. (Chapter 20)

question

Burden of proof

answer

The allocation of which party must prove its case. In a civil case, the plaintiff has the burden of proof to persuade the factfinder of every element of her case. In a criminal case, the government has the burden of proof. (Chapter 3)

question

Business judgment rule

answer

A common law rule that protects managers from liability if they are acting without a conflict of interest, and make informed decisions that have a rational business purpose. (Chapter 35)

question

Buyer in ordinary course of business

answer

Someone who buys goods in good faith from a seller who routinely deals in such goods. (Chapter 26)

question

Bylaws

answer

A document that specifies the organizational rules of a corporation or other organization, such as the date of the annual meeting and the required number of directors. (Chapter 34)

question

Capacity

answer

The legal ability to enter into a contract. (Chapter 10)

question

Certificate of deposit

answer

An instrument issued by a bank which promises to repay a deposit, with interest, on a specified date. (Chapter 23)

question

Certified check

answer

A check that the drawee bank has signed. This signature is a promise that the bank will pay the check out of its own funds. (Chapter 24)

question

Certiorari, writ of

answer

Formal notice from the United States Supreme Court that it will accept a case for review. (Chapter 3)

question

Challenge for cause

answer

An attorney's request, during voir dire, to excuse a prospective juror because of apparent bias. (Chapter 3)

question

Chancery, court of

answer

In medieval England, the court originally operated by the Chancellor. (Chapter 1)

question

Charging order

answer

A court order granting the creditor of a partner the right to receive that partner's share of partnership profits. (Chapter 33)

question

Chattel paper

answer

Any writing that indicates two things: (1) a debtor owes money and (2) a secured party has a security interest in specific goods. The most common chattel paper is a document indicating a consumer sale on credit. (Chapter 26)

question

Check

answer

An instrument in which the drawer orders the drawee bank to pay money to the payee. (Chapter 23)

question

Chicago School

answer

A theory of antitrust law first developed at the University of Chicago. Adherents to this theory believe that antitrust enforcement should focus on promoting efficiency and should not generally be concerned about the size or number of competitors in any market. (Chapter 39)

question

CISG

answer

See Convention on Contracts for the International Sale of Goods. (Chapter 9)

question

Civil law

answer

The large body of law concerning the rights and duties between parties. It is distinguished from criminal law, which concerns behavior outlawed by a government. (Chapter 1)

question

Class action

answer

A method of litigating a civil lawsuit in which one or more plaintiffs (or occasionally defendants) seek to represent an entire group of people with similar claims against a common opponent. (Chapter 3)

question

Classification

answer

The process by which the Customs Service decides what label to attach to imported merchandise, and therefore what level of tariff to impose. (Chapter 9)

question

Close corporation

answer

A corporation with a small number of shareholders. Its stock is not publicly traded. (Chapter 32)

question

Codicil

answer

An amendment to a will. (Chapter 47)

question

Collateral

answer

The property subject to a security interest. (Chapter 26)

question

Collateral promises

answer

A promise to pay the debt of another person, as a favor to the debtor. (Chapter 15)

question

Collective bargaining

answer

Contract negotiations between an employer and a union. (Chapter 31)

question

Collective bargaining unit

answer

The precisely defined group of employees who are represented by a particular union. (Chapter 31)

question

Comity

answer

A doctrine that requires a court to abstain from hearing a case out of respect for another court that also has jurisdiction. International comity demands that an American court refuse to hear a case in which a foreign court shares jurisdiction if there is a conflict between the laws and if it is more logical for the foreign court to take the case. (Chapter 9)

question

Commerce clause

answer

One of the powers granted by Article I, §8 of the Constitution, it gives Congress exclusive power to regulate international commerce and concurrent power with the states to regulate domestic commerce. (Chapter 5)

question

Commercial impracticability

answer

After the creation of a contract, an entirely unforeseen event occurs which makes enforcement of the contract extraordinarily unfair. (Chapter 17)

question

Commercial paper

answer

Instruments such as checks and promissory notes that contain a promise to pay money. Commercial paper includes both negotiable and non-negotiable instruments. (Chapter 23)

question

Commercial speech

answer

Communication, such as television advertisements, that has the dominant theme of proposing a commercial transaction. (Chapter 5)

question

Common carrier

answer

A transportation company that makes its services available on a regular basis to the general public. (Chapter 46)

question

Common law

answer

Judge-made law, that is, the body of all decisions made by appellate courts over the years. (Chapter 1)

question

Common stock

answer

Certificates that reflect ownership in a corporation. Owners of this equity security are last in line for corporate pay-outs such as dividends and liquidation proceeds. (Chapter 34)

question

Comparative negligence

answer

A rule of tort law that permits a plaintiff to recover even when the defendant can show that the plaintiff's own conduct contributed in some way to her harm. (Chapter 7)

question

Compensatory damages

answer

Those that flow directly from the contract. (Chapter 18)

question

Complaint

answer

A pleading, filed by the plaintiff, providing a short statement of the claim. (Chapter 3)

question

Concerted action

answer

Tactics, such as a strike, used by a union to gain a bargaining advantage. (Chapter 31)

question

Condition

answer

A condition is an event that must occur in order for a party to be obligated under a contract. (Chapter 17)

question

Condition precedent

answer

A condition that must occur before a particular contract duty arises. (Chapter 17)

question

Condition subsequent

answer

A condition that must occur after a particular contract duty arises, or the duty will be discharged. (Chapter 17)

question

Confiscation

answer

Expropriation without adequate compensation of property owned by foreigners. (Chapter 9)

question

Conforming goods

answer

Items that satisfy the contract terms. If a contract calls for blue sailboats, then green sailboats are non-conforming. (Chapter 22)

question

Consent order

answer

An agreement entered into by a wrongdoer and an administrative agency (such as the Securities and Exchange Commission or the Federal Trade Commission) in which the wrongdoer agrees not to violate the law in the future. (Chapter 40)

question

Consequential damages

answer

Those resulting from the unique circumstances of this injured party. (Chapter 18)

question

Consideration

answer

In contract law, something of legal value that has been bargained for and given in exchange by the parties. (Chapter 12)

question

Constitution

answer

The supreme law of a political entity. The United States Constitution is the highest law in the country. (Chapter 1)

question

Contract

answer

A legally enforceable promise or set of promises. (Chapter 10)

question

Contract carrier

answer

A transportation company that does not make its services available to the general public but engages in continuing agreements with particular customers. (Chapter 46)

question

Contributory negligence

answer

A rule of tort law that permits a negligent defendant to escape liability if she can demonstrate that the plaintiff's own conduct contributed in any way to the plaintiff's harm. (Chapter 7)

question

Control security

answer

Stock owned by any officer or director of the issuer, or by any shareholder who holds more than 10 percent of a class of stock of the issuer. (Chapter 37)

question

Convention on Contracts for the International Sale of Goods

answer

A United Nations sponsored agreement that creates a neutral body of law for sale of goods contracts between companies from different countries. (Chapter 9)

question

Conversion

answer

A tort committed by taking or using someone else's personal property without his permission. (Chapter 6)

question

Cookie

answer

A small computer file that identifies the user of a computer. Internet sites typically place cookies on a computer's hard drive to track visitors to their site. (Chapter 42)

question

Copyright

answer

Under federal law, the holder of a copyright owns a particular expression of an idea, but not the idea itself. This ownership right applies to creative activities such as literature, music, drama, and software. (Chapter 43)

question

Corporation by estoppel

answer

Even if a corporation has not actually been formed, courts will sometimes enforce contracts entered into in the belief that the corporation did indeed exist. (Chapter 34)

question

Counter-claim

answer

A claim made by the defendant against the plaintiff. (Chapter 3)

question

Cover

answer

The buyer's right to obtain substitute goods when a seller has breached a contract. (Chapter 18)

question

Creditor beneficiary

answer

When one party to a contract intends to benefit a third party to whom he owes a debt, that third party is referred to as a creditor beneficiary. (Chapter 16)

question

Criminal law

answer

Rules that permit a government to punish certain behavior by fine or imprisonment. (Chapter 1)

question

Cross-examination

answer

During a hearing, for a lawyer to question an opposing witness. (Chapter 3)

question

Cure

answer

The seller's right to respond to a buyer's rejection of non-conforming goods; the seller accomplishes this by delivering conforming goods before the contract deadline. (Chapter 22)

question

Damages

answer

(1) The harm that a plaintiff complains of at trial, such as an injury to her person, or money lost because of a contract breach. (2) Money awarded by a trial court for injury suffered. (Chapter 6)

question

De facto corporation

answer

Occurs when a promoter makes a good faith effort to incorporate (although fails to complete the process entirely) and uses the corporation to conduct business. The state can challenge the validity of the corporation, but a third party cannot. (Chapter 34)

question

De jure corporation

answer

The promoter of the corporation has substantially complied with the requirements for incorporation, but has made some minor error. No one has the right to challenge the validity of the corporation. (Chapter 34)

question

De novo

answer

The power of an appellate court or appellate agency to make a new decision in a matter under appeal, entirely ignoring the findings and conclusions of the lower court or agency official. (Chapter 4)

question

Debentures

answer

Long-term, unsecured debt, typically issued by a corporation. (Chapter 34)

question

Debtor

answer

A person who owes money or some other obligation to another party. (Chapter 26)

question

Decedent

answer

A person who has died. (Chapter 47)

question

Defamation

answer

The act of injuring someone's reputation by stating something false about her to a third person. Libel is defamation done either in writing or by broadcast. Slander is defamation done orally. (Chapter 6)

question

Default

answer

The failure to perform an obligation, such as the failure to pay money when due. (Chapter 26)

question

Default judgment

answer

Court order awarding one party everything it requested because the opposing party failed to respond in time. (Chapter 3)

question

Default rules

answer

Under the Uniform Partnership Act, these rules govern the relationship among the partners unless the partners explicitly make a different agreement. (Chapter 33)

question

Definiteness

answer

A doctrine holding that a contract will only be enforced if its terms are sufficiently precise that a court can determine what the parties meant. (Chapter 11)

question

Delegation

answer

The act by which a party to a contract transfers duties to a third person who is not a party to the contract. (Chapter 16)

question

Deponent

answer

The person being questioned in a deposition. (Chapter 3)

question

Deposition

answer

A form of discovery in which a party's attorney has the right to ask oral questions of the other party or of a witness. Answers are given under oath. (Chapter 3)

question

Derivative action

answer

A lawsuit brought by shareholders in the name of the corporation to enforce a right of the corporation. (Chapter 36)

question

Deterrence

answer

Using punishment, such as imprisonment, to discourage criminal behavior. (Chapter 8)

question

Devisee

answer

Someone who inherits under a will. (Chapter 47)

question

Direct examination

answer

During a hearing, for a lawyer to question his own witness. (Chapter 3)

question

Directed verdict

answer

The decision by a court to instruct a jury that it must find in favor of a particular party because, in the judge's opinion, no reasonable person could disagree on the outcome. (Chapter 3)

question

Disaffirmance

answer

The act of notifying the other party to a contract that the party giving the notice refuses to be bound by the agreement. (Chapter 14)

question

Discharge

answer

(1) A party to a contract has no more duties. (2) A party to an instrument is released from liability. (Chapter 17)

question

Disclaimer

answer

A statement that a particular warranty does not apply. (Chapter 21)

question

Discovery

answer

A stage in litigation, after all pleadings have been served, in which each party seeks as much relevant information as possible about the opposing party's case. (Chapter 3)

question

Dishonor

answer

An obligor refuses to pay an instrument that is due. (Chapter 24)

question

Dismiss

answer

To terminate a lawsuit, often on procedural grounds, without reaching the merits of the case. (Chapter 3)

question

Dissociation

answer

A dissociation occurs when a partner leaves a partnership. (Chapter 33)

question

Diversity jurisdiction

answer

One of the two main types of civil cases that a United States district court has the power to hear. It involves a lawsuit between citizens of different states, in which at least one party makes a claim for more than $75,000. (Chapter 3)

question

Domestic corporation

answer

A corporation is a domestic corporation in the state in which it was formed. (Chapter 34)

question

Donee

answer

A person who receives a gift. (Chapter 46)

question

Donee beneficiary

answer

When one party to a contract intends to make a gift to a third party, that third party is referred to as a donee beneficiary. (Chapter 16)

question

Donor

answer

A person who makes a gift to another. (Chapter 46)

question

Draft

answer

The drawer of this instrument orders someone else to pay money. Checks are the most common form of draft. The drawer of a check orders a bank to pay money. (Chapter 23)

question

Drawee

answer

The person who pays a draft. In the case of a check, the bank is the drawee. (Chapter 23)

question

Drawer

answer

The person who issues a draft. (Chapter 23)

question

Due Process Clause

answer

Part of the Fifth Amendment. Procedural due process ensures that before depriving anyone of liberty or property, the government must go through procedures which ensure that the deprivation is fair. Substantive due process holds that certain rights, such as privacy, are so fundamental that the government may not eliminate them. (Chapter 5)

question

Dumping

answer

Selling merchandise at one price in the domestic market and at a cheaper, unfair price in an international market. (Chapter 9)

question

Durable power of attorney

answer

An instrument that permits an attorney-in-fact to act for a principal. A durable power is effective until the principal revokes it or dies. It continues in effect even if the principal becomes incapacitated. (Chapter 47)

question

Duress

answer

(1) A criminal defense in which the defendant shows that she committed the wrongful act because a third person threatened her with imminent physical harm. (2) An improper threat made to force another party to enter into a contract. (Chapter 8)

question

Duty

answer

A tax imposed on imported items. (Chapter 9)

question

Easement

answer

The right to enter land belonging to another and make a limited use of it, without taking anything away. (Chapter 44)

question

Economic loss doctrine

answer

A common law rule holding that when an injury is purely economic, and arises from a contract made between two businesses, the injured party may only sue under the UCC. (Chapter 21)

question

Element

answer

A fact that a party to a lawsuit must prove in order to prevail. (Chapter 6)

question

Embezzlement

answer

Fraudulent conversion of property already in the defendant's possession. (Chapter 8)

question

Eminent domain

answer

The power of the government to take private property for public use. (Chapter 5)

question

Employee at will

answer

A worker whose job does not have a specified duration. (Chapter 30)

question

Enabling legislation

answer

A statute authorizing the creation of a new administrative agency and specifying its powers and duties. (Chapter 4)

question

Entrapment

answer

A criminal defense in which the defendant demonstrates that the government induced him to break the law. (Chapter 8)

question

Equal Protection Clause

answer

Part of the Fourteenth Amendment, it generally requires the government to treat equally situated people the same. (Chapter 5)

question

Equity

answer

The broad powers of a court to fashion a remedy where justice demands it and no common law remedy exists. An injunction is an example of an equitable remedy. (Chapter 1)

question

Error of law

answer

A mistake made by a trial judge that concerns a legal issue as opposed to a factual matter. Permitting too many leading questions is a legal error; choosing to believe one witness rather than another is a factual matter. (Chapter 3)

question

Estate

answer

The legal entity that holds title to assets after the owner dies and before the property is distributed. (Chapter 47)

question

Estoppel

answer

Out of fairness, a person is denied the right to assert a claim. (Chapter 29)

question

Evidence, rules of

answer

Law governing the proof offered during a trial or formal hearing. These rules limit the questions that may be asked of witnesses and the introduction of physical objects. (Chapter 3)

question

Exclusionary rule

answer

In a criminal trial, a ban on the use of evidence obtained in violation of the Constitution. (Chapter 8)

question

Exclusive dealing agreement

answer

A potential violation of §1 of the Sherman Act, in which a distributor or retailer agrees with a supplier not to carry the products of any other supplier. (Chapter 39)

question

Exculpatory clause

answer

A contract provision that attempts to release one party from liability in the event the other party is injured. (Chapter 13)

question

Executed contract

answer

A binding agreement in which all parties have fulfilled all obligations. (Chapter 10)

question

Executive agency

answer

An administrative agency within the executive branch of government. (Chapter 4)

question

Executive order

answer

An order by a president or governor, having the full force of law. (Chapter 1)

question

Executor

answer

A person chosen by the decedent to oversee the probate process. (Chapter 15)

question

Executory contract

answer

A binding agreement in which one or more of the parties has not fulfilled its obligations. (Chapter 10)

question

Executrix

answer

A female executor. (Chapter 47)

question

Exhaustion of remedies

answer

A principle of administrative law that no party may appeal an agency action to a court until she has utilized all available appeals within the agency itself. (Chapter 4)

question

Expectation interest

answer

A remedy in a contract case that puts the injured party in the position he would have been in had both sides fully performed. (Chapter 18)

question

Expert witness

answer

A witness in a court case who has special training or qualifications to discuss a specific issue, and who is generally permitted to state an opinion. (Chapter 3)

question

Export

answer

To transport goods or services out of a country. (Chapter 9)

question

Express authority

answer

Conduct of a principal that, reasonably interpreted, causes the agent to believe that the principal desires him to do a specific act. (Chapter 29)

question

Express contract

answer

A binding agreement in which the parties explicitly state all important terms. (Chapter 10)

question

Express warranty

answer

A guarantee, created by the words or actions of the seller, that goods will meet certain standards. (Chapter 21)

question

Expropriation

answer

A government's seizure of property or companies owned by foreigners. (Chapter 9)

question

Factfinder

answer

The one responsible, during a trial, for deciding what occurred, that is, who did what to whom, when, how, and why. It is either the jury or, in a jury-waived case, the judge. (Chapter 5)

question

Fair representation, duty of

answer

The union's obligation to act on behalf of all members impartially and in good faith. (Chapter 31)

question

False imprisonment

answer

The intentional restraint of another person without reasonable cause and without her consent. (Chapter 6)

question

Federal question jurisdiction

answer

One of the two main types of civil cases that a United States district court has the power to hear. It involves a federal statute or a constitutional provision. (Chapter 3)

question

Federalism

answer

A form of national government in which power is shared between one central authority and numerous local authorities. (Chapter 1)

question

Fee simple absolute

answer

The greatest possible ownership right in real property, including the right to possess, use, and dispose of the property in any lawful manner. (Chapter 44)

question

Fee simple defeasible

answer

Ownership interest in real property that may terminate upon the occurrence of some limiting event. (Chapter 44)

question

Felony

answer

The most serious crimes, typically those for which the defendant could be imprisoned for more than a year. (Chapter 8)

question

Fiduciary duty

answer

An obligation to behave in a trustworthy and confidential fashion toward the object of that duty. (Chapter 28)

question

Financing statement

answer

A document that a secured party files to give the general public notice that the se- cured party has a secured interest in the collateral. (Chapter 26)

question

Firm offer

answer

A contract offer that cannot be withdrawn during a stated period. (Chapter 11)

question

Fixtures

answer

Goods that are attached to real estate. (Chapter 26)

question

Foreign corporation

answer

A corporation formed in another state. (Chapter 34)

question

Foreign Sovereign Immunity Act

answer

A federal statute that protects other nations from suit in courts of the United States, except under specified circumstances. (Chapter 9)

question

Formal rulemaking

answer

The process whereby an administrative agency notifies the public of a proposed new rule and then permits a formal hearing, with opportunity for evidence and cross-examination, before promulgating the final rule. (Chapter 4)

question

Founding Fathers

answer

The authors of the United States Constitution, who participated in the Constitutional Convention in Philadelphia in 1787. (Chapter 1)

question

Framers See

answer

See Founding Fathers. (Chapter 5)

question

Franchise

answer

An arrangement in which the franchisee buys from a franchiser the right to establish a business using the franchiser's trade name and selling the franchiser's products. Typically the franchiser also trains the franchisee in the proper operation of the business. (Chapter 32)

question

Fraud

answer

Deception of another person to obtain money or property from her. (Chapter 6)

question

Freedom of Information Act (FOIA)

answer

A federal statute giving private citizens and corporations access to many of the documents possessed by an administrative agency. (Chapter 4)

question

Freehold estate

answer

The present right to possess property and to use it in any lawful manner. (Chapter 44)

question

Frustration of purpose

answer

After the creation of a contract, an entirely unforeseen event occurs that eliminates the value of the contract for one of the parties. (Chapter 17)

question

Fully disclosed principal

answer

If the third party in an agency relationship knows the identity of the principal, that principal is fully disclosed. (Chapter 29)

question

Fundamental rights

answer

In constitutional law, those rights that are so basic that any governmental interference with them is suspect and likely to be unconstitutional. (Chapter 5)

question

GAAP

answer

Generally accepted accounting principles. Rules set by the Financial Accounting Standards Board to be used in preparing financial statements. (Chapter 38)

question

GAAS

answer

Generally accepted auditing standards. Rules set by the American Institute of Certified Public Accountants (AICPA) to be used in conducting audits. (Chapter 38)

question

GATT See

answer

See General Agreement on Tariffs and Trade. (Chapter 9)

question

General Agreement on Tariffs and Trade (GATT)

answer

A massive international treaty, negotiated in stages between the 1940s and 1994 and signed by over 130 nations. (Chapter 9)

question

General deterrence See

answer

See Deterrence. (Chapter 8)

question

General intangibles

answer

Potential sources of income such as copyrights, patents, trademarks, goodwill and certain other rights to payment. (Chapter 26)

question

Gift

answer

A voluntary transfer of property from one person to another without consideration. (Chapter 46)

question

Gift causa mortis

answer

A gift made in contemplation of approaching death. (Chapter 46)

question

Goods

answer

Anything movable, except for money, securities, and certain legal rights. (Chapter 26)

question

Grantee

answer

The person who receives property, or some interest in it, from the owner. (Chapter 44)

question

Grantor

answer

(1) An owner who conveys property, or some interest in it. (2) Someone who creates a trust. (Chapter 44)

question

Greenmail

answer

If a company is threatened with a hostile takeover, its board of directors may offer to buy the stock of the attacker at an above-market price with the hope that the attacker will take her profits and leave the company alone. (Chapter 35)

question

Hacking

answer

Gaining unauthorized access to a computer system. (Chapter 42)

question

Harmless error

answer

A ruling made by a trial court which an appeals court determines was legally wrong but not fatal to the decision. (Chapter 3)

question

Heir

answer

Someone who inherits from a decedent who died intestate (that is, without a will). (Chapter 47)

question

Holder in due course

answer

Someone who has given value for an instrument, in good faith, without notice of outstanding claims or other defenses. (Chapter 23)

question

Holographic will

answer

A handwritten will that has not been witnessed. (Chapter 47)

question

Horizontal agreement or merger

answer

An agreement or merger between two potential competitors. (Chapter 39)

question

Hybrid rulemaking

answer

A method of administrative agency procedure incorporating some elements of formal and some elements of informal rulemaking, typically involving a limited public hearing with restricted rights of testimony and cross-examination. (Chapter 4)

question

Identify

answer

In sales law, to designate the specific goods that are the subject of a contract. (Chapter 22)

question

Illegal contract

answer

An agreement that is void because it violates a statute or public policy. (Chapter 13)

question

Illusory promise

answer

An apparent promise that is unenforceable because the promisor makes no firm commitment. (Chapter 12)

question

Implied authority

answer

When a principal directs an agent to undertake a transaction, the agent has the right to do acts that are incidental to it, usually accompany it, or are reasonably necessary to accomplish it. (Chapter 29)

question

Implied contract

answer

A binding agreement created not by explicit language but by the informal words and conduct of the parties. (Chapter 10)

question

Implied warranty

answer

Guarantees created by the Uniform Commercial Code and imposed on the seller of goods. (Chapter 21)

question

Implied warranty of habitability

answer

A landlord must meet all standards set by the local building code, or otherwise ensure that the premises are fit for human habitation. (Chapter 44)

question

Import

answer

To transport goods or services into a country. (Chapter 9)

question

In camera

answer

"In the judge's chambers," meaning that the judge does something out of view of the jury and the public. (Chapter 3)

question

Incidental damages

answer

The relatively minor costs, such as storage and advertising, that the injured party suffered when responding to a contract breach. (Chapter 18)

question

Incorporator

answer

The person who signs a corporate charter. (Chapter 34)

question

Indemnification

answer

A promise to pay someone else's obligations. (Chapter 28)

question

Independent agency

answer

An administrative agency outside the executive branch of government, such as the Interstate Commerce Commission. (Chapter 4)

question

Independent contractor

answer

Someone who undertakes tasks for others and whose work is not closely controlled. (Chapter 29)

question

Indictment

answer

The government's formal charge that a defendant has committed a crime. (Chapter 8)

question

Indorser

answer

Anyone, other than the issuer or acceptor, who signs an instrument. (Chapter 24)

question

Infliction of emotional distress

answer

A tort. It can be the intentional infliction of emotional distress, meaning that the defendant behaved outrageously and deliberately caused the plaintiff severe psychological injury, or it can be the negligent infliction of emotional distress, meaning that the defendant's conduct violated the rules of negligence. (Chapter 6)

question

Informal rulemaking

answer

The process whereby an administrative agency notifies the public of a proposed new rule and permits comment but is then free to promulgate the final rule without a public hearing. (Chapter 4)

question

Initial public offering (IPO)

answer

A company's first public sale of securities. (Chapter 37)

question

Injunction

answer

A court order that a person either do or stop doing something. (Chapter 1)

question

Instructions or charge

answer

The explanation given by a judge to a jury, outlining the jury's task in deciding a lawsuit and the underlying rules of law the jury should use in reaching its decision. (Chapter 3)

question

Instruments

answer

Drafts, checks, certificates of deposit and notes. (Chapter 26)

question

Insurable interest

answer

A person has an insurable interest if she would be harmed by the danger that she has insured against. (Chapter 13)

question

Insured

answer

A person whose loss is the subject of an insurance policy. (Chapter 47)

question

Insurer

answer

The person who issues an insurance policy. (Chapter 47)

question

Integrated contract

answer

A writing that the parties intend as the complete and final expression of their agreement. (Chapter 15)

question

Intentional tort

answer

An act deliberately performed that violates a legally imposed duty and injures someone. (Chapter 6)

question

Inter vivos gift

answer

A gift made "during life," that is, when the donor is not under any fear of impending death. (Chapter 46)

question

Inter vivos trust

answer

A trust established while the grantor is still living. (Chapter 47)

question

Interest

answer

A legal right in something, such as ownership or a mortgage or a tenancy. (Chapter 47)

question

Interference with a contract See

answer

See Tortious interference with a contract. (Chapter 6)

question

Interference with a prospective advantage See

answer

See Tortious interference with a prospective advantage. (Chapter 6)

question

Internet

answer

An international computer network that connects smaller groups of linked computer networks. (Chapter 42)

question

Interpretive rules

answer

A formal statement by an administrative agency expressing its view of what existing statutes or regulations mean. (Chapter 4)

question

Interrogatory

answer

A form of discovery in which one party sends to an opposing party written questions that must be answered under oath. (Chapter 3)

question

Intestate

answer

Without a will. (Chapter 47)

question

Inventory

answer

Goods that the seller is holding for sale or lease in the ordinary course of its business. (Chapter 26)

question

Invitee

answer

Someone who has the right to be on property, such as a customer in a shop. (Chapter 7)

question

Issue

answer

All direct descendants such as children, grandchildren, and so on. (Chapter 1)

question

Issuer

answer

The maker of a promissory note or the drawer of a draft. (Chapter 23)

question

Joint and several liability

answer

All members of a group are liable. They can be sued as a group, or any one of them can be sued individually for the full amount owing. (Chapter 33)

question

Joint liability

answer

All members of a group are liable and must be sued together. (Chapter 33)

question

Joint venture

answer

A partnership for a limited purpose. (Chapter 32)

question

Judgment non obstante veredicto (n.o.v.)

answer

"Judgment notwithstanding the verdict." A trial judge overturns the verdict of the jury and enters a judgment in favor of the opposing party. (Chapter 3)

question

Judicial activism

answer

The willingness shown by certain courts (and not by others) to decide issues of public policy, such as constitutional questions (free speech, equal protection, etc.) and matters of contract fairness (promissory estoppel, unconscionability, etc.). (Chapter 5)

question

Judicial restraint

answer

A court's preference to abstain from adjudicating major social issues and to leave such matters to legislatures. (Chapter 5)

question

Judicial review

answer

The power of the judicial system to examine, interpret, and even nullify actions taken by another branch of government. (Chapter 4)

question

Jurisdiction

answer

The power of a court to hear a particular dispute, civil or criminal, and to make a binding decision. (Chapter 3)

question

Jurisprudence

answer

The study of the purposes and philosophies of the law, as opposed to particular provisions of the law. (Chapter 1)

question

Justification

answer

A criminal defense in which the defendant establishes that he broke the law to avoid a greater harm. (Chapter 8)

question

Larceny

answer

Taking personal property with the intention of preventing the owner from ever using it. (Chapter 8)

question

Law merchant

answer

The body of rules and customs developed by traders and businesspersons throughout Europe from roughly the fifteenth to the eighteenth century. (Chapter 19)

question

Lease

answer

A contract creating a landlord-tenant relationship. (Chapter 45)

question

Legal positivism

answer

The legal philosophy holding that law is what the sovereign says it is, regardless of its moral content. (Chapter 1)

question

Legal realism

answer

The legal philosophy holding that what really influences law is who makes and enforces it, not what is put in writing. (Chapter 1)

question

Legal remedy

answer

Generally, money damages. It is distinguished from equitable remedy, which includes injunctions and other non-monetary relief. (Chapter 18)

question

Legislative history

answer

Used by courts to interpret the meaning of a statute, this is the record of hearings, speeches, and explanations that accompanied a statute as it made its way from newly proposed bill to final law. (Chapter 4)

question

Legislative rules

answer

Regulations issued by an administrative agency. (Chapter 4)

question

Letter of credit

answer

A commercial device used to guarantee payment in international trade, usually between parties that have not previously worked together. (Chapter 9)

question

Libel

answer

See Defamation. (Chapter 6)

question

License

answer

To grant permission to another person (1) to make or sell something or (2) to enter on property. (Chapter 44)

question

Licensee

answer

A person who is on the property of another for her own purposes, but with the owner's permission. A social guest is a typical licensee. (Chapter 7)

question

Lien

answer

A security interest created by rule of law, often based on labor that the secured party has expended on the collateral. (Chapter 26)

question

Life estate

answer

An ownership interest in real property entitling the holder to use the property during his lifetime, but which terminates upon his death. (Chapter 44)

question

Limited liability company

answer

An organization that has the limited liability of a corporation but is not a taxable entity. (Chapter 32)

question

Limited liability limited partnership

answer

In a limited liability limited partnership, the general partner is not personally liable for the debts of the partnership. (Chapter 32)

question

Limited partnership

answer

A partnership with two types of partners: (1) limited partners who have no personal liability for the debts of the enterprise nor any right to manage the business, and (2) general partners who are responsible for management and personally liable for all debts. (Chapter 32)

question

Liquidated damages

answer

A contract clause specifying how much a party must pay upon breach. (Chapter 18)

question

Liquidated debt

answer

The amount of the indebtedness is not in dispute. (Chapter 12)

question

Litigation

answer

The process of resolving disputes through formal court proceedings. (Chapter 3)

question

Living trust

answer

A trust established while the grantor is alive. See inter vivos trust. (Chapter 47)

question

Living will

answer

An instrument that permits adults to refuse medical treatment. It can also appoint a health care proxy to make medical decisions for a person who has become incompetent. (Chapter 47)

question

Lockout

answer

A management tactic, designed to gain a bargaining advantage, in which the company refuses to allow union members to work (and hence deprives them of their pay). (Chapter 31)

question

Mailbox rule

answer

A contract doctrine holding that acceptance is effective upon dispatch, that is, when it is mailed or otherwise taken out of the control of the offeree. (Chapter 11)

question

Maker

answer

The issuer of a promissory note. (Chapter 23)

question

Material

answer

Important or significant. Information that would affect a person's decision if he knew it. (Chapter 14)

question

Mediation

answer

The process of using a neutral person to aid in the settlement of a legal dispute. A mediator's decision is non-binding. (Chapter 3)

question

Mens rea

answer

Guilty state of mind. (Chapter 8)

question

Merger

answer

An acquisition of one company by another. (Chapter 36)

question

Minor

answer

A person under the age of 18. (Chapter 14)

question

Minority shareholders

answer

Shareholders who do not own enough stock to control their corporation. (Chapter 36)

question

Minute book

answer

Records of shareholder meetings and directors' meetings are kept in the corporation's minute book. (Chapter 34)

question

Mirror image rule

answer

A contract doctrine that requires acceptance to be on exactly the same terms as the offer. (Chapter 11)

question

Misdemeanor

answer

A less serious crime, typically one for which the maximum penalty is incarceration for less than a year, often in a jail, as opposed to a prison. (Chapter 8)

question

Misrepresentation

answer

A factually incorrect statement made during contract negotiations. (Chapter 14)

question

Mitigation

answer

One party acts to minimize its losses when the other party breaches a contract. (Chapter 18)

question

Modify

answer

An appellate court order changing a lower court ruling. (Chapter 3)

question

Money laundering

answer

Taking the profits of criminal acts and either (1) using the money to promote more crime or (2) attempting to conceal the money's source. (Chapter 8)

question

Monopolization

answer

A company acquires or maintains a monopoly through the commission of unacceptably aggressive acts. A violation of §2 of the Sherman Act. (Chapter 39)

question

Mortgage

answer

A security interest in real property. (Chapter 44)

question

Mortgagee

answer

A creditor who obtains a security interest in real property, typically in exchange for money given to the mortgagor to buy the property. (Chapter 44)

question

Mortgagor

answer

A debtor who gives a mortgage (security interest) in real property to a creditor, typically in exchange for money used to buy the property. (Chapter 44)

question

Motion

answer

A formal request that a court take some specified step during litigation. A motion to compel discovery is a request that a trial judge order the other party to respond to discovery. (Chapter 3)

question

Motion to suppress

answer

A request that the court exclude evidence because it was obtained in violation of the Constitution. (Chapter 8)

question

Multinational enterprise

answer

A corporation that is doing business in more than one country simultaneously. (Chapter 9)

question

NAFTA

answer

See North American Free Trade Agreement. (Chapter 9)

question

National Labor Relations Board

answer

(NLRB) The administrative agency charged with overseeing labor law. (Chapter 4)

question

Nationalization

answer

A government's seizure of property or companies. (Chapter 9)

question

Natural law

answer

The theory that an unjust law is no law at all, and that a rule is only legitimate if based on an immutable morality. (Chapter 1)

question

Negative or dormant aspect of the Commerce Clause

answer

The doctrine that prohibits a state from any action that interferes with or discriminates against interstate commerce. (Chapter 5)

question

Negligence per se

answer

Violation of a standard of care set by statute. Driving while intoxicated is illegal; thus, if a drunk driver injures a pedestrian, he has committed negligence per se. (Chapter 7)

question

Negotiable instrument

answer

A type of commercial paper that is freely transferable. (Chapter 23)

question

Negotiation

answer

The transfer of an instrument. To be negotiated, order paper must be indorsed and then delivered to the transferee. For bearer paper, no indorsement is required—it must simply be delivered to the transferee. (Chapter 23)

question

Nominal damages

answer

A token sum, such as one dollar, given to an injured plaintiff who cannot prove damages. (Chapter 18)

question

Noncompetition agreement

answer

A contract in which one party agrees not to compete with another in a stated type of business. (Chapter 10)

question

North American Free Trade Agreement

answer

A commercial association among Canada, the United States, and Mexico designed to eliminate almost all trade barriers. (Chapter 9)

question

Note

answer

An unconditional, written promise that the maker of the instrument will pay a specific amount of money on demand or at a definite time. When issued by a corporation, a note refers to short-term debt, typically payable within five years. (Chapter 23)

question

Novation

answer

If there is an existing contract between A and B, a novation occurs when A agrees to release B from all liability on the contract in return for C's willingness to accept B's liability. (Chapter 16)

question

Nuncupative will

answer

An oral will. (Chapter 47)

question

Obligee

answer

The party to a contract who is entitled to receive performance from the other party. (Chapter 16)

question

Obligor

answer

The party to a contract who is required to do something for the benefit of the other party. (Chapter 16)

question

Obscenity

answer

Constitutional law doctrine holding that some works will receive no First Amendment protection because a court determines they depict sexual matters in an offensive way. (Chapter 5)

question

Offer

answer

In contract law, an act or statement that proposes definite terms and permits the other party to create a contract by accepting those terms. (Chapter 11)

question

Offeree

answer

The party in contract negotiations who receives the first offer. (Chapter 11)

question

Offeror

answer

The party in contract negotiations who makes the first offer. (Chapter 11)

question

Order paper

answer

An instrument that includes the words "pay to the order of" or their equivalent. (Chapter 23)

question

Output contract

answer

An agreement that obligates the seller of goods to sell everything he produces during a stated period to a particular buyer. (Chapter 11)

question

Override

answer

The power of Congress or a state legislature to pass legislation despite a veto by a president or governor. A congressional override requires a two-thirds vote in each house. (Chapter 4)

question

Parol evidence

answer

Written or oral evidence, outside the language of a contract, offered by one party to clarify interpretation of the agreement. (Chapter 15)

question

Parol evidence rule

answer

In the case of an integrated contract, neither party may use evidence outside the writing to contradict, vary, or add to its terms. (Chapter 15)

question

Part performance

answer

An exception to the statute of frauds permitting a buyer of real estate to enforce an oral contract if she paid part of the price, entered the property, and made improvements, with the owner's knowledge. (Chapter 15)

question

Partially disclosed principal

answer

If the third party in an agency relationship knows that the agent is acting for a principal, but does not know the identity of the principal, that principal is partially disclosed. (Chapter 29)

question

Partnership

answer

An association of two or more persons to carry on as co-owners of a business for profit. (Chapter 33)

question

Partnership at will

answer

A partnership that has no fixed duration. A partner has the right to resign from the partnership at any time. (Chapter 33)

question

Partnership by estoppel

answer

If a person who is not a partner implies that he is a partner or does not object when other people imply it, he is liable as if he really were a partner. (Chapter 33)

question

Patent

answer

The right to the exclusive use of an invention for 20 years. (Chapter 43)

question

Payable on demand

answer

The holder of an instrument is entitled to be paid whenever she asks. (Chapter 23)

question

Payee

answer

Someone who is owed money under the terms of an instrument. (Chapter 23)

question

Per se violation of an antitrust law

answer

An automatic breach. Courts will generally not consider mitigating factors. (Chapter 39)

question

Peremptory challenge

answer

During voir dire, a request by one attorney that a prospective juror be excused for an unstated reason. (Chapter 3)

question

Perfect tender rule

answer

A rule permitting the buyer to reject goods if they fail in any respect to conform to the contract. (Chapter 22)

question

Perfection

answer

A series of steps a secured party must take to protect its rights in collateral against people other than the debtor. (Chapter 26)

question

Personal property

answer

All property other than real property. (Chapter 46)

question

Plain meaning rule

answer

In statutory interpretation, the premise that words with an ordinary, everyday significance will be so interpreted, unless there is some apparent reason not to. (Chapter 4)

question

Pleadings

answer

The documents that begin a lawsuit: the complaint, the answer, the counter-claim and reply. (Chapter 3)

question

Positive aspect of the Commerce Clause

answer

The power granted to Congress to regulate commerce between the states. (Chapter 5)

question

Precedent

answer

An earlier case that decided the same legal issue as that presently in dispute, and which therefore will control the outcome of the current case. (Chapter 1)

question

Predatory pricing

answer

A violation of §2 of the Sherman Act in which a company lowers its prices below cost to drive competitors out of business. (Chapter 39)

question

Preemption

answer

The doctrine, based on the Supremacy Clause, by which any federal statute takes priority whenever (1) a state statute conflicts or (2) there is no conflict but Congress indicated an intention to control the issue involved. (Chapter 5)

question

Preferred stock

answer

Owners of preferred stock have a right to receive dividends and liquidation proceeds of the company before common shareholders. (Chapter 34)

question

Preponderance of the evidence

answer

The level of proof that a plaintiff must meet to prevail in a civil lawsuit. It means that the plaintiff must offer evidence that, in sum, is slightly more persuasive than the defendant's evidence. (Chapter 3)

question

Presentment

answer

A holder of an instrument makes a demand for payment. (Chapter 24)

question

Pretermitted child

answer

A child omitted from a parent's will. (Chapter 47)

question

Prima facie

answer

"At first sight." A fact or conclusion that is presumed to be true unless someone presents evidence to disprove it. (Chapter 30)

question

Principal

answer

In an agency relationship, the principal is the person for whom the agent is acting. (Chapter 28)

question

Privacy Act

answer

A federal statute prohibiting federal agencies from divulging to other agencies or organizations information about private citizens. (Chapter 4)

question

Privity

answer

The relationship that exists between two parties who make a contract, as opposed to a third party who, though affected by the contract, is not a party to it. (Chapter 21)

question

Probable cause

answer

In a search and seizure case, it means that the information available indicates that it is more likely than not that a search will uncover particular criminal evidence. (Chapter 8)

question

Probate

answer

The process of carrying out the terms of a will. (Chapter 47)

question

Procedural due process See

answer

See Due Process Clause. (Chapter 5)

question

Procedural law

answer

The rules establishing how the legal system itself is to operate in a particular kind of case. (Chapter 1)

question

Proceeds

answer

Anything that a debtor obtains from the sale or disposition of collateral. Normally, proceeds refers to cash obtained from the sale of the secured property. (Chapter 26)

question

Production of documents and things

answer

A form of discovery in which one party demands that the other furnish original documents or physical things, relating to the suit, for inspection and copying. (Chapter 3)

question

Product liability

answer

The potential responsibility that a manufacturer or seller has for injuries caused by defective goods. (Chapter 21)

question

Professional corporation

answer

A form of organization that permits professionals (such as doctors, lawyers, and accountants) to incorporate. Shareholders are not personally liable for the torts of other shareholders, or for the contract debts of the organization. (Chapter 32)

question

Profit

answer

The right to enter land belonging to another and take something away, such as minerals or timber. (Chapter 44)

question

Promissory estoppel

answer

A doctrine in which a court may enforce a promise made by the defendant even when there is no contract, if the defendant knew that the plaintiff was likely to rely on the promise, the plaintiff did in fact rely, and enforcement of it is the only way to avoid injustice. (Chapter 10)

question

Promissory note

answer

The maker of the instrument promises to pay a specific amount of money. (Chapter 23)

question

Promoter

answer

The person who creates a corporation by raising capital and undertaking the legal steps necessary for formation. (Chapter 34)

question

Promulgate

answer

To issue a new rule. (Chapter 4)

question

Prosecution

answer

The government's attempt to convict a defendant of a crime by charging him, trying the case, and forcing him to defend himself. (Chapter 8)

question

Prospectus

answer

Under the Securities Act of 1933, an issuer must provide this document to anyone who purchases a security in a public transaction. The prospectus contains detailed information about the issuer and its business, a description of the stock, and audited financial statements. (Chapter 37)

question

Protective order

answer

A court order limiting one party's discovery. (Chapter 3)

question

Proxy

answer

(1) A person whom the shareholder designates to vote in his place. (2) The written form (typically a card) that the shareholder uses to appoint a designated voter. (Chapter 36)

question

Proxy statement

answer

When a public company seeks proxy votes from its shareholders, it must include a proxy statement. This statement contains information about the company, such as a detailed description of management compensation. (Chapter 36)

question

Publicly traded corporation

answer

A company that (1) has completed a public offering under the Securities Act of 1933, or (2) has securities traded on a national exchange, or (3) has 500 shareholders and $10 million in assets. (Chapter 35)

question

Punitive damages

answer

Money awarded at trial not to compensate the plaintiff for harm but to punish the defendant for conduct that the factfinder considers extreme and outrageous. (Chapter 6)

question

Purchase money security interest

answer

A security interest taken by the person who sells the collateral to the debtor, or by a person who advances money so that the debtor may buy the collateral. (Chapter 26)

question

Quantum meruit

answer

"As much as she deserves." The damages awarded in a quasi-contract case. (Chapter 10)

question

Quasi-contract

answer

A legal fiction in which, to avoid injustice, the court awards damages as if a contract had existed, although one did not. (Chapter 10)

question

Quid pro quo

answer

A Latin phrase meaning "this for that." It refers to a form of sexual harassment in which some aspect of a job is made contingent upon sexual activity. (Chapter 30)

question

Quiet enjoyment

answer

A tenant's right to use property without the interference of the landlord. (Chapter 45)

question

Quorum

answer

The number of voters that must be present for a meeting to count. (Chapter 36)

question

Ratification

answer

When someone accepts the benefit of an unauthorized transaction or fails to repudiate it once he has learned of it, he is then bound by it. (Chapter 29)

question

Real property

answer

Land, together with certain things associated with it, such as buildings, subsurface rights, air rights, plant life and fixtures. (Chapter 44)

question

Reasonable doubt

answer

The level of proof that the government must meet to convict the defendant in a criminal case. The factfinder must be persuaded to a very high degree of certainty that the defendant did what the government alleges. (Chapter 3)

question

Reciprocal dealing agreement

answer

An agreement under which Company A will purchase from Company B only if Company B also buys from Company A. These agreements are rule of reason violations of the Sherman Act. (Chapter 39)

question

Record date

answer

To vote at a shareholders meeting, a shareholder must own stock on the record date. (Chapter 36)

question

Red herring

answer

A preliminary prospectus. (Chapter 37)

question

Reformation

answer

The process by which a court rewrites a contract to ensure its accuracy or viability. (Chapter 18)

question

Refusal to deal

answer

An agreement among competitors that they will not trade with a particular supplier or buyer. Such an agreement is a rule of reason violation of the Sherman Act. (Chapter 39)

question

Registration statement

answer

A document filed with the Securities and Exchange Commission under the Securities Act of 1933 by an issuer seeking to sell securities in a public transaction. (Chapter 37)

question

Reliance interest

answer

A remedy in a contract case that puts the injured party in the position he would have been in had the parties never entered into a contract. (Chapter 18)

question

Remand

answer

The power of an appellate court to return a case to a lower court for additional action. (Chapter 1)

question

Reply

answer

A pleading, filed by the plaintiff in response to a defendant's counter-claim. (Chapter 3)

question

Repossess

answer

A secured party takes collateral because the debtor has defaulted on payments. (Chapter 26)

question

Repudiation

answer

An indication made by one contracting party to the other that it will not perform. (Chapter 22)

question

Request for admission

answer

A form of discovery in which one party demands that the opposing party either admit or deny particular factual or legal allegations. (Chapter 3)

question

Requirements contract

answer

An agreement that obligates a buyer of specified goods to purchase all of the goods she needs during a stated period from a particular seller. (Chapter 11)

question

Res ipsa loquitur

answer

A doctrine of tort law holding that the facts may imply negligence when the defendant had exclusive control of the thing that caused the harm, the accident would not normally have occurred without negligence, and the plaintiff played no role in causing the injury. (Chapter 7)

question

Resale price maintenance

answer

A per se violation of the Sherman Act in which a manufacturer enters into an agreement with retailers about the prices they will charge. (Chapter 39)

question

Rescind

answer

To cancel a contract. (Chapter 12)

question

Respondeat superior

answer

A rule of agency law holding that a principal is liable when a servant acting within the scope of employment commits a tort that causes physical harm to a person or property. (Chapter 29)

question

Restitution

answer

Restoring an injured party to its original position. (Chapter 14)

question

Restitution interest

answer

A remedy in a contract case that returns to the injured party a benefit that he has conferred on the other party, which it would be unjust to leave with that person. (Chapter 18)

question

Restricted security

answer

Any stock purchased in a pri- vate offering (such as one under Regulation D). (Chapter 37)

question

Retribution

answer

Giving a criminal defendant the punishment he deserves. (Chapter 8)

question

Reverse

answer

The power of an appellate court to overrule a lower court and grant judgment for the party that had lost in the lower court. (Chapter 3)

question

Revocation

answer

The act of disavowing a contract offer, so that the offeree no longer has the power to accept. (Chapter 11)

question

Rule of reason violation

answer

An action that breaches the antitrust laws only if it has an anticompetitive impact. (Chapter 39)

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Rulemaking

answer

The power of an administrative agency to issue regulations. (Chapter 4)

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S corporation

answer

A corporation that is not a taxable entity. (Chapter 32)

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Sale on approval

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A transfer in which a buyer takes goods intending to use them herself, but has the right to return the goods to the seller. (Chapter 20)

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Sale or return

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A transfer in which the buyer takes the goods intending to resell them, but has the right to return the goods to the original owner. (Chapter 20)

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Scienter

answer

In a case of securities fraud, the plaintiff must prove that the defendant acted willfully, knowingly, or recklessly. (Chapter 37)

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Secondary boycott

answer

Picketing, directed by a union against a company, designed to force that company to stop doing business with the union's employer. (Chapter 31)

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Security

answer

Any purchase in which the buyer invests money in a common enterprise and expects to earn a profit predominantly from the efforts of others. (Chapter 37)

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Security agreement

answer

A contract in which the debtor gives a security interest to the secured party. (Chapter 26)

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Security interest

answer

An interest in personal property or fixtures that secures the performance of some obligation. (Chapter 26)

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Separation of powers

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The principle, established by the first three articles of the Constitution, that authority should be divided among the legislative, executive, and judicial branches. (Chapter 5)

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Servant

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An agent whose work is closely controlled by the principal. (Chapter 29)

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Service mark

answer

A type of trademark used to identify services, not products. (Chapter 43)

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Settlor

answer

Someone who creates a trust. (Chapter 47)

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Sexual harassment

answer

Unwanted sexual advances, comments or touching, sufficiently severe to violate Title VII of the 1964 Civil Rights Act. (Chapter 30)

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Shilling

answer

A seller at auction either bids on his own goods or agrees to cross-bid with a group of other sellers. (Chapter 42)

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Short-swing trading

answer

Under §16 of the Securities Exchange Act, insiders must turn over to the corporation any profits they make from the purchase and sale or sale and purchase of company securities in a six-month period. (Chapter 37)

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Signatory

answer

A person, company, or nation that has signed a legal document, such as a contract, agreement, or treaty. (Chapter 9)

question

Single recovery principle

answer

A rule of tort litigation that requires a plaintiff to claim all damages, present and future, at the time of trial, not afterwards. (Chapter 6)

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Slander See

answer

See Defamation. (Chapter 6)

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Sole proprietorship

answer

An unincorporated business owned by a single person. (Chapter 32)

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Sovereign immunity

answer

The right of a national government to be free of lawsuits brought in foreign courts. (Chapter 9)

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Spam

answer

Unsolicited commercial or bulk e-mail. ("To spam" is to send such e-mail.) (Chapter 42)

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Specific deterrence See

answer

See Deterrence. (Chapter 8)

question

Specific performance

answer

A contract remedy requiring the breaching party to perform the contract, by conveying land or some unique asset, rather than by paying money damages. (Chapter 18)

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Stakeholders

answer

Anyone who is affected by the activities of a corporation, such as employees, customers, creditors, suppliers, shareholders, and neighbors. (Chapter 35)

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Stale check

answer

A check presented more than six months after its due date. (Chapter 25)

question

Stare decisis

answer

"Let the decision stand." A basic principle of the common law, it means that precedent is usually binding. (Chapter 1)

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Statute

answer

A law passed by a legislative body, such as Congress. (Chapter 1)

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Statute of frauds

answer

This law provides that certain contracts are not enforceable unless in writing. (Chapter 15)

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Statute of limitations

answer

A statute that determines the period within which a particular kind of lawsuit must be filed. (Chapter 17)

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Statute of repose

answer

A law that places an absolute limit on when a lawsuit may be filed, regardless of when the defect was discovered. (Chapter 21)

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Statutory interpretation

answer

A court's power to give meaning to new legislation by clarifying ambiguities, providing limits, and ultimately applying it to a specific fact pattern in litigation. (Chapter 4)

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Strict liability

answer

A tort doctrine holding to a very high standard all those who engage in ultrahazardous activity (e.g., using explosives) or who manufacture certain products. (Chapter 7)

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Strike

answer

The ultimate weapon of a labor union, it occurs when all or most employees of a particular plant or employer walk off the job and refuse to work. (Chapter 31)

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Strike suit

answer

A lawsuit without merit that defendants sometimes settle simply to avoid the nuisance of litigation. (Chapter 36)

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Subpoena

answer

An order to appear, issued by a court or government body. (Chapter 4)

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Subpoena duces tecum

answer

An order to produce certain documents or things before a court or government body. (Chapter 4)

question

Substantial performance

answer

The promisor performs contract duties well enough to be entitled to his full contract price, minus the value of any defects. (Chapter 17)

question

Substantive due process See

answer

See Due Process Clause. (Chapter 5)

question

Substantive law

answer

Rules that establish the rights of parties. For example, the prohibition against slander is substantive law, as opposed to procedural law. (Chapter 1)

question

Summary judgment

answer

The power of a trial court to terminate a lawsuit before a trial has begun, on the grounds that no essential facts are in dispute. (Chapter 3)

question

Supermajority voting

answer

Typically, shareholders can approve charter amendments by a majority vote. However, sometimes corporations require more than a majority of shareholders (e.g., 80 percent) to approve certain charter amendments, such as a merger. These provisions are designed to discourage hostile takeovers. (Chapter 35)

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Superseding cause

answer

An event that interrupts the chain of causation and relieves a defendant from liability based on her own act. (Chapter 7)

question

Supremacy Clause

answer

From Article VI of the Constitution, it declares that federal statutes and treaties take priority over any state law, if there is a conflict between the two or, even absent a conflict, if Congress manifests an intent to preempt the field. (Chapter 5)

question

Takings Clause

answer

Part of the Fifth Amendment, it ensures that when any governmental unit takes private property for public use, it must compensate the owner. (Chapter 5)

question

Tariff

answer

A duty imposed on imported goods by the government of the importing nation. (Chapter 9)

question

Tenancy by the entirety

answer

A form of joint ownership available only to married couples. If one member of the couple dies, the property goes automatically to the survivor. Creditors cannot attach the property, nor can one owner sell the property without the other's permission. (Chapter 44)

question

Tender

answer

To make conforming goods available to the buyer. (Chapter 22)

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Tender offer

answer

A public offer to buy a block of stock directly from shareholders. (Chapter 35)

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Term partnership

answer

When the partners agree in ad- vance on the duration of a partnership. (Chapter 33)

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Testamentary trust

answer

A trust created by the grantor's will. (Chapter 47)

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Testator

answer

Someone who dies having executed a will. (Chapter 47)

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Testatrix

answer

A female testator. (Chapter 47)

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Third party beneficiary

answer

Someone who stands to benefit from a contract to which she is not a party. An intended beneficiary may enforce such a contract; an incidental beneficiary may not. (Chapter 16)

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Three-Fifths Clause

answer

A clause in Article 1, section 2 of the United States Constitution, now void and regarded as racist, which required that for purposes of taxation and representation, a slave should be counted as three-fifths of a person. (Chapter 5)

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Tort

answer

A civil wrong, committed in violation of a duty that the law imposes. (Chapter 6)

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Tortious interference with a contract

answer

A tort in which the defendant deliberately impedes an existing contract between the plaintiff and another. (Chapter 6)

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Tortious interference with a prospective advantage

answer

A tort in which the defendant deliberately obstructs a developing venture or advantage that the plaintiff has created. (Chapter 6)

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Trade acceptance

answer

A draft drawn by a seller of goods on the buyer and payable to the seller or some third party. (Chapter 23)

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Trade secret

answer

A formula, device, process, method, or compilation of information that, when used in business, gives the owner an advantage over competitors who do not know it. (Chapter 43)

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Trademark

answer

Any combination of words and symbols that a business uses to identify its products or services and that federal law will protect. (Chapter 43)

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Treasury stock

answer

Stock that has been bought back by its issuing corporation. (Chapter 34)

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Trespass

answer

A tort committed by intentionally entering land that belongs to someone else, or remaining on the land after being asked to leave. (Chapter 6)

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Trial court

answer

Any court in a state or federal system that holds formal hearings to determine the facts in a civil or criminal case. (Chapter 3)

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Trust

answer

An entity that separates legal and beneficial ownership. (Chapter 47)

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Tying arrangement

answer

A violation of the Sherman and Clayton Acts in which a seller requires that two distinct products be purchased together. The seller uses its significant power in the market for the tying product to shut out a substantial part of the market for the tied product. (Chapter 39)

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Ultra vires

answer

An activity that is not permitted by a corporation's charter. (Chapter 34)

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Ultrahazardous activity

answer

Conduct that is lawful yet unusual and much more likely to cause injury than normal commercial activity. (Chapter 7)

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Unconscionable contract

answer

An agreement that a court refuses to enforce because it is fundamentally unfair as a result of unequal bargaining power by one party. (Chapter 13)

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Undisclosed principal

answer

If a third party in an agency relationship does not know that the agent is acting for a principal, that principal is undisclosed. (Chapter 29)

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Undue influence

answer

One party so dominates the thinking of another party to a contract that the dominant party cannot truly consent to the agreement. (Chapter 14)

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Unfair labor practice

answer

An act, committed by either a union or an employer, that violates the National Labor Relations Act, such as failing to bargain in good faith. (Chapter 31)

question

Unilateral contract

answer

A binding agreement in which one party has made an offer that the other can accept only by action, not words. (Chapter 10)

question

Unliquidated debt

answer

A claimed debt that is disputed, either because the parties disagree over whether there is in fact a debt or because they disagree over the amount. (Chapter 12)

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Usury

answer

Charging interest at a rate that exceeds legal limits. (Chapter 13)

question

Valuation

answer

A process by which the Customs Service determines the fair value of goods being imported, for purposes of imposing a duty. (Chapter 9)

question

Verdict

answer

The decision of the factfinder in a case. (Chapter 3)

question

Vertical agreement or merger

answer

An agreement or merger between two companies at different stages of the production process, such as when a company acquires one of its suppliers or distributors. (Chapter 39)

question

Veto

answer

The power of the president to reject legislation passed by Congress, terminating the bill unless Congress votes by a 2/3 majority to override. (Chapter 4)

question

Void agreement

answer

An agreement that neither party may legally enforce, usually because the purpose of the bargain was illegal or because one of the parties lacked capacity to make it. (Chapter 10)

question

Voidable contract

answer

An agreement that, because of some defect, may be terminated by one party, such as a minor, but not by both parties. (Chapter 10)

question

Voir dire

answer

The process of selecting a jury. Attorneys for the parties and the judge may inquire of prospective jurors whether they are biased or incapable of rendering a fair and impartial verdict. (Chapter 3)

question

Warranty

answer

A guarantee that goods will meet certain standards. (Chapter 21)

question

Warranty of fitness for a particular purpose

answer

An assurance under the Uniform Commercial Code that the goods are fit for the special purpose for which the buyer intends them and of which the seller is aware. (Chapter 21)

question

Warranty of merchantability

answer

An assurance under the Uniform Commercial Code that the goods are fit for their ordinary purpose. (Chapter 21)

question

Whistleblower

answer

Someone who discloses wrongful behavior. (Chapter 30)

question

Winding up

answer

The process whereby the assets of a partnership are sold and the proceeds distributed. (Chapter 33)

question

World Wide Web

answer

A decentralized collection of documents containing text, pictures and sound that is accessible from Internet sites. It is a sub-network of the Internet. (Chapter 42)

question

Writ

answer

An order from a government compelling someone to do a particular thing. (Chapter 1)

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