Business Law GLOSSARY

Glossary of Business Law Terms

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Cafeteria Plan: A type of employment benefits plan in which the employee selects benefits from a "menu," up to a specified dollar amount.

Capital Account: The record which lists all basic assets of a business, not including inventory or the alleged value of good will.

Capital Assets: Equipment, property, and funds owned by a business.

Capital Expenditure: Payment by a business for basic assets such as property, fixtures, or machinery, but not for day-to-day operations such as payroll, inventory, maintenance and advertising.

Capital: The basic assets of a business (particularly corporations or partnerships) or of an individual, including actual funds, equipment and property; distinguished from stock in trade, inventory, maintenance, advertising and payroll.

Carrier: In general, any person or business which transports property or people by any means of conveyance (truck, auto, taxi, bus, airplane, railroad, ship), almost always for a charge.

Carrying For Hire: The act of transporting goods, or people, for a fee. It is important to determine if the carrier has liability for safe delivery or is subject to regulation.

Carrying on Business: Pursuing a particular occupation on a continuous and substantial basis. There need not be a physical or visible business "entity" as such.

Casualty: A loss of property due to fire, storm shipwreck or other casualty, which is allowable as a deduction in computing taxable income.

Cause of Action: The plaintiff's legal claim against the defendant. There is often more than one cause of action in a lawsuit.

C-Corporation: Any corporation that has not elected S Corporation status.

Certificate of Authority: A document issued by the secretary or state or equivalent department that authorizes a foreign corporation to operate in a state other than its state of incorporation.

Certificate of Good Standing: A document issued by the secretary or state or equivalent department that certifies that a corporation in validly existing and in compliance with all periodic and taxation requirements.

Civil Law: That part of the law which governs relationships between people where there is no criminal activity involved.

Close Corporation: A corporation owned by a small number of individuals. Corporations must elect to be close corporations by inserting a statement in their articles of incorporation. State laws typically permit close corporations to be operated more informally than non-close corporations

Co- Partner: One who is a member of a partnership. The prefix "co" is a redundancy, since a partner is a member of a partnership. The same is true of the term "co-partnership."

Co-Defendant: A defendant joined together with one or more other defendants in the same case.

Commercial Law: All the laws which apply to the rights, relations and conduct of persons and businesses engaged in commerce, merchandising, trade and sales. In recent years this body of law has been codified in the Uniform Commercial Code.

Commission: A fee paid based on a percentage of the sale made by an employee or agent, as distinguished from regular payments of wages or salary.

Common Counts: Claims for debt alleged in a lawsuit (included in the complaint), which are general and alleged together so that the case will not be dismissed based on a technicality.

Common Law: Body of law that has grown based on the decisions of courts long ago. It originated in England and has since passed to the United States. It is always changing to reflect the current needs society.

Common Stock: A corporation's primary class of stock. Common stock holders typically have voting rights.

Company: Any formal business entity for profit, which may be a corporation, a partnership, association or individual proprietorship. Often people think the term "company" means the business is incorporated, but that is not true.

Comparable Worth: A legal concept which requires that people who work similar jobs of similar worth to the employer must be paid the same amount regardless of gender.

Comparative Negligence: A defense to negligence used when it is believed that the plaintiff's negligence contributed to his or her injuries. Based on the amount of negligence by each party, the amount of damages is adjusted accordingly.

Complaint: A pretrial document filed in a court by one party against another that states a grievance, called a "cause of action."

Conscious Parallelism: An un-discussed imitation by a business of a competitor's action, such as changing prices up or down without the active conspiracy between business rivals, which would make this coincidental activity a violation of anti-trust laws.

Consignee: A person or business holding another's goods for sale or for delivery to a designated agent.

Consignment: The act of consigning goods to one who will sell them for the owner or transport them for the owner.

Consolidated Omnibus Budget Reconciliation Act ("COBRA"): A federal law that requires employers to allow employees to continue their health insurance coverage after termination, in the same insurance group, at the group rate, and providing the same benefits.

Constructive Discharge: A type of termination of the employment relationship in which the employee quits, but the employer is liable as if a wrongful termination occurred, because the employee was forced to resign due to intolerable working conditions.

Contingency Fee Agreement: An agreement between an attorney and their client, which allows the attorney to be paid only if the client prevails in a lawsuit and collects monetary damages. The lawyer then receives a percentage of the damages, generally 1/3 of the award.

Contributory Negligence: A defense to negligence, which points out that the plaintiff's negligence contributed to his or her injuries. Contributory negligence is an absolute bar to the plaintiff's recovery against the defendant.

Conversion; Conversion Rights: Rights allowing the holder of shares of stock or other financial instrument to convert to other shares of stock.

Convertible Instrument: Financial instruments such as bonds or notes that can be converted into shares of stock. Shares of stock may also be convertible into shares of another class.

Cooperation: An organization formed with state governmental approval to act as an artificial person to carry on business (or other activities), which can sue or be sued, and (unless it is non-profit) can issue shares of stock to raise funds.

Cooperative Consortium: A group of separate businesses or business people joining together and cooperating to complete a project, work together to perform a contract or conduct an ongoing business.

Corporate Secretary: A corporate officer, elected by the directors, usually charged with record-keeping responsibilities.

Co-sign: To sign a promissory note or other obligation in order to share liability for the obligation.

Counterclaim: A demand by the defendant against the plaintiff asserting an independent cause of action in the same lawsuit.

Cross Examination: Questioning the witness who has been presented by the opposition at trail or a deposition.

Cumulative Voting: A system of voting shares of stock used in some states. Cumulative voting gives minority shareholders additional voting power by allowing them to "cumulate" their votes for a single director.