Chapter 7 - Corporations, Contracts, and Antitrust Legal Issues Flashcards
corporation
an organization—usually a group of people or a company—authorized by the state to act as a single entity and recognized as such in law for certain purposes
articles of incorporation
a set of formal documents filed with a government body to legally document the creation of a corporation
partnership
an arrangement where parties, known as business partners, agree to cooperate to advance their mutual interests
sole proprietorship
a type of enterprise owned and run by one person and in which there is no legal distinction between the owner and the business entity
limited partnership
a partnership where one of the partners has limited liability but also limited power
joint venture
a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task
shareholder
also known as stockholder; an individual or institution that legally owns one or more shares of the share capital of a public or private corporation
share capital
the portion of a corporation’s equity that has been obtained by the issue of shares in the corporation to a shareholder, usually for cash
share
one of the equal parts into which a company’s capital is divided, entitling the holder to a proportion of the profits
capital
wealth in the form of money or other assets owned by a person or organization or available or contributed for a particular purpose such as starting a company or investing
piercing the corporate veil
a situation in which courts put aside limited liability and hold a corporation’s shareholders or directors personally liable for the corporation’s actions or debts
alter ego
an alternative self, which is believed to be distinct from a person’s normal or true original personality
closed corporation
companies with a small number of shareholders that are held by managers, owners, and even families
for-profit corporation
a corporation that is allowed to distribute its income to the shareholders, directors, officers, and other individuals for private gain
not-for-profit corporation
a corporation that may not distribute its income for the private gain of individuals; it is allowed to pay reasonable salaries but must generally use the income to improve the corporation
equity
the value of the shares issued by a company
due diligence
the care that a reasonable person exercises to avoid harm to other persons or their property
ultra vires
an act which requires legal authority but is done without it
intra vires
an act done with legal permission
contract
a legally enforceable oral or written agreement
elements of a contract
(1) mutual assent, expressed by a valid offer and acceptance
(2) adequate consideration of the agreement and its consequences
(3) legal capacity (must be sane and an adult)
(4) legality (not a criminal arrangement, not forced on someone against their will)
assent
the expression of approval or agreement
consent
permission for something to happen or agreement to do something
breach of contract
a failure, without legal excuse, to perform any promise that forms all or part of the contract
duress
a situation whereby a person performs an act as a result of violence, threat, or other pressure against the person
exculpatory contracts
a contract that prevents one party from holding the other party liable for damages related to the contract. Exculpatory clauses are used quite often in purchases such as the ones included with an amusement park or plane ticket.
accession
(1) the act or process by which someone rises to a position of honor or power
(2) something added
(3) the act of assenting or agreeing
adhesion contracts
also called a standard form contract, leonine contract, take-it-or-leave-it contract, or boilerplate contract; a contract between two parties, where the terms and conditions of the contract are set by one of the parties, and the other party has little or no ability to negotiate more favorable terms and is thus placed in a “take it or leave it” position
indemnification clauses
also known as hold harmless agreements, they transfer the liability of one party’s action away from the other
indemnity
a contractual obligation of one party to compensate the loss incurred to the other party due to the acts of the indemnitor or any other party
indemnitor
the person or organization that holds another (the indemnitee) harmless in a contract
warranty
a written guarantee, issued to the purchaser of an article by its manufacturer, promising to repair or replace it if necessary within a specified period of time
boilerplate
any written text that can be reused in new contexts or applications without significant changes to the original. The term is used in reference to statements, contracts and computer code, and is used in the media to refer to hackneyed or unoriginal writing
hackneyed
(of a phrase or idea) lacking significance through having been overused; unoriginal and trite
trite
(of a remark, opinion, or idea) overused and consequently of little import; lacking originality or freshness
express contract
an exchange of promises in which the terms by which the parties agree to be bound are declared either orally or in writing, or a combination of both, at the time it is made
implied contract
A contract that is found to exist even when its terms are not explicitly stated because (1) the parties assumed a contract existed (implied-in-fact contract), or (2) denying the contract’s existence would result in unjust enrichment to one of the parties (implied-in-law contract)
learned intermediary
a doctrine of products liability law: the manufacturer of a prescription drug fulfills its duty to warn of potentially harmful effects of the drug by informing the prescribing physician (who in this case, is called the learned intermediary)
abandonment of care
a form of medical malpractice that occurs when a physician terminates the doctor-patient relationship without reasonable notice or a reasonable excuse, and fails to provide the patient with an opportunity to find a qualified replacement care provider
unilateral
(of an action or decision) performed by or affecting only one person, group, or country involved in a particular situation, without the agreement of another or the others
antitrust
relating to legislation preventing or controlling trusts or other monopolies, with the intention of promoting competition in business
trust (corporate or property meaning)
(1) a combination of firms or corporations formed by a legal agreement, especially one that reduces or threatens to reduce competition
(2) a property interest held by one person for the benefit of another
vertical restraint of trade
two or more entities at different levels in a distribution chain act together to restrain trade (e.g. a manufacturer of hospital supplies collaborates with a wholesaler to keep prices artificially high)
horizontal restraint of trade
competitors agree to fix prices, divide the market between themselves, or try to exclude others from competing in the same market
Federal Trade Commission (FTC)
an independent agency of the United States government whose principal mission is the enforcement of civil U.S. antitrust law and the promotion of consumer protection
per se antitrust violation
an violation of antitrust law that is automatic and requires no further review (e.g. price fixing, division of markets, etc.)
rule of reason analysis
A type of antitrust analysis used to determine the legality of agreements (written or oral) that may restrict competition. Under the rule of reason, courts examine both the positive and negative effects of an agreement before determining whether it violates antitrust laws.
economic credentialing
the use of economic criteria unrelated to quality of care or professional competence in determining a physician’s qualifications for initial or continuing hospital medical staff membership or privileges
delineation
(1) the action of describing or portraying something precisely
(2) the action of indicating the exact position of a border or boundary
noncompete agreement
an agreement in which an individual agrees not to compete directly or work for a competitor for a certain period of time after leaving his or or her employment
