Term
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Definition
| A person who forms and operates a business either by himself or herself or with others |
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Term
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Definition
| A form of business in which the owner is actually the business; the business is not a separate legal entity |
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Term
| d.b.a. ("doing business as") |
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Definition
| The operation of a usiness under a trade name |
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Definition
An association of two or more persons to carry on as co-owners of a business fo profit
*also known as an 'ordinary partnership'* |
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Definition
A partner of a general partnership who is liable for the debts and obligations of the general partnership.
*also known simply as a 'partner'* |
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Term
| Uniform Partnership Act (UPA) |
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Definition
A model act that codifies partnership law.
* most states have adopted the UPA in whole or in part* |
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Term
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Definition
A written agreement that partners sign
*also called 'articles of partnership'* |
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Term
| Right to Participate in Management |
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Definition
| Unless otherwise agreed, each partner's right to participate in the management of a partnership and right to an equal vote on partnership matters |
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Term
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Definition
A formal judicial proceeding in which the court is authorized to:
(1) review the partnership and the partners' transactions and,
(2) award each partner his or her share of the partnership assets |
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Term
| Joint and Several Liability |
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Definition
Tort liability of partners together and individually.
- With this type of liability, a plaintiff can sue one or more partners separately.
- If successful, the plaintiff can recover the entire amount of the judgment from any or all of the defendant-partners |
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Term
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Definition
Liability of partners for contracts and debts of the partnership.
- A plaintiff must name the partnership and all of the partners as defendants in a lawsuit |
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Term
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Definition
| The change in the relationship of the partners caused by any partner ceasing to be associated with the carrying on of the business |
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Definition
| The process of liquidating a partnership's assets and distributing the proceeds to satisfy claims against the partnership |
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Term
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Definition
| A situation in which a partner withdraws from a partnership without having the right to do so at that time |
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Term
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Definition
A type of partnership that has two types of partners:
i. General Partners
ii. Limited Partners
*also known as a 'special partnership'* |
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Term
| Revised Uniform Limited Partnership Act (RULPA) |
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Definition
| A 1976 revision of the ULPA that is a more modern, comprehensive law for the formation, operation, and dissolution of limited partnerships |
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Term
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Definition
| Partners in a limited partnership who invest capital, manage the business, and are personally liable for partnership debts |
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Term
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Definition
| Partners in a limited partnership who invest capital but do not participate in management and are not personally liable for partnership debts beyond their capital contributions |
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Term
| Certificate of Limited Partnership |
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Definition
| A document that two or more persons must execute and sign that makes a limited partnership legal and binding |
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Term
| Limited Partnership Agreement |
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Definition
A document that sets forth the rights and duties of general and limited partners; the terms and conditions regarding the operation, termination, and dissolution of partnership; and so on.
*also called 'articles of limited partnership'* |
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Term
| Personal Liability of General Partners |
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Definition
| The unlimited personal liability of general partners of a limited partnership for the debts and obligations of the limited partnership |
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Term
| Limited Liability of Limited Partners |
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Definition
| The limited liability of limited partners of a limited partnership only up to their capital contributions to the limited partnership; limited partners are not personally liable for the debts and obligations of the limited partnership |
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Term
| Limited Liability Limited Partnership (LLLP) |
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Definition
| A special type of limited partnership that has both general partners and limited partners, where both the general and limited partners have limited liability and are not personally liable for the debts of the LLLP |
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Term
| Limited Liability Company (LLC) |
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Definition
| An unincorporated business entity that combines the most favorable attributes of general partnerships, limited partnerships, and corporations |
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Term
| Uniform Limited Liability Company Act (ULLCA) |
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Definition
| A model act that procides comprehensive and uniform laws for the formation, operation, and dissolution of LLCs. |
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Term
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Definition
| The formal documents that must be filed at the secretary of state's office of the state of organization of an LLC to form the LLC. |
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Term
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Definition
| An agreement entered into by members that governs the affairs and business of an LLC and the relations among members, managers, and the LLC |
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Term
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Definition
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Term
| Limited Liability of Members of an LLC |
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Definition
| The liability of LLC members for the LLC's debts, obligations, and liabilities only to the extent of their capital contributions |
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Term
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Definition
| A person who intentionally or unintentionally (negligently) causes injuy or death to another person. |
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Term
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Definition
| An LLC that has not designated in its articles of organization that it is a manager-managed LLC and that is managed by its members |
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Term
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Definition
| An LLC that has designated in its articles of organization that it is a manager-managed LLC and whose nonmanager members give their management rights over to designated managers |
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Term
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Definition
| A duty owed by a member of a member-managed LLC and a manager of a manager-managed LLC to be honest in his or her dealings with the LLC and to not act adversely to the interests of the LLC |
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Term
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Definition
Dissolution that occurs when a member withdraws from;
(1) a term LLC prior to the expiration of the term or
(2) an at-will LLC when the operating agreement eliminates a member's power to withdraw |
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Term
| Limited Liability Partnership (LLP) |
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Definition
| A special form of partnership in which all partners are limited partners, and there are no general partners |
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Term
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Definition
| The formal documents that must be filed at the secretary of state's office of the state of organization of an LLP in order to form the LLP |
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Term
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Definition
| An arrangement that is established when one party (the franchisor) licenses another party (the franchisee) to use the franchisor's trade name, trademarks, commercial symbols, patents, copyrights, and other property in the distribution and selling of goods and services |
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Term
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Definition
| An agreement that a franchisor and franchisee enter into that sets forth the terms and conditions of a franchise |
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Term
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Definition
| A business arrangement that occurs when the owner of intellectual property (the licensor) contracts to permit another party (the licensee) to use the intellectual property. |
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Term
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Definition
| An arrangement in which two or more business entities combine their resources to pursue a single project or transaction |
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Term
| Joint Venture Corporation |
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Definition
| A corporation owned by two or more joint venturers that is created to operate a joint venture |
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Term
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Definition
| An arrangement between two or more companies in which they agree to ally themselves to accomplish a designated objective |
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Term
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Definition
| A fictitious legal entity that is created according to statutory requirements |
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Term
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Definition
| State statutes that regulate the formation, operation, and dissolution of corporations |
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Term
| Limited Liability of Shareholders |
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Definition
| A general rule of corporate law which provides that generally shareholders are liable only to the extent of their capital contributions for the contracts and debts of their corporation and are not personally liable for the contracts and debts of the corporation |
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Term
| Revised Model Business Corporation Act (RMBCA) |
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Definition
| A 1984 revision of the MBCA that arranges the provisions of the act more logically, revises the language to be more consistent, and make substantial changes in the provisions |
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Term
| Publicaly Held Corporation |
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Definition
| A corporation that has many shareholders and whose securities are often traded on national stock exchange |
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Term
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Definition
A corporation owned by one or a few shareholders.
*also known as a 'close corporation'* |
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Term
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Definition
| A corporation in the state in which it was incorporated |
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Term
| Articles of Incorporation |
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Definition
The basic governing documents of a corporation, which must be filed with the secretary of state of the state of incorporator.
*also known as a 'corporate charter'* |
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Term
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Definition
| A person or corporation that is empowered to accept service of process on behalf of a corporation |
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Term
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Definition
| A detailed set of rules adopted by incorporators or the board of directors after a corporation is incorporated that contains provisions for managing the business and the affairs of the corporation |
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Term
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Definition
| A meeting that must be held by the initial directors of a corporation after the articles of incorporation are filed |
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Term
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Definition
| A corporation that has qualified for and elected to be taxed puruant to the federal Subchapter S Revision Act |
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Term
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Definition
Representation of ownership rights to a corporation.
*also called 'Stocks'* |
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Term
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Definition
| A type of equity security that represents the residual value of a corporation |
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Term
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Definition
| A person who owns common stock |
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Term
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Definition
| A type of equity security that is given certain preferences and rights over common stock |
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Term
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Definition
| The right to receive a fixed dividend at stipulated periods during the year |
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Term
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Definition
| The right to be paid a stated dollar amount if the corporation is dissolved and liquidated |
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Term
| Cumulative Preferred Stock |
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Definition
| Stock for which any missed dividend payments must be paid in the future to the preferred shareholders before the comon shareholders can receive any dividends |
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Term
| Participating Preferred Stock |
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Definition
| Stock that allows a preferred stockholder to participate in the profits of the corporation along with the common stockholders |
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Term
| Convertible Preferred Stock |
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Definition
| Stock that permits the preferred stockholders to convert their shares into common stock |
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Term
| Redeemable Preferred Stock |
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Definition
| Stock that permits a corporation to buy back the preferred stock at some future date |
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Term
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Definition
| The number of shares provided for in a corporation's articles of incorporation |
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Term
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Definition
| Shares that have been sold by a corporation |
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Term
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Definition
Securities that establish a debtor - creditor relationship in which the corporation borrows money from an investor, to whom a debt security is issued.
*also known as 'fixed income securities'* |
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Term
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Definition
| A long-term unsecured debt instrument that is based on a corporation's general credit standing |
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Term
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Definition
| A long-term debt security that is secured by some form of collateral |
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Term
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Definition
| A debt security with a maturity of five years or less |
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Term
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Definition
| A contract between a corporation and a holder that contains the terms of a debt security |
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Term
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Definition
| Persons and entities that own shares of a corporation |
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Term
| Annual Shareholders' Meeting |
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Definition
| A meeting of the shareholders of a corporation that must be held by the corporation to elect directors and to vote on other matters |
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Term
| Special Shareholders' Meetings |
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Definition
| Meetings of shareholders that may be called to consider and vote on important or emergency issues, such as a proposed merger or amending the articles of incorporation |
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Term
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Definition
A written document that a shareholder signs, authorizing another person to vote his or her shares at the shareholders' meetings in the event of the shareholder's absence.
* also known as a 'proxy card'* |
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Term
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Definition
The required number of shares that must be represented in person or by proxy to hold a shareholders' meeting.
- The RMBCA establishes a majority of outstanding shares as a quorum |
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Term
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Definition
A system in which each shareholder votes the number of shares he or she owns on candidates for each of the positions open.
*also known as 'noncumulative voting'* |
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Term
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Definition
| A system in which a shareholder can accumulate all of his or her votes and vote them all for one candidate or split them among several candidates |
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Term
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Definition
| A distribution of profits of a corporation to shareholders |
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Term
| Piercing the Corporate Veil |
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Definition
A doctrine that says if a shareholder dominates a corporation and uses it for improper purposes, a court of equity can disregard the corporate entity and hold the shareholder personally liable for the corporation's debts and obligations
*also known as the 'alter ego doctring'* |
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Term
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Definition
| A resolution that a shareholder who meets certain ownership requirements may submit to other shareholders for a vote. Many shareholder resolutions concern social issues. |
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Term
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Definition
| A panel of decision makers, the members of which are elected by the shareholders |
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Term
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Definition
| A member of the board of directors who is also an officer of the corporation |
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Term
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Definition
| A member of a board of directors who is not an officer of the corporation |
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Term
| Quorum of a Board of Directors |
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Definition
| The number of directors necessary to hold a board meeting or transact business of the board of directors |
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Term
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Definition
| Employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation |
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Term
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Definition
| The duties of care and loyalty owed by directors and officers to their corporation and its shareholders |
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Term
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Definition
| A duty of directors and officers not to act adversely to the interests of the corporation and to subordinate their personal interests to those of the corporation and its shareholders |
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Term
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Definition
| A duty that corporate directors and officers have to use care and diligence when acting on behalf of the corporation |
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Term
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Definition
| Failure of a corporate director or officer to exercise the duty of care while conducting the corporation's business |
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Term
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Definition
| A rule that says directors and officers are not liable to the corporation or its shareholders for honest mistakes of judgment |
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Term
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Definition
| A federal statute that establishes far-reaching rules to improve corporate governance, eliminate conflicts of interest, and instill confidence in investors of public companies |
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Term
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Definition
| A situation in which one corporation is absorbed into another corporation and ceases to exist |
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Term
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Definition
| Dissolution of a corporation that has begun business or issued shares upon recommendation of the board of directors and a majority vote of the shares entitled to vote |
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Term
| Winding up and liquidation |
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Definition
| The process by which a dissolved corporation's assets are collected, liquidated, and distributed to creditors, shareholders, and other claimants |
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Term
| Multinational Corporation |
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Definition
| A corporation that operates in two or more countries |
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Term
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Definition
| An office operated by a multinational corporation in another country; a branch office is not a separate legal entity. |
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Term
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Definition
| A corporation that is owned by a multinational corporation; a subsidiary is a separate legal entity from its parent corporation |
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Term
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Definition
| A multinational corporation that owns one or more subsidiary corporations in foreign countries |
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Term
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Definition
| The large body of common law that governs agency; a mixture of contract law and tort law |
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Term
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Definition
| A party who employs another person to act on his or her behalf |
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Term
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Definition
| A party who agrees to act on behalf of another |
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Term
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Definition
| A principal-agent relationship; the fiduciary relationship "which results from the manifestation of consent by one person to anotherthat the other shall act in his behalf and subject to his control, and consent by the other so to act" |
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Term
| Principal-Agent Relationship |
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Definition
| A relationship formed when an employer hires an employee and gives that employee authority to act and enter into contracts on his or her behalf |
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Term
| Employer-Employee Relationship |
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Definition
| A relationship that results when an employer hires an employee to perform some form of physical service |
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Term
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Definition
| An agency that occurs when a principal and an agent expressly agree to enter into an agency agreement with each other |
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Term
| Exclusive Agency Contract |
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Definition
| A contract a principal and agent enter into that says the principal cannot employ any agent other than the exclusive agent |
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Term
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Definition
| An express agency agreement that is often used to give an agent the power to sign legal documents on behalf of the principal |
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Term
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Definition
| An agency that occurs when a principal and an agent do not expressly create an agency, but it is inferred from the conduct of the parties |
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Term
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Definition
An agency that occurs when:
(1) a person misrepresents himself or herself as another's agent when in fact he or she is not and,
(2) the purported principal ratifies the unauthorized act |
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Term
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Definition
| Agency that arises when a principal creates the appearance of an agency that in actuality does not exist |
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Term
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Definition
| A duty that a principal owes to pay an agreed-upon amount to the agent either upon the completion of the agency or at some other mutually agreeable time |
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Term
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Definition
An agent's duty to a principal that includes:
(1) performing the lawful duties expressed in the contract and,
(2) meeting the standards of reasonable care, skill, and diligence implicit in all contracts |
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Term
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Definition
| Information that is learned by an agent that is attributed to the principal |
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Term
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Definition
A duty that an agent owes to maintain an accurate accounting of all transactions undertaken on the principal's behalf.
*also known as the 'duty of accountability'* |
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Term
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Definition
| A fiduciary duty owed by an agent not to act adversely to the interests of the principal |
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Term
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Definition
| A rule that says an employer is liable for the tortious conduct of his or her employees or agents while they are acting within the scope of its authority |
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Term
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Definition
| A situation in which an agent does something during the course of his or her employment to further his or her own interests rather than the principal's |
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Term
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Definition
| A rule that says a principal is generally not liable for injuries caused by its agents and employees while they are on their way to and from work |
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Term
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Definition
| An errand or another act that a principal requests of an agent while the agent is on his or her own personal business |
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Term
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Definition
| A test that determines whether an agent's motication in committing an intentional tort is to promote the principal's business; if so, the principal is liable for any injury caused by the tort |
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Term
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Definition
| A test that determines whether an agent committed an intentional tort within a work-related time or space; if so, the principal is liable for any injurty caused by the agent's intentional tort |
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Term
| Intentional Misrepresentation |
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Definition
A deceit in which an agent makes an untrue statement that he or she knows is not true
* also known as 'fraud'* |
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Term
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Definition
An agency in which a contracting third party knows
(1) that the agent is acting for a principal and,
(2) the identity of the principal |
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Term
| Partially Disclosed Agency |
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Definition
| An agency i which a contracting third party knows that the agent is acting for a principal but does not know the identity of the principal |
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Term
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Definition
| An agency in which a contracting third party does not know of either the existence of the agency or the principal's identity |
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Term
| Implied Warranty of Authority |
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Definition
| A waranty of an agent who enters into a contract on behalf of another party that he or she has the authority to do so. |
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Term
| Ratification of a Contract |
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Definition
| A situation in which a principal accepts an agent's unauthorized contract |
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Term
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Definition
| "A person who contracts with another to do something for him who is not controlled by the other nor subject to the other's right to control with respect to their physical conduct in the performance of the undertaking" |
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Term
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Definition
The termination of an agency contract in violation of the terms of the agency contract.
- The nonbreaching party may recover damages from the breaching party |
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Term
| Power of Attorney: General Power of Attorney |
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Definition
| This confers broad powers on the agent to act in any matters on the principal's behalf |
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Term
| Power of Attorney: Special Power of Attorney |
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Definition
| This limits the agent to acts specifically enumerated in the agreement |
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Term
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Definition
An agent with power of attorney
- even though they do not have to be a lawyer |
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Term
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Definition
| The implied authority an agent possesses at certain times when an express agency agreement does not provide enough detail to cover contingencies that may arise in the future regarding the performance of the agency. |
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