An 'Act of God' refers to violent and catastrophic events caused by natural forces which could not have been prevented or avoided by human foresight or prudence. In legal terms, such events can excuse the performance of a contractual duty if that performance is rendered impossible.
Actual Cash Value (ACV) is an insurance term referring to the amount equivalent to the replacement cost of damaged or lost property, minus depreciation. It is a measure sometimes used as a substitute for market value in insurance claims.
An addendum is a document that is attached to an existing contract to modify, clarify, or add terms to the original agreement. Commonly used in various fields, an addendum can provide additional information or conditions without altering the main body of the contract.
A legally enforceable agreement containing standardized terms, offered by a business to consumers of goods or services. The consumer must accept the standard provisions and does not have the ability to change those terms.
For purposes of consolidated tax returns, an affiliated group is composed of companies whose common parent or other inclusive corporation owns at least 80% of the voting power and value of the stock of the includable corporations (except preferred stock).
An agent is a person appointed by another person, known as the principal, to act on his or her behalf. Agents have the authority to perform tasks or make decisions as specified by the principal.
A company incorporated under the laws of a foreign country regardless of where it operates. 'Alien corporation' can be synonymous with 'foreign corporation,' but the latter can also refer to a corporation formed in a different U.S. state than where it conducts business.
Allocated benefits refer to the payments in a defined-benefit pension plan, where benefits are distributed to participants as premiums are received by the insurance company. This ensures that employees are guaranteed a pension at retirement, even if the firm ceases operations.
Anticipatory breach involves breaking a contract before the actual time of required performance. It occurs when one party repudiates their contractual obligation beforehand by indicating that they will not or cannot fulfill their contractual duties.
Apparent authority is a legal doctrine where a principal is held responsible for the actions of an agent when the principal's words or actions reasonably lead a third party to believe that the agent has the authority to act on behalf of the principal.
An assignee is a person, company, or entity to whom an agreement, contract, or right is sold, given, or transferred. This legal transfer allows the assignee to step into the shoes of the assignor and assume their rights and obligations under the original contract.
A bailee is a person who has temporary custody of the personal property of another. The degree of liability for such property can vary depending on the circumstances and the terms of the bailment agreement.
A bilateral contract is a mutual agreement in which both parties commit to performing an action or refraining from doing something, creating obligations on both sides. This is a common framework in business, employment, and service agreements.
A bilateral mistake occurs when both parties to a contract are mistaken about the same material fact. This mutual error can result in the contract being voidable, as the actual terms do not align with the parties' expectations.
A brand name is the vocalizable component of a brand, trademark, or service mark, setting it apart from visual identifiers. It can be a word, letter, or a combination of words and letters.
A breach refers to the failure to perform some contracted-for or agreed-upon act or to comply with a legal duty owed to another or to society.
Dissolution of any unit, organization, or group of organizations. An antitrust action by the Justice Department may result in the breakup of a large corporation into smaller companies if it is found to be in violation of antitrust laws.
A voluntary payment offered, usually surreptitiously, in expectation of a special favor. While offering a bribe is not always illegal, accepting one is unethical or frequently illegal.
A business entity is an organization established as a separate entity for the purpose of conducting business. It functions independently of its owners and has its own legal rights and obligations.
A principle applied to various transactions to ensure that the transaction serves a legitimate business purpose, other than solely for tax benefits, in order to be considered valid for tax purposes.
A buy-and-sell agreement is a strategic approach utilized in sole proprietorships, partnerships, and close corporations to safeguard the continuity of the business upon the death or disability of a proprietor, partner, or shareholder. Such agreements involve selling the business interests to remaining members according to a predetermined formula.
A buy-sell agreement is a legally binding pact among partners or stockholders that outlines the process for one party to buy the interests of another if certain events occur, such as the death of a partner.
A cancellation clause is a contract provision that grants the right to terminate obligations upon the occurrence of specified conditions or events. For example, a cancellation clause in a lease might permit the landlord to break the lease upon the sale of a building.
A charter is a formal document granted by a governing body that establishes a corporate entity, often detailing its rights and privileges. It can also refer to hiring a vehicle for exclusive use.
The Chartered Property and Casualty Underwriter (CPCU) is a professional designation that signifies expertise in various areas including insurance, risk management, economics, finance, management, accounting, and law. To earn this prestigious designation, candidates must complete 10 national examinations and have at least three years of work experience in the insurance industry or a related field.
The Clayton Antitrust Act is a landmark piece of legislation aimed at promoting fair competition and eliminating unethical business practices in the public marketplace.
A clerical error is a mistake made during the process of copying, typing, or transmitting a document, as opposed to judgment errors or technical errors.
A Close Corporation Plan consists of a pre-arrangement that ensures surviving stockholders can purchase the shares of a deceased stockholder based on a pre-determined formula, thereby maintaining control of the corporation within the existing shareholder group.
A corporation that dissolves before realizing a substantial portion of the taxable income to be derived from its properties. The Internal Revenue Service (IRS) treats the gain on the sale or liquidation of a collapsible corporation as ordinary income to the stockholder.
Commerce Clearing House (CCH) is a leading provider of information services, software, and workflow tools for tax, accounting, and legal professionals.
Commerce Clearing House (CCH) is a prominent publisher of tax services and a range of other business-related publications, providing essential resources for professionals in various sectors.
Commercial law, also known as business law or mercantile law, is the body of law that governs the rights and obligations of persons in their commercial dealings with one another, including trade, sales, business operations, and the regulatory framework influencing these activities.
Located at the principal place from which a corporation's trade or business is managed or directed.
Commitment refers to a promise or pledge made by one entity to perform or refrain from performing a specific act, often involving legal obligations and enforceable terms.
Legislation governing the activities of companies in the UK, with a comprehensive overhaul implemented in the Companies Act 2006.
A person legally capable of entering a contract. They must be of legal age and not mentally incompetent or under the influence of intoxication.
Complete Liquidation refers to a series of distributions that redeem all the stock of a corporation under a specific plan.
Compulsory liquidation, also known as compulsory winding-up, is the process of liquidating a company by a court order. This detailed guide covers its definition, examples, frequently asked questions, related terms, and further reading suggestions.
The term 'concession' can refer to various business arrangements, such as small shops in lobbies, government-granted rights, rent reductions, or compensation in corporate underwriting.
A condition precedent is an express or implied provision of a contract that requires the occurrence of a specific event or the performance of a certain act before the contract becomes binding on the parties.
A condition subsequent is a provision in a contract that describes an event or act, upon the happening of which certain obligations under the contract terminate.
A contingency is a potential event or circumstance that is uncertain but could have either positive or negative consequences on an entity's financial situation or operations. It is often considered in risk management and financial planning.
A contingent liability refers to potential financial obligations that a business may incur due to actions of parties other than its own employees, notably when independent contractors are involved.
A contractor is an individual or company who contracts to do work for another party. Independent contractors take on specific tasks while maintaining control over the means and methods of executing the job.
A corporate acquisition involves one company purchasing most or all of another company's shares to gain control of that company, which can lead to significant structural and operational changes.
Corporate reorganization involves significant changes in the structure of a corporation through mergers, acquisitions, divisive acquisitions, or other forms of restructuring.
The corporate veil is a legal concept that separates the actions and liabilities of a corporation from its shareholders or officers, offering them protection against personal liability. Courts may pierce the corporate veil to hold individuals accountable for a corporation's actions.
A counterclaim is a counter demand made by a defendant against the plaintiff. It is not merely an answer or denial of the plaintiff's allegations; rather, it asserts an independent cause of action in favor of the defendant.
Countermand refers to the action of revoking or retracting a previous order by issuing a new and contradictory directive. It is commonly used in various business contexts where changes in instructions or decisions are needed promptly.
A counteroffer is the rejection of an original offer to buy or sell along with a simultaneous substitute offer. They are commonly encountered in various transactions, particularly in real estate, where factors other than price might be negotiated.
A Cross Purchase Plan is a life insurance strategy used among business partners. Each partner buys a life insurance policy on the other partners to ensure business continuity and facilitate buyouts in the event of a partner's death.
De facto refers to situations that exist in reality, even if not legally recognized or officially sanctioned. It applies to scenarios where practices or institutions operate as though they were legal, even if they lack official authorization.
Deceptive advertising refers to marketing practices that make false claims or misleading statements, creating a false impression about products or services.
Deceptive packaging refers to packaging that creates a misleading impression about the quantity or quality of the product it contains.
Dehiring refers to the process of laying off, firing, or rejecting a previous hiring decision. It involves retracting the employment of an individual or group of employees after they have been hired.
Direct Liability refers to the legal obligation of an individual or business due to negligent acts or omissions that result in bodily injury or property damage to another party, without any intervening circumstances.
A disclaimer is a statement or assertion that denies or renounces a claim, right, or responsibility. It is commonly used in various contexts such as legal claims, property rights, insurance policies, and professional opinions.
Dishonor refers to the refusal, whether rightly or wrongly, to make payment on a negotiable instrument when such an instrument is duly presented for payment.
Documentary evidence refers to any evidence introduced at a trial in the form of documents. This includes written or printed papers, such as contracts, wills, deeds, and letters. It plays a pivotal role in the legal proceedings, supporting the factual assertions made by the parties involved.
Domestic corporations are entities established under the laws of the United States, operating primarily within the country, and are subject to federal and state regulations.
A domestic corporation or partnership refers to a business entity created or organized within the United States or under the laws of the United States or any state. Such entities are subject to federal and state regulations specific to domestic businesses.
A detailed explanation and exploration of the term 'Duty,' including its application in taxation, fiduciary obligations, and additional contexts.
An emolument refers to the income or compensation received from employment, office, or labor, including salary, fees, and other forms of compensation.
Statutes specifying the extent to which employers shall be liable to make compensation for injuries sustained by their employees in the course of employment.
Employment at will is a legal doctrine that gives employers the right to hire, fire, suspend, or discipline employees at their discretion, as long as these actions do not violate any laws or contracts.
Entertainment expenses and business meals are deductible only if they are 'directly related to' or 'associated with' the active conduct of a taxpayer's trade or business. These expenses are deductible to the extent of 50% of cost, excluding any lavish or extravagant costs.
Equitable distribution refers to the fair division of property among interested persons, most commonly observed during divorce proceedings or the settlement of estates.
Exculpatory pertains to evidence or statements that justify or excuse a defendant from alleged fault or guilt. It can also refer to clauses in financial and legal documents that release a party from liability.
Fully accomplished or performed actions, where nothing is left unfulfilled. This is the opposite of executory, where something remains to be completed.
An executed contract is one where all terms and conditions have been met and fulfilled by the parties involved, indicating the conclusion of the contractual obligations.
An executory contract is an agreement that has not been fully accomplished or completed, but remains contingent upon the occurrence of some future event or performance of some future act.
Express authority refers to the clear and unequivocal powers granted to an agent by a principal, either orally or in writing, allowing the agent to act on behalf of the principal in specific matters.
An express contract is a legally binding agreement, the terms of which are clearly stated either orally or in writing. It is distinguished from an implied contract where the terms are inferred from conduct or circumstances.
An extension refers to an agreement between two parties to extend the time period specified in a contract. In the context of taxation, an extension provides an additional period of time to file an income tax return.
A neutral party who studies the issues in a dispute and makes a recommendation for a fair settlement.
An agent employed to sell goods or merchandise consigned or delivered to him by or for his principal for compensation.
The term 'Fleet Factors' refers to a landmark 1990 court decision in the United States regarding a lender's potential exposure to liability for environmental cleanup if the lender acquires the property by foreclosure.
A foreign corporation is a legal entity that is registered outside the state or country in which it primarily conducts business. It is important to distinguish between out-of-state corporations and alien corporations.
Form 10-Q is a quarterly report mandated by the United States Securities and Exchange Commission (SEC), providing a comprehensive overview of a company's financial performance for the quarter.
The right to sell an ownership interest to another party who acquires all of the seller's rights, without permission from others. This is a characteristic of corporate stock, though not of restricted stock, as contrasted with a partnership interest.
A Friendly Suit is an action authorized by law, brought by agreement between the parties, to secure a judgment that will have a binding effect in cases where an agreement or settlement would not.
A frivolous lawsuit is a legal claim presented in court without substantial grounds or factual support. Such claims are considered a waste of judicial resources and can result in penalties for the party who files them.
A general partnership is a business arrangement where two or more individuals share ownership and management, and each partner is personally liable for the business's debts and obligations. Income and losses are passed through to the partners.
Goods refer to commodities or items of commerce that are tangible and physical, and can be owned, sold, or exchanged in the marketplace, excluding real estate, choses in action, investment securities, or similar items.
In various domains such as business law, taxation, and international business, the term 'GOV' refers to governmental bodies, regulations, or actions pertaining to public policies, administrative systems, and regulatory frameworks that impact businesses, individuals, and the economy.
Guaranteed payments for capital refer to payments made to a partner by a partnership, determined without regard to partnership income, specifically for the use of that partner's capital.
A hold harmless agreement involves the assumption of liability through a contractual arrangement by one party, effectively eliminating the liability on the part of another party. These agreements are common in scenarios where one entity wants to minimize their risk exposure.
A 'home office' can refer to either the headquarters of a company or an office within a personal residence used exclusively for business purposes. Each carries specific implications, particularly in terms of taxation and business operations.
A hostile takeover is an acquisition attempt by another company or raider against the wishes of the current management and board of directors.
Hush money refers to cash given to assure the silence of the receiver, often in a manner akin to a bribe. It is typically used to keep certain information confidential, preventing it from becoming public knowledge.
An implied contract refers to an agreement that is established by the actions, behavior, or circumstances of the parties involved, without a written or spoken exchange. Unlike an explicit contract, its terms are inferred from conduct rather than articulated in words.
An Implied In Fact Contract is an agreement derived from the actions, behavior, or circumstances of the involved parties, rather than from their written or spoken words.
An implied warranty is a legal term referring to the assurance that a product or service meets certain standards of quality and functionality, even if this warranty is not explicitly stated in writing. It contrasts with an express warranty, which is explicitly communicated.
Imposition refers to an excessive or unwarranted request made by an individual or entity, or the act of levying a tax or fine on a specific item.
The term 'In Perpetuity' refers to a state of existence that continues indefinitely without end. In various legal and business contexts, it implies a perpetual time frame or duration.
Incidental damages refer to losses that are reasonably related to the wrongful conduct that gives rise to a claim for actual damages. These damages are intended to cover additional costs incurred by a party due to another party’s breach or misconduct.
Incorporation is the process by which a company is officially registered and recognized as a legal entity separate from its owners, allowing it to own assets, incur liabilities, and engage in contracts.
An independent contractor is a self-employed individual who offers services to clients while maintaining complete control over how those services are provided. They handle their own taxes and benefits, and are not classified as employees of the payor.
Infringement refers to the violation or overstepping of another individual's or entity's protected rights, including but not limited to intellectual property rights such as copyrights, patents, and trademarks.
Intangible property represents possessions that hold real value but do not have a physical presence. Examples include stock certificates, bonds, promissory notes, and franchises.
