business law

Equitable Subordination

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. Equitable...

Exclusive Dealing Arrangement


Exclusive dealing arrangements are essentially requirements contracts in which a seller agrees to sell all or a substantial portion of its products or services to a particular buyer, or when a buyer similarly agrees to purchase all or a...


A cost incurred by a company through its operations to earn revenue.

Federal Unemployment Tax Act (FUTA)

Federal legislation permitting the government to impose a tax on business in order to fund state unemployment agencies.  Employers must file a Form 940 annually to report this tax.

Financial institutions - State statutes

Alabama- Title 5 Alaska- Title 6 Arizona- Title 6 Arkansas (searchable index) California Colorado (see Title 11) Connecticut- Title 36 Delaware- Title 5 District of Columbia (see Title 26) Florida (see Title XXXVIII) Georgia (see...

Fiscal Year Accounting Period

The 12-month period over which a company reports its spending and income.  It is measured by the first day of the month through the last day of the twelfth month.

Fixed Asset

Also known as plant, it is tangible, long-term assets or properties that are not consumed or easily converted into cash.  Fixed assets are often used in the production of income.

Foreign Direct Investment

Foreign Direct Investment: An Overview

The International Monetary Fund (“IMF”) defines foreign direct investment (“FDI”) as a “cross-border investment” in which an investor that is “resident in one economy [has] control or a...

Franchise Tax

A state law levied on businesses or corporations chartered within that state.  The tax is typically based on the net worth of the taxpaying entity, rather than on income.

Fringe Benefit

Various non-wage employee benefits that are in addition to normal wages.  Some fringe benefits are exempt from taxation, provided certain conditions are satisfied.

Examples of fringe benefits are health insurance, life insurance and employee...

General Journal

Where double-entry bookkeeping entries are first recorded as they occur in time.  It serves as an aid for transferring the entries later to official accounting records.

General Ledger

The formal and main accounting ledger of a company which contains all of the business' financial accounts and statements.

Gibbons v. Ogden (1824)


A Supreme Court case that adopted an expansive view of the scope of the Commerce Clause of the Constitution by holding that Congress had the power to regulate interstate commerce. The case involved the right of competing ferry services...

Golden Parachute

An agreement between a company and its top executive providing lucrative benefits in the event employment is terminated, usually due to a change in company ownership. 


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...


The owner of property or assets.

Horizontal Scheme

A cooperation agreement between competitors on the same level of commerce.  A horizontal scheme violates antitrust law if it involves price-fixing or any other recognized restraint on trade.  

See Antitrust Law

Income Statement

A business' financial statement that measures its revenue performance over the course of a specific accounting period.


Any individual who files the articles of incorporation on behalf of a business, thereby incorporating the business.

See also

IncorporateArticles of Incorporation


Definition from Nolo’s Plain-English Law DictionarySomeone who has a position in a business or stock brokerage, which allows him or her privy to confidential information (such as future changes in management, upcoming profit and loss reports, secret sales...

Insider trading


Insider trading is the trading of a company’s stocks or other securities by individuals with access to confidential or non-public information about the company.  Taking advantage of this privileged access is...

International trade

International trade law: an overview

International trade is “the exchange of goods [or] services” “between nations.” Black’s Law Dictionary 285, 1529 (8th ed. 2004).

Sources of international trade law...


Definition from Nolo’s Plain-English Law DictionarySomeone who buys products (usually in bulk or lots) and then resells them to various retailers. This middleman generally specializes in specific types of products, such as auto parts, electrical and...


Intentional conduct that is wrongful or unlawful, especially by officials or public employees. Malfeasance is at a higher level of wrongdoing than nonfeasance (failure to act where there was a duty to act) or misfeasance (conduct that is lawful but...

Minimum Contacts


A nonresident defendant’s connections with the forum state (i.e., the state where the lawsuit is brought) that are sufficient for jurisdiction over that defendant to be proper. Lack of minimum contacts violates the nonresident...

Most Favored Nation


A clause frequently included in bilateral investment treaties ("BITs") which provides that a host state shall treat all of its trading partners equally. Under such a clause, if the host state lowers a tariff for one trading partner...

National treatment


A clause frequently included in bilateral investment treaties ("BITs") which provides that a host state shall treat foreign and domestic enterprises equally.

See also

Most favored nation

World Trade Organization: Trade without...

Poison pill


A corporation’s defensive strategy against a hostile takeover bid in which current shareholders other than the tender-offer bidder or prospective bidder, upon a triggering event, have the right to purchase additional corporate stocks at a...

Predatory pricing

Below-cost pricing intended to eliminate specific competitors and reduce overall competition.

See Antitrust for more information.

Qualified small business stock


Under § 1202 of the Internal Revenue Code, stock of a domestic C corporation whose aggregate gross assets do not exceed $50,000,000 before or immediately after issuance. A taxpayer who acquires qualified small business stock at its original...



A quorum is the minimum number of members of a group or committee required to be in attendance in order for that group to be able to take official action.  Groups that often have quorum requirements include legislative bodies,...

Securities Act of 1933


The Securities Act was Congress's opening shot in the war on securities fraud. Congress primarily targeted the issuers of securities. Companies which issue securities (called issuers) seek to raise money to fund...

Securities Exchange Act of 1934




The Securities and Exchange Act of 1934 ("1934 Act," or "Exchange Act") primarily regulates transactions of securities in the secondary market. As such, the 1934 Act typically governs...

Securities law history

Why Regulate Securities?

The development of federal securities law was spurred by the stock market crash of 1929, and the resulting Great Depression.  In the period leading up to the stock market crash, companies issued stock and...

Shareholder Derivative Suit


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....

Sherman Antitrust Act


The Sherman Antitrust Act of 1890 is a federal statute which prohibits activities that restrict interstate commerce and competition in the marketplace. The Sherman Act was amended by the Clayton Act in 1914. The Sherman Act is...