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As attorneys, we sometimes forget that we have a vocabulary that can be unfamiliar to the rest of the population. If you're ever wondering what a legal term means or what a concept is about, then this resource is for you.
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Arbitration
An alternative mechanism for resolving disputes outside of the formal litigation process. Arbitration is typically faster than going to court, and the process (and the final decision) is usually private and confidential.
Antitrust
An area of the law that tries to prevent monopolies from forming and increase competition between businesses.
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Attorney-Client Privilege
What you discuss with your attorney (or prospective attorney) will generally be treated as confidential unless you share those discussions with third-parties.
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Contract
A legally binding agreement between two or more parties. In order to be legally binding, a contract must have: mutual assent (expressed by a valid offer and acceptance), consideration, capacity, and legality.
Copyright
The exclusive legal right to reproduce, publish, sell, or distribute an “original work of authorship.” Copyright protection does not extend to ideas, procedures, processes, systems, methods of operation, concepts, principles, or discoveries, and copyright does not protect names, titles, short phrases, slogans, familiar symbols, lettering, coloring, and listings of contents or ingredients.
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Corporation or C Corp
An artificial entity that can conduct business, sue or be sued, and raise money by issuing stock.
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DBA
An acronym for “Doing Business As.” In Ohio, we use the terms “Fictitious Business Name” or “Trade Name” instead.
Discrimination
The unfair or unequal treatment of an individual or group based on certain characteristics. Ohio law prohibits an employer with four or more employees from discriminating against an employee or prospective employee because of their race, color, religion, sex, national origin, disability, age or ancestry.
Duty of Care
In Ohio, a member of an LLC’s duty of care to the company is limited to not engaging in grossly negligent or reckless conduct, intentional misconduct, or knowingly violating the law.
Duty of Loyalty
In Ohio, a member of an LLC’s duty of loyalty to the company and the other members requires (1) not misappropriating the LLC’s property, profits, or business opportunities and (2) not acting in a way that is adverse to the interests of the LLC.
Photo by Alex Kotliarskyi on Unsplash
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Employees vs. Independent Contractors
If a person is an independent contractor, you only have the right to control or direct the result of the work, not exactly what will be done and how it will be done. Everyone else you hire is an employee. Because you must withhold income taxes and pay Social Security, Medicare, and unemployment taxes on wages paid to employees, the IRS imposes penalties and back taxes on businesses who misclassify workers.
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Exempt employees are those who are exempt from the requirements of the Fair Labor Standards Act (the “FLSA”) and therefore do not have to be paid overtime. Other employees are non-exempt, meaning they must be paid at least minimum wage and overtime for any hours over 40 that they work in a week.
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Fair Use
A legal principle that defends certain uses of copyrighted works from claims of copyright infringement, i.e. criticism, comment, news reporting, teaching, scholarship, or research.
Fictitious Business Name
A name used by a business (other than its official business entity name) that the business does not claim the sole right to use.
Fiduciary Duty
A duty to act in a way that will benefit someone else, often financially. Business partners often have certain fiduciary duties to each other, namely the duty of care, duty of loyalty and duty of good faith and fair dealing.
Harassment
Unwelcome conduct that is based on race, color, religion, sex (including pregnancy), national origin, age (40 or older), disability or genetic information. Harassment becomes unlawful where 1) enduring the offensive conduct becomes a condition of continued employment, or 2) the conduct is severe or pervasive enough to create a work environment that a reasonable person would consider intimidating, hostile, or abusive.
Injunction
A court order to stop doing something.
Intellectual Property
Limited Liability Company or LLC
A business entity that provides the limited liability protection of a corporation with more flexible taxation options and a flexible management structure. LLCs are the most recommended structure for new businesses because they do not require as many formalities as corporations.
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Limited Liability Partnership or LLP
A partnership structure that is generally only used by professionals who cannot form limited partnerships (typically because their professional ethics rules do not allow limited partnerships). Each partner can actively participate in the management of the LLP. Unlike a traditional partnership, a partner’s liability for the other partners’ activities is limited to the partner’s share of the partnership assets.
Limited Partnership or LP
A partnership structure with a general partner (who is personally liable for everything that occurs in the business) and one or more passive partners (who have limited liability protection but cannot participate in the management of the business).
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Mediation
A (usually) voluntary program where both sides in a dispute sit down with a neutral mediator who tries to help them reach a resolution short of formal litigation.
Mutual Assent
The idea that both parties actually agreed to enter into a contract or agreement. Mutual assent is typically proven by showing that one party made an offer and the other party accepted that offer.
Negligence
(1) the failure to use the level of care that a reasonable person in your situation would use; (2) the failure to do something when you have a duty to do so.
Offer and Acceptance
In contract law, an offer is the promise to do (or refrain from doing) something in exchange for something else. An offer must be stated in such a way that a reasonable person would believe that a binding contract would result if the offer is accepted. Acceptance is the act of agreeing to the terms of the offer.
Partnership
The default business entity type whenever two or more people go into business together for a profit. If you have business partners and have not formed a business entity, you are in a partnership. All of the partners are personally liable for everything that happens in the business.
Patent
The exclusive right of an inventor to exclude others from making, using, importing, and selling the patented innovation for a limited period of time.
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Public Domain
A work of authorship that is no longer under copyright protection (or that failed to meet the requirements for copyright protection) is said to be in the “public domain.” Works in the public domain may be used freely without the permission of the former copyright owner.
Publish
In copyright law, to publish a work is to distribute copies of the work to the public by sale or other transfer of ownership, or by rental, lease, or lending. A public performance or display of a work does not of itself constitute publication.
S Corp
A small corporation that is taxed as a partnership. S Corps can have no more than 100 shareholders (and these are usually individuals).
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Photo by Ian Schneider via Unsplash
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Social Enterprise
Typically combines a non-profit’s social mission with a traditionally for-profit business activity.
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The default status for an individual who starts a business without forming a business entity. Sole proprietors are personally liable for everything that happens in their business.
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Statute of Frauds
The legal principle that certain contracts must be in writing to be enforceable; these typically include: contracts related to property rights (including both the sale or lease of property), contracts for the sale of goods for $500 or more, contracts that cannot be performed within one year, contracts of suretyship (an agreement to assume the obligation of another person). These contracts must be signed by “the party to be charged,” i.e. the party that is to be held liable under the contract.
Tort
A wrongful act (other than a breach of contract) that can result in legal liability (typically money damages and/or an injunction).
Photo by Nik Shuliahin via Unsplash
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Trademark
A distinctive word, phrase, logo, or graphic symbol that is used to identify the source of a product or service and distinguish your products or services from someone else’s.
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A name (other than the official entity name) that is registered to be used by a business in Ohio. Once registered, no other business can use the same or confusingly similar trade name.
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Trade Secret
A formula, pattern, compilation, program, device, method, technique, or process that derives economic value from not being generally known to the public and is subject to reasonable efforts to maintain its secrecy.
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Vicarious Liability
Being legally responsible for someone else’s actions. For example, employers are often liable for the actions of their employees when the employee was acting in the course of his/her job duties.
Work Made for Hire
A work prepared by an employee within the scope of his or her employment or a work specially ordered or commissioned (when certain legal requirements are met). When a work qualifies as a work made for hire, the employer, or commissioning party, is considered to be the author.
501(c)(3)
The portion of the Internal Revenue Code that exempts certain nonprofit organizations from paying most federal taxes. While 501(c)(3) is the most common exemption, there are actually 29 exemptions in 26 U.S.C. Section 501(c).