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
Capital Account: The record which lists all basic assets
of a business, not including inventory or the alleged value of good
Capital Assets: Equipment, property, and funds owned by a
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
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
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
Cause of Action: The plaintiff's legal claim against the
defendant. There is often more than one cause of action in a
C-Corporation: Any corporation that has not elected S
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
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
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
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
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
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
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
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.