BUL6456 Exam 2 (CH 7, 8, 14, 15, 16, 5, 19, 20

Respondeat Superior

"let the master answer" doctrine under which an employer may be held vicariously or secondarily liable for the negligent or intentional conduct of an employee that is committed in the scope of the employee's employment.

Promissory Estoppel

(aka detrimental reliance or unjust enrichment)- applies only if the injured party can prove there was 1. A promise and 2. Justifiable reliance on the promise 3. That was foreseeable and 4. Resulted in injustice

Criminal versus Civil Liability

-Civ Law (particularly tort), compensates the victim for legal wrongs committed against the victim or his or her property. -Crim Law protects society by punishing the criminal. It does not compensate the victim. The victim of a crime may bring a civil suit for damages against the perpetrator.

Exceptions to the Search Warrant Requirements:

1. A search incident to a lawful arrest 2. A search and seizure of anything discovered by police in plain view if the officers are legitimately on the premises 3. A stop and frisk of a suspect if the office reasonably believes the suspect is armed and dangerous 4. A search when the owner or a person who appears to have authority voluntarily and intelligently consents to the search 5. Ant instance when the police are in "hot pursuit" or when the evidence may disappear before a warrant can be obtained (Ex. Blood samples containing alcohol)

The Commerce Requirement is Satisfied When the Defendant's Conduct:

1. Directly interferes with the flow of goods in the stream of commerce or 2. Has a substantial effect on interstate commerce

Three Broad Categories of Environmental Law

1. Laws that regulate the release of pollutants into the air, water, or ground 2. Governs the manufacture, sale, distribution, and use of chemical substances as commercial products 3. Laws that require government decision makers to take into account the effects of their decisions on the quality of the environment

Components of a Valid Search Warrant

1. Must be based on probable cause 2. Be supported by an oath or affirmation 3. Describe in specific detail (with particularity)which is to be searched or seized

3 Forms of Mens Rea

1. Negligence-the least culpable state of mind 2. Recklessness- disregard for potential for harm 3. Intention to do Wrong- most culpable state of mind

Horizontal Price Fixing Agreements Include:

1. Setting prices (including max prices) 2. Setting the terms of sale, such as customer credit terms 3. Setting the quantity or quality of goods to be manufactured or made available for sale 4. Rigging bids

Elements of a Crime:

1. an act that violates an existing criminal stature and 2. the requisite state of mind

Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)

1980 act that authorizes the federal government to investigate and take remedial action in response to a release or threatened release of hazardous substances into the environment. This imposes strict liability

Perfect Tender Rule

A UCC rule that gives the buyer an absolute right to reject any goods not meeting all contract requirements, including time of delivery

Condition Precedent

A condition that trust be met before a party's obligations to perform arise under a contract

Option Contract

A contract in which the offeror promises to hold an offer open for a certain amount of time

Agent

A person who manages a task delegated by another (the principal) and exercises whatever discretion is given to the agent by the principal

Limited Warranty

A warranty that limits the remedies available to the consumer for a defective product

Herfindahl Hirschman Index (HHI)

An aid to the interpretation of market dara when determining the anticompetitive effect of a merger; the HHI of market concentration is calculated by summing the squares of the individual market shares of all firms in the market.

Smith v. Maryland

Supreme Court upheld police officers' use, without a warrant, of a device called a pen register to record the numbers dialed from the suspect's phone. The court upheld that there is no subjective expectation of privacy in telephone numbers dialed

Smith versus Van Gorkom 1995

The Delaware Supreme Court held that the TransUnion directors were grossly negligent in making an uniformed decision regarding the proposed merger agreement. Their decision was not protected by the business judgment rule. This case underscores that not every statement of an officer can be relied on in good faith, and no statement is titled to blind reliance.

Stone vs. Ritter

The Delaware Supreme Court recognized that "good faith may be described colloquially as part of a 'triad; of fiduciary duties," but ruled that the obligation to act in good faith does not establish an independent fiduciary duty that stands on the same footing as the duties of care and loyalty. Failure to act in good faith alone does not appear to give rise to liability.

Executory Contract

Contract that has not yet been performed and involves an exchange of promises

Non price Considerations

Directors are duty bound to consider separately whether certain provisions are in the best interest of the company and its shareholders or, if not, whether the proposal as a whole, notwithstanding such provisions, is in the best interest of their constituencies.

Doctrine of First Sale

First sale doctrine

Quasi

Foreign Corporation- under California corporate law, a privately held corporation incorporated outside of California with more than 50% of its stock owned by California residents and with more than 50% of its sales, payroll, and property tax derived from activities in California. Such a corporation is bound by certain Californian corporate governance rules.

Offeror

Person making the offer.

Offeree

Person to whom an offer is made.

Low

Profit Limited Liability Company (L3C)- a for profit company with a nonprofit soul meaning that it can distribute its profits to investors while serving a philanthropic purpose.

Commercial Impracticability

Provisions in Section 2-615 of the UCC that excuses a filter to perform if the performance is made impractical by an event unforeseen by the contract

Merchant

Section 2-104 of the UCC defines a merchant as a person who deals in goods of the kind or otherwise by his occupation holds himself out as having knowledge or skill peculiar to the practices or goods involved in the transaction

Direct Damages

The difference between the market price at the time the buyer or seller learned of the other party's breach and the contract price for goods

Fourth Amendment

The right to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures without a valid warrant issued with probably cause

Unjust enrichment

The unfair appropriation of the benefits of negotiation of contracts for the party's own use

Revoke

To annul an offer by rescission; to take away authority

United States v. Ziegler

US Court of Appeals for the 9th Circuit held that an employer could consent to a search of an employee's office and work computer even though the employee had legitimate expectation of privacy, because they had locked the office and used a computer password. This is because the employer has "common authority over or other sufficient relationship to the premises or effects sought to be inspected.

Knockout Rule

Under the UCC, a rule that a court may apply when an offer and an acceptance contain conflicting terms; the court strikes the conflicting terms and replaces them with "suitable UCC gap-filler provisions"

Full Warranty

Warranty that gives the consumer the right to free repair or replacement of a defective product

Quantum Meruit

a basis for equitable relief by a court when there was no contract between the parties, but one party has received a benefit for which it has not paid

Tying Arrangements

a business arrangement whereby a seller will sell product A (the trying or desired product) to the customer only if the customer purchases product B (the tied product) from the seller

Franchise

a business relationship in which one party (the franchisor) grants to another party (the franchisee) the right to use the franchisor's name and logo and to distribute the products from a specific locale

Master Limited Partnership (MLP)

a business structure that is currently available to a select group of entities, primarily "mineral or natural resource companies." It is described as a, "type of corporation that is able to raise money on public exchanges and doesn't pay income tax at the corporate level." It is thus a pass-through entity, like a partnership, but it acts like a corporation.

Corporate Opportunities Doctrine

a central corollary of the fiduciary duty of loyalty is that officers and directors may not take personal advantage of a business opportunity that rightfully belongs to the corporation.

Fiduciary Out

a clause allowing the board of directors to negotiate with other bidders or to terminate a merger agreement.

Ex Post Facto Clause

a clause in the US Constitution that provides that a person can be convicted of a crime only if his or her actions constituted a crime at the time they occurred.

No Talk Clause

a clause permitting a company to engage in discussions with and provide information to other potential acquirers only if the board has concluded that engaging in discussions or providing information is necessary to prevent the board from breaching its fiduciary duties to its shareholders

Target Corporation

a company that is the subject of a tender offer or other hostile corporate takeover attempt. Also a company that another firm controls after acquiring it via merger a sale of stock by the target's shareholders, or a sale of substantially all the assets of the target

Revlon Mode

a company whose breakup has become inevitable or is subject to an inevitable change in control. The Revlon duty is to maximize shareholder value.

Industrial Ecology

a concept that advocates a system approach to Eco efficiency and applies it to groups of corporations working together

Entire Fairness

a corporate law requirement of fair dealing and fair price applicable to parent-subsidary mergers and certain other transactions with a controlling shareholder.

Responsible Corporate Officer Doctrine

a corporate officer may be found guilty of a crime if he or she bore a "responsible relation" to a violation of a statute dealing with "products which may affect the health of consumers"—that is, if the officer had the power to prevent the violation and failed to do so. Two issues are involved, vicarious liability issue (whether an officer bears responsibility for the actions of their subordinates) and meds rea issue (whether the officer must have known about the intended violation before he or she can be held personally criminally liable.

De Facto Corporation

a corporation in fact even though it is not technically a corporation by law. They must show that they were unaware of the defect and that they made a good faith effort to incorporate quickly.

Close Corporation

a corporation that 1. Has elected in its charter to be treated as a close corporation and 2. Has a "small" number of shareholders, typically no more than thirty. A corporation must elect to become a close corporation by stating in its certificate of incorporation that it is a close corporation.

Consent Decree

a court order based on an agreement by the defendant corporation to take measures to remedy the problem that led to the criminal charges. Like a plea of nolo contendere, a consent of decree cannot be introduced as evidence of guilt in a subsequent civil trial.

Injunction

a court order forcing a person to perform what they promised

Specific Performance

a court order to a breaching party requiring it to perform all of its obligations under the contract as promised. a court order to breaching party requiring it to perform all its obligations under the contract as promised

Felony

a crime punishable by imprisonment for more than one year or by death.

Bona Fide Prospective Purchaser Defense

a defense to liability for hazardous waste under the Comprehensive Environmental Response, Compensation, and Liability Act, intended in part to encourage the purchase of brownfields among other things, the defense requires that the purchaser have no affiliation with a liable party; undertake "all appropriate inquiry" prior to acquiring the property; and take reasonable steps to stop and prevent future and continuing releases of hazardous materials.

Duty of Good Faith

a director cannot act loyally towards the corporation unless she acts in the good faith belief that her actions are in the corporation's best interest

Outside Director

a director who is not also an officer

Sovereign Acts Doctrine

a doctrine holding that the government cannot be held liable for breach of contract due to legislative or executive acts of general application

Mere Continuation (identity) Test

a doctrine of successor liability whereby a firm that acquires assets of a target firm is liable for the debts of the target firm when, after the asset purchase, there is a single corporation with the same shareholders and directors as the target firm prior to the asset purchase

Sovereign Immunity

a doctrine that prevents the courts of one county from hearing a suit against the government of another country

Reverse Piercing

a doctrine whereby a corporation may be held liable for the debts of a shareholder

Respondeat Superior

a doctrine which means "let the master answer" a corporation can be held liable for criminal offenses committed by its employees if the acts were committed within their scope of their employment.

Benefit Corporation (B Corp)

a for-profit corporation that uses the power of business to solve social and environmental problems. They are required to "have a purpose of creating general public benefit" in addition to their corporate purposes. Directors of these corporations do not have a duty to maximize shareholder value even when there is a change of control.

Capacity

a legal term that refers to a person's ability to understand the nature and effect of an agreement. The widely accepted rule is that minors and mentally incompetent persons lack capacity because they are unable to protect their own interests. -As a result the law usually gives minors and the incompetent persons the power to repudiate their contractual obligation.

Contract

a legally enforceable promise or set of promises. If the promise is broken, the person to whom the promise was made—the promise—has certain legal rights against the person who made the promise—the promisor. If the promisor fails to carry out its prose the promise may be able to recover money damages or it may be able to get an injunction

Misdemeanor

a less serious crime, punishable by a fine or a jail sentence of one year or less.

Shrink-Wrap License

a license agreement that the purchasers of the software can read only after they purchase the software and open the package

Antitrust Injury

a loss due to a competition-reducing aspect or effect of the defendant's violation of antitrust laws. A plaintiff may not recover under the antitrust laws for losses that resulted from actual competition

Offer

a manifestation of willingness to enter into a bargain that justifies another person in understanding that his or her assent will conclude the bargain. -An offer is effective if 1. The offeror (the person making the offer) has an intention to be bound by the offer, 2. The terms of the offer are reasonably definite, and 3. The offer is communicated to the offeree (the intended recipient). -offers are evaluated for intention and definiteness -Advertisements are not offers; they are invitations unless the advertisement includes a promise so definite that the seller is clearly binding itself to the conditions stated. For example, when ads are posted for leads to the recovery of lost or stolen belongings for a reward. not defined by the UCC—traditional common law principles determine whether an offer has been made. Under the UCC, neither an invitation for bids nor a price quotation is an offer. Similarly, a proposal by a sales representative that is subject to approval by the home office is not an offer.

Exclusive Distributorships

a manufacturer may limit itself to a single distributor in a given territory or line of business, refusing to sell to other potential distributors in that territory or line of business. These have been upheld under the rule of reason when there is some competitive pressure that limits the market power of the retailers holding them. This restriction on intrabrand competition is permissible because of the intense interbrand competition among US and foreign automobile manufacturers

Dual Distributor

a manufacturer that sells its goods through both wholesale and retail channels. Early decisions held that restraints imposed by dual distributors were illegal per se on the basis that the arrangements were unlikely to create the efficiencies and increased competition created by permissible forms of vertical non-price agreements.

Inside Director

a member of he board who is also an officer

Misrepresentation

a misleading or false representation of the facts intended to deceive another party

Mistake of Fact

a mistake about an underlying fact that may make a contract voidable. Contrast with mistake of judgment

Mistake of Judgement

a mistake that occurs when the parties to a contract make an erroneous assessment about the value of what is bargained for.

Joint Venture

a one-time partnership of 2 or more parties for a specific purpose. The parties must have 1. Share a community interest 2. Have the mutual right to direct and govern 3. Share the partnership's profits and losses 4. Combine their property, money, effort, skill, or knowledge, in the undertaking.

Third-party beneficiary

a party who does not give consideration for a promise yet has legal rights to enforce the contract. A person is a third-party beneficiary with legal rights when the contracting parties intended to benefit that person

Anticipatory Repudiation

a party's indication before performance is due that it will breach a contract

Strict Liability

a person can be guilty regardless of his or her mind or degree of fault. Typically it involves issues of public health or safety or involve dangerous or delirious devices or products or obnoxious waste materials. These statutes are usually disfavored, and most courts will require clear legislative intent to impose strict liability before the will dispense with mens rea as an element of a crime.

Fiduciary

a person entrusted with the duty to act for the benefits of another

Principal

a person who delegates a portion of his or her tasks to another person who represents the principal as the agent

Independent Contractor

a person who performs work for an employer but whose work methods and work products are not controlled by the employer.

State Implementation Plan (SIP)

a plan for each state that identifies how the state will attain and/or maintain the National Ambient Air Quality Standards (NAAQS) established by the Environmental Protection Agency.

Poison Pill or Shareholder Rights Plan

a plan that would make any takeover not approved by the directors prohibitively expensive

Illegal per se

a practice that is illegal regardless of its impact on the market or its procompetitive justifications

Undisclosed Principal

a principal whose identity or existence is not known or suspected by a third party dealing with the principal's agent.

Plurality Standard

a process whereby a nominee for the board of directors can be elected as long as he or she receives a plurality of the votes cast for any nominee, without regard to the number of votes withheld

Unilateral contract

a promise given in exchange for an act. Example: Sam promises Marta $10 is she drives him to business school. Marta has to drive him first to get the $10 and no contract is formed until she does

Bilateral Contract

a promise given in exchange for another promise. One party agrees to do one thing, and the other party agrees to do something in return. Example: Sam promises Marta $10 if she promises to drive him to school. The exchange of promises represents consideration and makes the promises binding.

Illusory Promise

a promise that neither confers any benefit on the promise nor subjects the promisor to any detriment. Because there is no mutuality of obligation in such a case, the resulting agreement is unenforceable.

Tender Offer

a public offer to all the shareholders of a target corporation to buy their shares at a stated price, usually higher than the market price

Probable Cause

a reasonable belief that the suspect has committed a crime or is about to commit a crime

Agency

a relationship in which one person (the agent) acts for or represents another person (the principal

Majority Voting

a requirement that a nominee for the board of directors of a corporation must receive a majority of the shares voted to be elected

Acceptance

a response to a person receiving the offer that indicates willingness to enter into the agreement proposed in the offer. -Both offers and acceptance can be oral, written, or implied by conduct. -"The mailbox rule:" A contract is formed when the offeree puts the acceptance letter in the mailbox; the offeror cannot revoke the offer thereafter. -Responding to an offer in a manner other than that specified by the offeror will not constitute in acceptance, nor will a conditional response not defined by the UCC—under section 2-207, a contract exists if: There is a timely and definite response to the offer and The parties act as if there is a contract between the, Unless the offeror indicates unambiguously that his or her offer can be accepted only in a particular way, an offer can be accepted in any manner by any medium that is reasonable under the circumstances. It is not necessary for the offer and acceptance to match exactly in order for a contract for the sale of goods to exist.

Equal Dignities Rule

a rule under which if an agent acts on behalf of another (its principal) in signing an agreement that must under the statute of frauds be in writing, the authority of the agent to act on behalf of the principal must also be in writing

Equal Dignities Rule

a rule under which, if an agent acts on behalf of another (its principal) in signing an agreement that must under that statute of frauds be in writing, the authority of the agents to act on behalf of the principal must also be in writing.

Exclusionary Rule

a rule virtually unique to the US legal system that generally prohibits the introduction in a criminal trial of evidence that was obtained by an illegal search or seizure in violation of the 4th amendment (or 5th). Illegal evidence includes evidence found when the search went beyond the scope of the warrant, evidence gathered without a warrant when a warrant was required, and evidence acquired directly or indirectly as a result of an illegal search, arrest, or interrogation (called fruit of the poisonous tree).

Parol Evidence Rule

a rule whereby oral evidence of prior or contemporaneous statements is not admissible as evidence if it is introduced to vary or alter the terms of an otherwise value written contract that the parties intended to encompass their entire agreement

Model Penal Code

a set of criminal law statues proposed by the National Conference of Commissioners on Uniform State Laws for adoption by that states

Publicly Owned Sewage Treatment Works (POTWs)

a sewage treatment plant owned and usually operated by a government agency. It must comply with its own NPDES permit for the discharge of treated waters.

Controlling Shareholders

a shareholder who owns sufficient shares to outvote the other shareholders, or to otherwise set corporate policy, and thus to control the corporation

Firm Offer

a signed offer by a merchant indicating the offer will be kept open. It is not revocable for lack of consideration. The offer must be kept open during the time stated, or id none is stated, for a reasonable period of time, up to a maximum of three months.

Impracticability

a situation in which performance of a contract is possible but commercially impractical a situation in which performance of a contract is possible but commercially impractical

Limited Partnership

a special type of partnership consisting of general partners and limited partners. These are usually used to raise capital, the limited liability for limited partners makes them attractive to investors

Statute of Frauds

a statute that requires that certain contracts. Such as contracts conveying an intense in real property must in a signed writing to be enforceable in a court. set forth in section 2-201, provides that a contract for the sale of goods for $500 or more is unenforceable unless it is at least partly in writing. In particular the provision states: There must be some writing evidencing the sale of goods The writing must be signed by the party against whom the enforcement is sought The writing must specify the quantity of the goods sold

Leveraged Buyout (LBO)

a stock purchase financed by debt. This is typically secured by the assets of the target company and it may take the form of a bond issuance, a commercial bank loan, or a loan from an investment bank.

Shareholder Derivative Suit

a suit brought by a shareholder on behalf of the corporation

Due Diligence

a systematic and ongoing process for determining whether property contains or emits hazardous substances and whether the company is in compliance with environmental laws.

Undercapitalization Theory

a theory that may be used to pierce the corporate veil in certain jurisdictions; it applies when the corporation is a separate entity, but its deliberate lack of adequate capital allows it to skirt potential liabilities

Alter Ego Theory

a theory that may be used to pierce the corporate veil; it applies when owners have so mingled their own affairs with those of a corporation that the corporation does not exist as a distinct entity, it is an alter ego (second self) of its owners

Fraud in the factum

a type of fraud that occurs when a party is persuaded to sign one document thinking that it is another

Fraud in the Inducement

a type of fraud that occurs when a party makes a false statement to persuade the other party to enter into an agreement

Promissory Fraud

a type of fraud that occurs when one party induces another to enter into a contract by promising to do something without having the intention to carry out the promise

White Collar Crime

a violation of the law by a corporation or one if its managers Most of these types of crimes are nonviolent. Intent to break the law is not needed.

Proxy

a written authorization for another person to vote on someone else's behalf

Power of Attorney

a written instrument that authorizes a person, called an attorney-in-fact (who need not be a lawyer), to sign documents or perform certain specific acts on behalf of another person.

Environmental Protection Agency (EPA)

administers all the federal laws that set national goals and policies for environmental protection, except the National Environmental Policy Act, which is administered by the Council on Environmental Quality. The EPA was created in 1970 and operates under the supervision of the president.

Strategic Environmental Management

advocates placing environmental management on the profit side of the firm rather than the cost side. This represents a profound shift in how companies view their relationship with the environment.

Ratify

agree to be bound by

Goods

all things (including specially manufactured goods) which are movable at the time of identification to the contract for sale

Agency by Ratification

an agency formed when a principal approves or accepts the benefits of the actions of an otherwise unauthorized agent

Aided In The Agency Relation Theory

an agency principal whereby the principal may be held vicariously liable for the wrongful acts of an agent acting outside of the scope of authority because the principal provided the instrumentality or created the circumstances that made it possible for the agent to commit the wrongful act

Agency by Estoppel

an agency relationship created when the principal leads a third party to believe that a person is his or her agent. In such situations, the principal may be estopped (prevented) from denying that the person is his or her agent

Horizontal Market Division

an agreement among competitors to divide a market according to class of customer or geographic territory; it violates antitrust law

Group Boycott

an agreement among competitors to refuse to deal with another competitor

Horizontal Price Fixing

an agreement between retailers to set a common price for a product, is the classic example of a per se violation of section 1

Merger Agreement

an agreement between two companies to combine those companies into one

Ratification

an agreement by an individual, after the individual becomes competent or reaches the age of majority, to be bound by contracts entered into while the person was incompetent or a minor; a principal's agreement to be bound by the acts of an agent

Mutual Rescission

an agreement by both parties in a bilateral contract are obligated to perform their sides of the bargain

General Release

an agreement by person engaging in a dangerous activity to assume all risks and hold the party offering access to said dangerous activity free of all liability

Prenuptial Agreement

an agreement entered into before marriage that sets forth the manner in which the parties' assets will be distributed and the support to which each party will be entitled, in the event the parties get divorced

Resale Price Maintenance (RPM)

an agreement on minimum price between firms at different levels of production or distribution that violates antitrust laws

Accord and Satisfaction

an agreement to accept performance that is different from what is called for in the contract

Covenant not to Compete

an agreement, general part of an employment contract or a contract to sell a business, in which one party agrees to refrain from competing with the other party for a specific period of time and within a particular area. (Must be reasonable)

Vertical Market Division

an arrangement imposed by a manufacturer on its distributors or dealers that limits the freedom of the dealer to market the manufacturer's product. Non-price vertical restrictions are judged under the rule of reason

Restitution

an award made to a plaintiff of a benefit improperly obtained by the defendant

Corporation by Estoppel

an entity that is neither a de jure nor a de facto corporation. It is a doctrine providing that, when a third party, in all its transactions with an enterprise, acts as if it were doing business with a corporation, the third party is prevented or estopped from claiming that the enterprise is not a corporation

Oppression

an equality of bargaining power that results in no real negotiation and an absence of meaningful choice for one party to the contract

Impossibility

an excuse for nonperformance based on the destruction of something vital to the performance of the contract or another unforeseen event that makes performance of the contract impossible

Express Warranty

an explicit guarantee by the seller that the goods will have certain qualities. The seller must #1 make a statement or promise relating to the goods #2 provide a description of the goods or #3 furnish a sample or model of the goods

Tax Evasion

an illegal practice whereby a person intentionally does not pay his or her tab liability. A prosecution must allege willful misconduct on the part of the accused.

US Sentencing Commissions

an independent agency in the judicial branch created by Congress, to provide an honest, fair, and effective federal sentencing system that would impose reasonably uniform sentences for similar criminal offenses committed by similar offenders.

Crime

an offense against the public at large. Any act that violates the duties owed by the offender to the community, for which the offender must make satisfaction to the public. Conviction of a crime can lead to a substantial fine, a prison sentence, or even the death penalty. An act is criminal only if it is defined as such in a federal or state stature or a local ordinance enacted by a city or count.

Browse-Wrap Agreement

an online agreement that appears on a website but does not require the user to make any action to express his or her consent to the agreement that appears on a website but does not require the user to take any action to express his or her consent to the agreement. To be enforceable, a browse-wrap agreement at a minimum must be conspicuous.

Intent to be Bound

an oral or written statement or an action signaling that a party intended to enter into a contract -Titling an agreement a "letter of intent" or using the phrase "formal agreement to follow" might not be enough to prove that the parties did not intend to be bound if their conduct suggests otherwise.

Corporation

an organization authorized by state law to act as a legal entity distinct from its owners. It has its own name and operates with specified powers to achieve the specific purposes set out in its corporate charter.

Adhesion Contract

an unfair type of contract by which sellers offer goods or services on a take it or leave it basis, with no chance for consumers to negotiate the goods except by agreeing to the terms of the contract.

Public Nuisance

an unreasonable interference with a right common to the general public. Thus, industrial odors, noise, smoke, and pollutants of any kind were the subjects of numerous lawsuits

Cap

and-Trade System- a market-based system that caps the amount of carbon dioxide that companies such as power generators, are allowed to emits. Higher allowances can be bought.

C Corporation

any corporation not meeting the requirements for an S corporation is automatically a C-Corp. It pays tax on the income generated by the business, and the shareholders pay tax on that same income when it is distributed as dividends.

Fraud

any deception intended to induce someone to part with property or money. It may involve false representation of fact, whether by words or conduct, or concealment of something that should have been disclosed.

Enterprise

any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity

Sherman Act

applies only to "trade or commerce" amongst states or with foreign nations. The phrase "commerce among the several states" extends the reach of the act as far as constitutionally allowed under the Commerce Clause. Section 1- prohibits concerted activity that restrains trade (yet almost every business transaction restrains trade to a certain extent)—courts have construed this section to prohibit only those restraints of trade that unreasonably restrict competition. For liablilty under section 1, a plaintiff must demonstrate that 1. There is a contract, combination, or conspiracy among separate entities 2. It unreasonably restraints trade 3. It affects interstate or foreign commerce and 4. It causes an ant-trust injury

Contiguous Landowner Defense

applies to owners of property contiguous to contaminated sites. Requires that parties have no contractual relationship with a liable party and it requires that the parties undertake "all appropriate inquiry" prior to acquiring the property and take reasonable steps to stop and prevent future or continuing release of hazardous materials

Vertical Agreements

are the agreements firms at different levels of production or distribution, such as an automaker and its dealers or a clothing retailer and its suppliers

Horizontal Agreements

are those between firms that compete directly with each other at the same level of production or distribution, such as retailers selling the same range of products.

Business Judgment Rule

as long as certain standards are met, a court will presume that the directors have acted in good faith and in the honest belief that the action taken was in the best interest of the company. The court will not question will not question whether the action was wise or whether the directors made an error of judgment or a business mistake.

Third Party Defense or Innocent Landowner Defense

asserted when the defendant can show that the third party responsible for the release was not an employee and had no contractual relationship with the person asserting the defense. It requires that the purchaser comply with various statutory obligations to take reasonable steps to stop and prevent future and continuing releases of hazardous materials.

Apparent Authority

authority that arises when a principal, by words or actions, causes a third party to reasonably believe that an agent has the authority to act for or bind the principal

Electronic Agents

autonomous computer programs that can be dispatched by the user to execute certain tasks

Multiple

brand product market- made up of product or service offerings by different manufacturers or sellers that are economically interchangeable and may therefore be said to compete.

Transactional Immunity

broader than use immunity that prohibits any criminal prosecution of the witness that relates to any matter discussed in his or her testimony.

Unconscionability

can be either be procedural (relating to the bargaining process) or substantive (relating to the provisions of the contract)

Clawback Provision

can occur when an inaccuracy in a filing requires a restatement of earnings, then officers can be required to pay back bonuses or other incentive compensation received during the year after the erroneous filing. In practice, clawbacks are rare.

Irrevocable offer

cannot be terminated by the offeror. Irrevocable offers arise 1. When an option contract has been created and 2. When an offeree has relied on an offer to his or her detriment

Plus Factors

circumstantial evidence of an agreement. Example: a meeting between the two defendants or increasing prices and persistent profits despite a decline in demand for the goods or service

Redneck

coal miners wore read scarfs (West Virginia). They don't marry their cousins

Duress

coercion

Limited Liability Company (LLC)

combines the tax advantages of a pass-through entity with the limited liability advantages of a corporation. The LLC is a creature of state law. The founders and investors have flexibility to shape their duties and responsibilities by contract.

Consequential Damages

compensation for losses that occur as a foreseeable result of a breach of contract. Actual damages represent the damage, loss, or injury that flows directly and immediately from the act of the other party; in contrast consequential damages refer to damage, loss, or injury flowing from some of the consequences or results of such acts. compensation for losses that occur as a forseeable result of a breach of contract. Actual damages represent the damage, loss, or injury that flows directly and immediately from the act of the other party; in contrast consequential damages refer to damage, loss, or injury flowing from some of the consequences or results of such act.

Intrabrand Competition

competition among firms producing or distributing the same brand; the restraints may or may not reduce interbrand competition. Courts look more favorably on reductions in intrabrand competition when there is vigorous interbrand competition that can prevent the reduction in intrabrand competition from harming customers.

Interbrand Competition

competition between companies producing the same type of product or service. As a result, horizontal restraints are more likely to result in higher prices or lower quality for a class of goods or services

Per se Analysis

condemns practices that are considered completely void if redeeming competitive rationales

The Katz Test

conducting a warrantless search or seizure under circumstance in which an individual has subjective privacy expectation that society deems reasonable, then the police are not entitled to conduct a search or seizure without a warrant. The Supreme Court ruled that the government could not use an electronic bug outside of pay-phone booths without a warrant

Environmental Law

consists of numerous federal, state, and local laws with the common objective of protecting human health and the environment. They include real estate owners and investors, developers, insurance companies, and financial institutions.

Brownfields

contaminated sites that are eligible for cleaning and reclaiming with assistance from the Superfund

Territorial Restrictions

contractual provisions that prevent a dealer or distributor from selling outside a specified territory

General Partnership

created when two or more persons agree to place their money, efforts, labor, or skills in a business and to share the profits and losses. Their agreement can be express or implied, but they must share in real profits, not just receive wages or compensation. A partnership is treated as an entity separate from its partners and can acquire property in its own name. Only subject to one level of taxes.

Burden of Proof

criminal trials impost a much heavier burden than civil cases. In a criminal case, the accused is presumed innocent until proved guilty beyond reasonable doubt. In most civil cases, the plaintiff only needs to establish the facts by the preponderance of the evidence. Criminal- Beyond reasonable doubt 99% Intentional Tort- Clear and convincing 75% Negligence- Preponderance of evidence >50%

Racketeering Activity

defined to include various state and federal offenses, specifically including mail and wire fraud and fraud in the sale of securities. Two demonstrate a pattern of this activity, at least two acts must be shown, "one of which occurred after the effective date of this chapter and the last of which occurred within ten years...after the commission of a prior act. Two isolated acts are not considered sufficient.

All Appropriate Inquiries Rule

defines what constitutes the "all appropriate inquiry" required for the third-party defense and certain other defenses

Pierce the Corporate Veil

disregard the corporate firm. When a court denies limited liability to a corporation and holds shareholders personally responsible for claims against the corporation, the court has pierced the corporate veil.

Information

document filed with the court

Baseline Assessments

establish the environmental condition of the property at both the commencement and the termination of the leases. These assessments may provide some protection from liability for conditions caused by prior or succeeding tenants.

Hazardous Substance Superfund

established by CERCLA to finance federal response activity to hazardous materials released into the environment.

Unocal Corporation versus Mesa Petroleum Co.

established the principle that the business judgment rule applies to takeover defenses, provided that the directors can show that they had reasonable grounds for believing that the unwelcome suitor posed a threat to corporate policy and effectiveness and that the defense was a reasonable response to threat.

Accord

formed when the creditor accepts the debtor's offer to settle the dispute for an amount less than the creditor claims is due

Stock Option

gives the person to whom it is granted (the optionee) the right to buy a certain number of shares at a fixed price for a fixed number of years, but usually no more than ten years.

Sixth Amendment

grants criminal defendants a number of procedural protections, including a right to counsel and to a trial by a jury.

Cartels

groups of competitors that agree to set prices

Implied Warranty of Merchantability

guarantees that the goods are reasonably fit for the general purpose for which they are sold and that they are properly packaged and labeled.

Actus Reus

guilty act or wrongful deed-often used to describe the act in question. The act must occur to be criminal; merely thinking about a criminal activity is not criminal

Mens Rea

guilty mind- the crime is not committed unless the criminal act named in the statute is performed with the requisite state of mind

Going Private

having fewer than three hundred shareholders and no longer being required to file public periodic reports under the Security Exchange Act of 1934.

Representations and warranties

highly negotiated provisions in a purchase-and-sale contract concerning the parties and the stock, goods, or other assets being sold

Resource Conservation and Recovery Act (RCRA)

imposes criminal penalties on both corporations and individuals who dispose of hazardous waste without the appropriate RCRA permit.

Substantial Continuity Test or Continuity of Enterprise Approach

imposes successor liability when the purchaser of the assets maintains the same business, with the same employees doing the same jobs under the same supervisors, working conditions, production process, and produces the same products for the same customers as the seller corporation.

Foreign Corporation

in a given state, a corporation doing business in that state but chartered or incorporated in another state

Compensatory Damages

in an action for breach of contract, the amount necessary to make up for the economic loss caused by the breach. Also called actual damages

Incidental Damages

in an action for breach of contract, the lesser and usually relatively minor damages that a non-breaching party incurs in mitigating damages resulting from the breach, such as the charges, expenses, and commissions incurred in stopping delivery; the cost of the transportation, care, and custody of goods after a breach; and the expenses incurred in connection with the return or subsequent disposition of goods that are the subject of the contract

Unconscionable

in contract law, oppressive or fundamentally unfair/ in contract law, the quality of being oppressive or fundamentally unfair. Unconscionability can be either procedural (relating to the bargaining process) or substantive (relating to the provisions of the contract

Surprise

in contract law, the extent to which the supposedly agreed on terms of the bargain are hidden in a densely form drafted by the party seeking to enforce the disputed terms

Promisee

in contract law, the person to whom a promise of performance was made

Promisor

in contract law, the person who made the promise of performance to another

Expectation Damages

in the case of breach of contract, remuneration that puts a plaintiff into the cash position the plaintiff would have been in if the contract had been fulfilled

Express Ratification

in the contract of agency, ratification that occurs when the principal, through words or behavior, manifests an intent to be bound by the agent's act

Potentially Responsible Parties (PRPs)

include 1. Present owner and operator of the facility 2. The owner or operator at the time of the disposal of hazardous substance 3. Any person who arranged for treatment or disposal of substance at the facility and 4.any person who transported hazardous substances to or selected the facility.

Winding Up

involves settling the accounts and liquidating the assets of the partnership for the purpose of making distributions and terminating the concern.

Fixtures

items of personal property that are attached to real property and cannot be removed without substantial damage. Fixtures are not considered goods under Article 2 and, like real property, are generally subject to the common law contract principles

Miranda v. Arizona

landmark self-incrimination case in which the Supreme Court ruled that a statement made by the defendant in custody is admissible only if the defendant was informed prior to police interrogation of their constitutional right to remain silent and to have legal counsel present. These warnings are referred to as the Miranda warnings.

Mitigate

lessen

Pre contractual Liability

liability imposed on a party for losses caused to the other party during negotiations that fail to ripen into a binding contract.

Usury statutes

limit the interest rate on loan and usually provide that any loan agreement in violation of the statute is unenforceable.

National Effluent Limitations

limitations established by the EPA which impose increasingly stringent restrictions on pollutant discharge based on the availability of economically achievable treatment and recycling technologies

Proxies

limited written powers of attorney entitling a proxy holder to vote the shares owned by the person giving he proxy.

Confrontation Clause

limits the prosecution's ability to introduce prior statements by witnesses not subject to cross examination at trial. Part of the 6th amendment right to confront and cross-examine witnesses.

Duty of Loyalty

mandates that fiduciaries act in good faith and in what they believe to be the best interest of the corporation, subordinating their personal interests to the welfare of the corporation.

Hillbilly

marry their cousins

Identification to the Contract

means the designation—by marking, setting aside, or other means—of the particular goods that are to be supplied under the contract

Greenmail

occurs when a raider acquires stock in a target company and then threatens to commence a hostile takeover unless the stock is repurchased by the target at a premium over the market price. Defensive tactics, such as shareholder rights plans (also called poison pills), can protect shareholders from coercive tender offers.

Termination

occurs when all the partnership affairs are wound up and the partners' authority to act for the partnership is completely extinguished.

Condition Concurrent

occurs when the mutual duties of performance are to take place simultaneously Example: If a buyer's obligation to pay for stock often does not become absolute until the seller tenders or delivers the stock certificate. The seller's obligation to deliver the stock certificates does not become absolute until the buyer tenders or makes payment.

Line

of-Business Test- under this test, if an officer, director, or controlling shareholder learns of an opportunity in the corporation's line of business, a court will not permit the person to keep the opportunity for themselves.

Board of Directors

officials elected by the stockholders that have central decision making authority. They typically employ officers to manage the day-to-day operations of the business

Sole Proprietorship

one individual owns all of the assets of the business and is solely and personally liable for all of its debts, contract obligations, and tort liabilities. The sole proprietor IS the business. A separate organization does not exist in a sole proprietorship; it is not a legal entity.

Condition subsequent

operates to terminate an existing contractual obligation if the condition occurs. Example: a partner agrees to sell his share of the partnership for ten times the partnership's earnings unless an audit of the partnership's books shows earnings of less than $5 million. The partner will not be obligated to sell if the audit reveals earnings of less than $5 million.

Racketeering Influenced and Corrupt Organization Act (RICO)

originally designed to combat organized crime and to provide an enforcement mechanism against syndicate bosses and masterminds who might otherwise escape liability. This act prohibits 1. The investment in an enterprise of income derived from racketeering 2. The acquisition of an interest in an enterprise through a pattern of racketeering activity involving at least two related predicate acts in a ten year period 4. Conspiring to engage in any of these activities

Members

owners of an LLC

Due Process Clauses

part of the 5th Amendment and 14th Amendment that bars the government from using the involuntary confession, even if the Miranda warnings were given. For example, physical coercion or brutality invalidates a confession.

Double Jeopardy Clause

part of the 5th Amendment that protects criminal defendants from multiple prosecutions for the same offense. If the defendant is found not guilty, then the prosecutor may not appeal the verdict. If the defendant is found guilty, however, the defendant may appeal. Double jeopardy does not bar a second prosecution if the first proceeding ended in a hung jury or if a guilty verdict was reversed on appeal.

General Partners

partner that remain jointly and severally liable for partnership obligations (just like partners in a general partnership), and they are responsible for the management of the partnership.

Limited Partners

partners that assume no liability for partnership debts beyond the amount of capital they have contributed and they have no right to participate in the management of the partnership.

Limited Liability Partnership (LLP)

partnership designed primarily for groups of professionals, such as law firms and accounting firms. These are created by filing the appropriate forms with a central state agency. This status can be attained without significant modification of the business's partnership agreement. The main focus is to insulate its partners from vicarious liability for certain partnership obligations, such as liability arising from malpractice, or negligent, or wrongful conduct of another partner.

Holders of Record

persons whose names appear on the corporation's shareholder list on a specified date and are entitled to vote.

Trusts

powerful associations of companies with the intention and power to create a monopoly or otherwise interfere with free course trade. The first US antitrust law, the Sherman Act, was passed by Congress in 1890 as fear of corporate power grew during the Progressive Era. The Act was part of a populist movement to combat the rise of trusts in such basic industries such as oil and steel.

Click-Wrap License

presents the user with a notice on his or her computer screen that requires the user to agree to the terms of the license by clicking on an icon. The software cannot be obtained until icon is clicked.

Eight Amendment

prohibits cruel and unusual punishment. -The death penalty is only available in cases involving murder and crimes against the state, such as treason, espionage, and terrorism.

Fifth Amendment

prohibits forced self-incrimination, double jeopardy, and criminal conviction without due process of law. It proceeds that no person "shall be compelled in any criminal case to be a witness against himself. This protection against self-incrimination extends to the preliminary stages in criminal process as well as the trial itself.

Use Immunity

prohibits the testimony of the witness from being used against the witness in anyway

Good Faith Exception

provides that evidence obtained by the police in good faith will not be excluded from trial even if it was obtained in violation of the 4th amendment. This rule also protects errors made by court personnel that potentially could lead to unconstitutional police conduct because of their reliance on the information from the court employee.

Inevitable Discovery Exception

provides that illegally obtained evidence can lawfully be introduced at a trial if it can be shown that the evidence would inevitably have been found by other legal means.

Consideration

providing something of value to create a valid contract. It can be money, an object, a service, a promise, or the giving up of a right to do something the promisor has the legal right to do.

Deal Protection Devices

provisions to dissuade other bidders and thereby protect the consummation of the friendly merger transaction. The Delaware Supreme court will uphold such provisions as long as they 1. Are reasonable 2. Are not coercive or preclusive and 3. Do not impair the board's ability to exercise its fiduciary duty.

Superlien

provisions which secure recovery of costs incurred by state agencies for environmental risks.

Implied Ratification

ratification that occurs when the principal,, by his or her silence or failure to repudiate the agent's act, acquiesces in it.

Environmental Justice

refers to the belief that decisions with environmental consequences (like where to place dumps, factories, or incinerators) should not discriminate against poor and minority populations.

Detrimental Reliance

reliance that can lead to a court barring the offeror from revoking the offer. Example: Someone says you can stay at their house in Hawaii if you fix a whole in the wall. You buy the plane ticket and don't reserve another place to stay because you accept the offer to stay in the house. Then the homeowner revokes the offer. The court can intervene here because there was detrimental reliance

Discharged

relieved

Duty of Care

requires fiduciaries to make informed and reasonable decisions and to exercise reasonable supervision of the business

National Pollutant Discharge Elimination System (NPDES)

requires permits for the discharge of pollutants from any point source to navigable waters.

Knowingly

requires proof of knowledge of the facts that constitute the offense, not knowledge of the unlawfulness, unless the text of the statute dictates a different result. Example: A person cannot be convicted of knowingly acquiring food stamps in an unauthorized manner unless he or she knew that they were doing so in an illegal or unauthorized way.

Vertical Restraints

restraints between firms at different levels in the chain of distribution—include price-fixing, marker division, trying arrangements, and some franchise agreements

Customer Restrictions

restrictions that prevent a dealer or distributor from selling to a certain class of customer

Implied Warranty of Fitness for a Particular Purpose

section 2-315 of the UCC< guarantees that the goods are fit for a particular purpose beyond the ordinary purposes for whch the seller recommended the. Broad in scope, this warranty may apply to merchants and mom merchants alike. This will only be implied only if 4 elements are present: The buyer had a particular purpose for the goods The seller knew or had reason to know of that purpose The buyer relied on the seller's expertise The seller knew or had reason to know the buyer's reliance

Price Discrimination

selling the same tangible product to different purchasers at the same level of the distribution at different prices. By outlawing this, Congress believed it could protect independent businesses by preventing the formation of monopolies.

Frustration of Purpose

situation in which contract performance is possible, but changed circumstances have made the contract useless to one or both of the parties

Essential Facility

some resource necessary to its rivals' survival that they cannot feasibly duplicate. A court considers four elements in these cases 1. Whether the defendant prevents would be competitors from using the facility 2. Whether it is feasible for the defendant to permit access to the facility by its would-be competitors 3. Whether the defendant has monopoly power and control of the facility and 4. Whether the competitors are able to duplicate the essential function. It does not require a firm to share resources that are merely useful, that would allow competitors to compete more effectively, or that the competitors could duplicate on their own.

Termination or Breakup Fees

sometimes characterized as liquidated damages provisions, and they are often 2% or 3% of the value of the deal. They are usually intended to help make the bidder whole for its out of pocket expenses

Restricted Stock

stoc subject to vesting restrictions. These are frequently used in the private company context where the stock is sufficiently inexpensive and that the executive can afford to purchase a substantial portion of it.

S Corporation

subchapter S corporation under the internal revenue code that is taxed as a pass-through entity. Shareholders have to pay tax on their pro rata shares of the corporation's income.

Undue influence

sufficient influence and power over another to make genuine assent impossible

Arrested

taken into custody against his or her will for criminal prosecution or interrogation

Cover

that is, buy the goods elsewhere and be reimbursed for the extra cost of the substitute foods

In re Caremark International In. Derivative Litigation

the Delaware Court of Chancery held that directors cannot satisfy their obligation to be reasonably informed concerning the corporation's compliance with the law and its business performance unless they assure themselves that the organization has in place reasonably designed information and reporting systems to provide senior management and the board itself with timely and accurate information as a matter of ordinary operations.

United States v. Jones

the Supreme Court held that placing a GPS tracking device on a car and tracking the car's movements for a month constituted a 4th amendment search requiring a warrant because of trespass on private property.

Maryland v. King

the Supreme Court held that taking a cheek-swab of DNA sample from an individual after his arrest for a felony involving violence is reasonable under the 4th Amendment.

Collective Entity Doctrine

the Supreme Court holds that the custodian of records for a collective entity (such as a corporation) may not resist a subpoena for such records on the grounds that the act of production will incriminate him or her

Kyllo v. United States

the Supreme Court ruled that police may not use infrared thermal-imaging scanners to scan homes without a warrant because it is a violation of the fourth amendment. However, police are allowed to search garbage put to the curb for pickup without a warrant. --The court has permitted warrantless searches of business offices when the government agent entered during normal business hours and observed whatever was visible to customers or the public from the public areas of the premises

Florida v. Jardines

the US Supreme court again looked to tort and property law to determine if using a drug-sniffing dog on the front port of the home an individual suspected of growing marijuana in his home constituted as a "search." Because the officers invaded the area surrounding the home it would be a 4th amendment violation if a warrant wasn't secured first. They only have the right to approach a home and knock on its door without a warrant.

Vertical Merger

the acquisition by one company of another company at higher or lower level in the chain of production and distribution. Example: the merger of an airplane manufacturer and the airplane engine manufacturer

Conglomerate Mergers

the acquisition of a company by another company in a different line of business—has largely been abandoned because the merging companies are in different markets and there is no threat to competition

Conscious Parallelism

the act of consistently setting prices at the same levels and changing prices at the same time as competitors. To prevail in a price fixing suit, a plaintiff must present evidence that "tends to exclude the possibility" that the alleged conspirators acted independently.

Carbon Footprint

the amount of carbon dioxide and other greenhouse gasses a company releases into the air

Bail

the amount of money a defendant must post as a bond to guarantee his or her appearance at trial

Liquidated Damages

the amount of money stipulated in a contract to be paid to non-breaching party should one of the parties breach the agreements

Predatory Pricing

the attempt to eliminate rivals by undercutting their prices to the point where they lose money and go out of business, leaving the monopolist unrestrained by competition and thus able to raise its prices.

Reliance Damages

the awards made to a plaintiff for any expenditures made in reliance on a contract that was subsequently breached

Covenants

the borrower's promise to the lender that it will or will not take specific actions as long as either a commitment or a loan is outstanding

Output Contract

the buyer promises to buy all the output that the seller produces. Again, the parties do not know how many units that will be, but the seller must set all its output to that buyer. The seller cannot sell any of its products to another buyer.

Booked

the charges are written in a register against the criminal. The arresting officer must then file a report with the prosecutor and the prosecutor decides whether to press charges against arrested individual or not.

Merger

the combination of two or more corporations into one. The disappearing operation is no longer maintains it separate corporate existence by becomes part of the surviving corporation. The surviving corporation assumes that is, becomes responsible for, all of the liabilities and debts of the disappearing corporation and acquires all of its assets by operation of the law.

Horizontal Merger

the combining of two or more competing companies at the same level in the chain of production and distribution.

Attorney/Client Privilege

the communications between a criminal defendant and his or her attorney are protected from disclosure.

Recklessness

the conscious disregard of a substantial risk that one's actions will result in the harm prohibited by the statute. Recklessness is found when the individual knew of the possible harm of his or her act but ignored the risk.

United States v. Stein

the court ruled that the federal government had violated managers; 6th Amendment rights when it pressured their employer to refrain from advancing their legal expenses as a condition to not prosecuting the employer for allegedly creating and marketing fraudulent tax shelters.

Satisfaction

the discharge of the debt

Duty of Candor

the duty to disclose "fully and fairly" all material facts. Directors who knowingly disseminate false information that results in corporate injury or damage to an individual stockholder violate their fiduciary duty and may be held accountable in a manner appropriate to the circumstances.

De Jure Corporation

the entity is a corporation by right and cannot be challenged.

Actual Authority

the express or implied power of an agent to act for and bind a principal to agreements entered into by an agent

Puffing

the expression of opinion by a seller regarding goods; not a warranty expressing an opinion about the quality of the goods Ex) When a car sales person says "this is a top-notch car" it is puffin versus a factual statement like "it will get 25 mpg"

Negligence

the failure to see the possible negative consequences of one's actions that a reasonable person would have seen. Failure to exercise reasonable care

Duty of Loyalty

the fiduciary duty of agents, officers, and directors to act in good faith and in what they believe to be the best interest of the principal or the cooperation

Duty of Care

the fiduciary duty of agents, officers, and directors to act with the same care that a reasonably prudent person would exercise under similar circumstances. Sometimes expressed as the duty to use the same level of care a reasonably prudent person would use in the conduct of his or her own affairs.

Duty of Care

the fiduciary duty of agents, officers, and directors to act with the same care that a reasonably prudent person would exercise under similar circumstances. Sometimes expresses as the duty to use the same level of care a reasonably prudent person would use in the conduct of his or her own affairs.

Duty of Obedience

the fiduciary duty of agents, officers, and directors to obey all reasonable orders of the principal

Willful Misconduct

the government must prove that the defendant acted with knowledge that his conduct was unlawful. The defendant does not need to have known which particular law he or she was breaking, however; it is sufficient that the defendant knew that they were violating some law

Vicarious Liability

the imposition of civil or criminal liability on one party (e.g., an employer) for the wrongful acts of another. Also called imputed liability

Vicarious Lability or Imputed Liability

the imposition of liability on one party for the wrongs committed by another. Under this theory, officers, directors, and managers may, under certain limited circumstances, be found guilty of crimes committed by employees under their supervision.

Natural Resources Law

the laws that govern wilderness protection, wildlife protection, coastal zone management, energy conservation, and national park designation

Managers

the leaders who are responsible for managing the business, property, and affairs of the company. The managers appoint the officers of the company.

National Ambient Air Quality Standards (NAAQS)

the maximum levels of pollutants in the outdoor air that, with adequate margins of safety, are compatible with public health.

Novation

the method of contract modification by which the original contract is canceled and a new one is written with perhaps only one change, such as substitution of a new party

Quorum

the number of members of a decision-making body that must be present for business to be transacted. In most jurisdictions, the holders of more than 50% of the outstanding shares of a corporation comprise a quorum for a shareholders' meeting

Shareholders

the owners of corporations that are also knows as stockholders

Battle of the Forms

the parties negotiate the essential terms of the contract (for example, quantity, quality, and delivery date) but neglect to bargain over items that are less immediately important (for example, whether disputes will be subject to arbitration, time period for complaints of defect, or whom will be at risk of loss if shipment process fails). The parties then exchange standard printed forms, each of which is filled with fine print listing all kinds of terms advantageous to the party who drew up the form. (Is there a contract then? If so, what are its terms?) The UCC calls truce in the battle of the forms by effectively abolishing the mirror-image rule.

Bidder

the party making an offer, also known as a raider

Standing

the plaintiff must have suffered an injury from the defendant's violation of antitrust law. Example: a consumer buying goods from an innocent middle man does not have standing to recover from a manufacturer who was a member of a price-fixing cartel

Express Authority

the power of an agent to act for a principal based on that agent's justifiable belief that the principal has authorized hum or her to do so; may be given by the principal's actual words or by an action that indicates the principal's consent

Implied Authority

the power of an agent to do whatever is reasonable to complete the task he or she has been instructed to undertake

Market Power (also called monopoly power)

the power to control prices or exclude competition in a relevant market. The determination of whether a particular firm has market power usually requires complex economic analysis.

Exercise Price

the price at which the optionee can exercise the options by purchasing stock

Mutuality of obligation

the principle whereby both parties in a bilateral contract are obligated to perform their sides of the bargain

Antitrust Laws

the principles that the economy functions best when firms are free to compete vigorously with one another. Prices of goods are at lower prices and consumer welfare is maximized. -Includes a ban on horizontal price fixing

Incorporation

the process by which a corporation is formed. The corporate statutes of each state set forth the steps that must be taken to establish a corporation in that state.

Plea bargaining

the process whereby the prosecutor agrees to reduce the charges in exchange for a guilty plea from the accused. This is used when a lower-ranking member of a criminal conspiracy will "cop a plea"—that is, provide the prosecutor with some testimony incriminating his or her criminal superiors n exchange for a reduced sentence or immunity from prosecution.

Establishment of Mail or Wire Fraud

the prosecutor must demonstrate 1. The existence of a scheme intended to defraud or to obtain money or property by fraudulent means 2. The use of the mails or of interstate telephone lines in furtherance of the fraudulent scheme

Successor Liability

the responsibility an acquirer of corporate assets has for the liabilities of the seller. Ordinarily they do not assume any of the seller's liabilities but this doctrine arose out of attempts by companies to evade liability by selling the bulk of their business or assets to another firm and then distributing proceeds to shareholders, thereby leaving creditors with no assets to collect against.

Appraisal Rights

the right to receive in cash the fair value of the shares they were forced to give up as a result of the transaction. The right is available only if the transaction was subject to shareholder approval and if the dissenting shareholder complies with certain statutory procedures.

Operating Agreement

the rights, obligations, and powers of the members, managers, and officers

Rule of Reason

the rule that takes into account a defendant's actions as well as the structure of the market to determine whether an activity promotes or restrains competition. The objective of this rule is to determine whether, on balance, the activity promotes or restrains the competition, or put differently, helps or harms consumers.

Takeover

the situation which a bidder acquires sufficient stock from a corporation's shareholders to obtain control of the corporation, often over the objection of the target corporation's board of directors.

Corporate Domicile

the state under whose laws a corporation is formed

Embezzlement

the taking of money or property that is lawfully in the employee's possession by reason of his or her employment. For example, a company's treasurer who takes money that belongs to the company y writing checks to dummy accounts is guilty of this.

Mirror Image Rule

the traditional concept of contract formation that requires that what the offeree accepts must be exactly the same as what the offeror has offered the UCC abolished the mirror image rule which requires the acceptance to contain the exact same terms as the offer.

Navigable Waters

the water of the United States, including the territorial seas. They include for example, waters used in interstate or foreign commerce and interstate lakes, rivers, and streams.

Larceny

theft or the simple taking of property without the owner's consent

Creditor Beneficiary

third party to a contract that the promise enters into in order to discharge a duty to said third party.

Donee Beneficiary

third party to a contract to whom promise does not owe an obligation, but rather wishes to confer a gift or a right of performance

Dissenting Shareholders

those who voted against the transaction

Impossibility Defense

to establish this defense the corporate officer must introduce evidence that he exercised extraordinary care, but was nevertheless unable to prevent the violations of the act.

Closely Held Corporation

typically has a small number of shareholders, and it is characterized by the absence of a market for its stick. If a court characterizes a corporation as closely held, it will often impose a greater duty of loyalty and care on the corporation's directors and majority shareholders.

Tender of Delivery

under article 2 of the UCC, the seller's notification to the buyer that it has the goods ready for delivery. (If the seller is not a merchant the risk passes to the buyer upon tender of delivery)

Voidable

unenforceable

Negligence Per Se

violations of a criminal statute—in a subsequent civil suit, the court will accept the criminal conviction as sufficient proof that the defendant was negligent

Intent

when a person consciously decides to do wrong or to cause the harm prohibited by the statute, or when he or she knows such harm is substantially certain to result from their conduct

Counteroffer

when an offeree rejects an offer and makes a new offer. A counteroffer constitutes a rejection of the original offer and reverses the roles of the original offeror and offeree

Constructive Trust

when an officer is forced to hold the profits for the benefit of the corporation and pay them over to the corporation on request. This can be imposed by a shareholder to block the officer from a sale that was not offered to the corporation before the officer was trying to take advantage of it for personal gain.

Freeze Out

when majority shareholders force minority shareholders to convert their shares into cash as long as the transaction is fair this is okay.

Delegation of Negotiating Authority

when negotiation responsibilities are delegated to managers or inside directors the board is exposed to much greater risk of liability

Proxy Contest

when someone wishing to replace the board with his or hew own candidates must acquire sufficient number of shareholder votes to do so.

Nolo Contendere

when the accused can plead that he or she does not contest to the charges. For purpose of criminal proceedings, this is equivalent to a guilty plea. Unlike a guilty plea however, a like this cannot be introduced at a subsequent civil trial. Therefore, the plea may be used by corporate defendants who anticipate civil suits based on the same activity for which they face criminal charges.

Bust Up Takeover

when the acquired corporation is taken apart and its assets sold piecemeal.

Requirements Contract

when the buyer agrees to buy all its requirements of a specified commodity, such as steel, from the seller, and the seller agrees to meet those requirements. Ex) a company agrees to buy all of the steel they need for production from a certain seller. The amount is unknown but it is definite that they won't buy any from another seller.

Staggered (or classified) Board

where directors serve for a specified terms, usually three years, with only a fraction of them up or reelection at any one time.

Proxy Contests

where insurgents propose their own slate of directors or rally to oppose a board proposal by sending out their own proxy statement and soliciting proxies for their candidates or position, continue to be an important technique for obtaining control of a publicly traded company or opposing a particular transaction proposed by the incumbent board of directors.

Preliminary Hearing

where the prosecutor presents evidence demonstrating probable cause that the defendant committed the felony. Following this hearing, formal charges are usually filed either by the prosecutor through an information or by a grand jury through an indictment

Standstill Agreement

where the shareholder agrees not to commence a tender offer or proxy contest or to buy additional shares of the issuer for a period of time, often ten years

No Shop Agreements

where the target agrees not to actively solicit other bidders but retains the right to negotiate with parties that submit unsolicited buds to the target.