Business Law Glossary
We provide a glossary of some key business law terms for your convenience.
Preparing to Meet with Your Business Law Attorney
Before meeting with your attorney, it is wise to prepare information relating to your legal matter. This checklist provides different types of information you may be asked to bring to an initial meeting with your business law attorney.
Basic Contract Law
The following article discusses basic contract law.
Business Law Glossary
A successful business venture usually grows from a simple idea into greater commercial possibility. One of an entrepreneur's first and most crucial business decisions is to determine what legal form the new enterprise should take. If you are starting a company, a skilled business law attorney can help you weigh the pros and cons of each available business entity, considering the laws of your jurisdiction; your goals; and issues like flexibility, taxation, legal liability, size and potential profitability.
An entrepreneur can choose from a sole proprietorship, partnership, corporation, limited liability company (LLC) or other type of entity, depending on what is available under the law of the applicable state or jurisdiction.
Sole proprietorships are relatively simple operations run by self-employed persons who have not organized their businesses into formal business entities.
Partnerships are formal or informal agreements to work cooperatively and divide the business profits and losses. In general partnerships all the associated parties have joint decision-making responsibility and share in the profits, losses, debts and liabilities. In limited partnerships the limited partners supply capital and share proportionately in income (and perhaps losses proportional to contributions) but do not take active partnership control, which is left to general partners.
Corporations are formally organized business entities of perpetual duration typically governed by state laws and regulations, and usually managed by boards of directors and corporate officers. Shareholders can participate in corporate profits and losses by buying shares of corporate stock. Corporations are considered separate legal entities from their directors, officers and shareholders, who are normally not personally responsible for corporate debts and liabilities.
Limited liability companies, also known as LLCs, offer members restricted personal responsibility for company debts and obligations. LLCs usually exist for a specified number of years. Like corporations, LLCs must file documents with state agencies to establish and maintain their status. LLCs only came into being beginning in the 1970s and function in several ways like partnerships.
Joint ventures are specific business projects carried out by two or more persons. Joint venturers share financing, management, liabilities and profits from limited commercial transactions, as opposed to having ongoing general business relationships. Legally, joint ventures are usually treated similarly to partnerships.
Most states allow operation of all the business types defined above and some states also offer different varieties of these entities. However, each state's laws, although similar, have their own unique twists and turns. Therefore, a business lawyer experienced in the particular laws of your jurisdiction can advise you on a desirable course of action for your business, depending on your objectives. Of foremost concern, the selection of a business form usually has tax implications, as well as an effect on how the profits are distributed and liabilities attached.
Copyright © 2011 FindLaw, a Thomson Reuters business
DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.
Preparing to Meet with Your Business Law Attorney
As you prepare for your first meeting with your business law attorney, you should gather certain documents and information to bring with you. The information you provide will help your attorney to analyze your business needs and create a plan that will best meet your business goals. The following list can help you decide what information to bring. Not all items listed may apply to your situation, and your attorney may ask you for additional documents that are not on this list. If you do not have some of these documents, your attorney can assist you to obtain them.
Business Information
- Business plan including business model
- Business name registration documents
- Any existing business organization documents
- Licensing and permits
- Marketing plans and samples
Financial Information
- Business accounting books
- Individual income tax returns for the past three to five years (state and federal)
- Business income tax returns for the past three to five years (state and federal)
- List of business debts and assets
- Business bank statements
Property Information
- Leases for business space or equipment
- Deeds and titles to business real property and business assets
- Property insurance documents
Bills and Outstanding Debt
- Business credit card statements
- Loan documents
- Utility bills
- Monthly budget worksheet
Legal Agreements
- Supplier contracts
- Contracts with customers
Finally, you will also want to start thinking about other issues that may affect your business. You may wish to speak with your attorney about the following:
- Tax considerations for the business
- Tax considerations for you as an individual
- Your comfort level with business and legal risks
- Personal liabilities and assets
Copyright © 2011 FindLaw, a Thomson Reuters business
DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.
Basic Contract Law
Contracts are the basic building blocks of commerce. Every successful commercial enterprise relies on solid, enforceable contracts in order to conduct business. Most contractual agreements are governed by state law, both by the common law of contracts — the law made by judges — and by state statutes enacted by legislatures. Many legislatively enacted contract laws are based on the Uniform Commercial Code (UCC), a comprehensive set of business laws adopted in some form by every state.
A skilled business attorney knowledgeable in contract law and experienced in commercial agreements can assist you with contract formation in your business dealings.
Contract Defined
In very basic terms, a contract is an exchange of enforceable promises by two or more parties. A valid contract imposes legal duties upon the parties to perform their respective promises in the manner prescribed by the terms of the agreement. If a contractual duty is not performed, the breaching party may be liable for resulting damage to the nonbreaching party who relied on the broken promise to his or her detriment.
Creation of a Contract
The traditional elements of a contract are:
- Offer — a proposal to do something in exchange for another party's promise to do something in exchange
- Acceptance — an agreement by the recipient of an offer to its terms
- Consideration — the value received by each party to a contract
Breach of Contract
A breach is material if the party to whom the duty is owed does not receive the substantial benefit of the bargain because of the other party's nonperformance. Consequences of a material breach are severe and may include discharge of any duty to counter perform.
On the other hand, a breach is immaterial if the party to whom the duty is owed has already received a substantial benefit of the bargain, despite partial or deficient performance of the other party. In this case, the injured party is probably not relieved of the duty to counter perform under the contract but may have a legal remedy for the minor breach.
Defenses
Several defenses to breach of contract exist, including these common examples:
- Fraud
- Impossibility of performance
- Waiver
- Estoppel
- Modification
- Unconscionability
Remedies for a Breach of Contract
When there is no valid defense to breaching a contract, the breaching party normally becomes liable to the injured party. The main legal remedies for breach of contract are:
- Compensatory damages — usually payment of money to put the injured party in the position he or she would have been in absent the breach
- Liquidated damages — payment of an amount of money agreed to by the parties in the contract in anticipation of possible future breach
- Specific performance — court-ordered performance of the contract, usually when the subject matter of the contract is so unique that money cannot replace actual performance
Conclusion
This article barely scratches the surface of contract law. Be sure to consult an experienced business lawyer to answer your contract questions and guide your contract negotiation, drafting, performance and enforcement.
Copyright © 2011 FindLaw, a Thomson Reuters business
DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.
