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business law

Equitable Subordination

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In the law of corporations, describes decision by a court to subordinate a controlling shareholder’s claims upon debt owed her by her own firm, to those of other  “outside” (i.e., bona fide third party) creditors in bankruptcy.

Accord

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Definition

1)  A harmonious agreement, especially between countries. 

2)  An offer to substitute a different obligation for one that was previously owed, plus the acceptance of that offer.  Either of the parties involved can propose an accord.  If the newly substituted obligation is actually performed, the performance is called a satisfaction.  See Accord and satisfaction.

Accounts receivable

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Definition

Money owed to a business by another business or individual in exchange for property or services that were provided on credit.  The settlement of an account receivable begins by sending an invoice to the customer.  A company enters accounts receivable under "current assets" on its balance sheet. 

Goodwill

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The good reputation or brand identification enjoyed by a commercial entity.  In bankruptcy and other areas of law, goodwill is considered an intangible asset.

Good will is generally calculated as the difference between the purchase price of a company and the sum of its fair market value.

See General intangible.

Account debtor

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Definition

Someone who owes an obligation by virtue of an account, chattel paper, or general intangible.

Account

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Definition

Within the context of secured transactions under Article 9 of the Uniform Commercial Code, this refers to a right to payment of a monetary obligation.  Not included:  (1) letters of credit, (2) commercial tort claims, (3) deposit accounts, (4) investment property, (5) chattel paper, or (6) rights to payment for money or funds that have been advanced or sold.

Shareholder Derivative Suit

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Definition

A shareholder derivative suit is a lawsuit brought by a shareholder on behalf of a corporation. Generally, a shareholder can only sue on behalf of a corporation when the corporation has a valid cause of action, but has refused to use it.  This often happens when the defendant in the suit is someone close to the company, like a director or a corporate officer.  If the suit is successful, the proceeds go to the corporation, not to the shareholder who brought the suit.  

Business Judgment Rule

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 In suits alleging a corporation's director violated his duty of care to the company, courts will evaluate the case based on the business judgment rule. Under this standard, a court will not second guess the decisions of a director as long as they are made (1) in good faith, (2) with the care that a reasonably prudent person would use, and (3) with t
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