Know the difference between a Godfather offer and Al Capone offer? An emolument clause and an enema clause?
Test your knowledge of the 25 most important commercial law vocabulary terms that non-native English speaking lawyers mistake. Have some fun with hilariously wrong answers. For the whole list of 250 key terms, click here.
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Question 1 of 25
1. Question
Claim to the title of a private (non-governmental or non-crown) property by an occupant who has notoriously, openly, and visibly occupied the property continuously for a certain period (commonly 12 to 20 years). Adverse possession may be claimed for a property that has been abandoned, or in opposition of the rights of its actual (legal) owner who does not challenge its possession by the claimant. See also color of title.
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Question 2 of 25
2. Question
Situation where an individual, firm, or cartel controls the supply of a commodity and dictates its price. Because cornering is often ruthless in its anti-social behavior, governments enact anti-monopoly or anti-trust laws to prevent its occurrence. Attempts to corner a market, however, do not usually last long because high prices encourage people to unearth the untapped supplies and create substitutes which ‘break’ the corner. See also Black Friday.
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Question 3 of 25
3. Question
Sandbagging is a strategy of lowering the expectations of a company or an individual’s strengths and core competencies, in order to produce relatively greater-than-anticipated results.
In a business context, sandbagging is most often seen when a company’s top brass shrewdly tempers the expectations of its shareholders by producing guidance that is well below what they know will be realistically achievable. In other words: management personnel low-ball projected earnings and other performance indicators.CorrectIncorrect -
Question 4 of 25
4. Question
Attempt by a group to obtain the authorization of other members to vote on their behalf in an organizational ballot. In corporate settings, a proxy solicitation is usually accompanied by a ‘proxy statement.’
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Question 5 of 25
5. Question
… a convincing statement, information or explanation made to a person to induce that person to enter into a contract or to take a decision, which s/he would not have done without such persuasion.
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Question 6 of 25
6. Question
Advantage, benefit, profit, or wage received as compensation for being employed or holding an office.
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Question 7 of 25
7. Question
Combines the limited personal liability feature of a corporation with the single taxation feature of a partnership or sole-proprietorship firm. Its profits and tax benefits are split any way the stockholders/ shareholders (whether individuals or other firms) choose. Tax return for a LLC is filed with the taxation authorities only for the purpose of information, and each shareholder files own tax return separately. Also called company limited by share. See also limited company.For more information, see The Difference between an S Corporation and an LLC.
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Question 8 of 25
8. Question
Business structure that combines features of a limited company with that of a partnership for use as a tax shelter, but does not create a legal entity separate and distinct from its owners. It is usually formed by at least one general partner (or full partner) and at least one limited partner (or nominal partner). General partners are the operators who control and manage the partnership, and are jointly and severally liable for all its debts and obligations. The limited partners (1) cannot, in any way, control or participate in the management of the partnership (otherwise they will lose their limited liability protection), (2) are liable only up to the sums invested by them, and (3) cannot withdraw their investments without the consent of the general partners.Both types of partners benefit from the firm’s profits, capital gains, accelerated depreciation, and investment credits, but the general partners are paid management fees as well. Limited partnerships can be formed for any type of business but they are most popular in equipment-leasing, movie making, oil and gas exploration, and real estate development industries. When the business begins to show taxable profits, a limited partnerships is often terminated and reorganized as a regular limited company.
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Question 9 of 25
9. Question
An accumulation of less than 5% of a target firm’s outstanding stock by another company or individual investor with a particular goal in mind. If the toehold purchase is made by another company, it may be a precursor to an acquisition strategy, such as a takeover bid or tender offer.
If an individual investor makes the toehold purchase, they usually accompany their purchase with demands that the target company take steps to increase the shareholder value of the firm.CorrectIncorrect -
Question 10 of 25
10. Question
1. Loan agreements: Legal right of a lender to seek repayment of the loan from the borrower’s (and/or the guarantor’s) unpledged personal property, in addition to the property pledged to the lender as collateral.2. Negotiable instrument: Legal right of the holder to demand and require payment from the drawer, maker, or endorser if the instrument (such as a check, draft, promissory note) is dishonored. See also with recourse and without recourse.
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Question 11 of 25
11. Question
General liability or obligation of a producer (or supplier) of a good or service to make restitution for loss associated with its use, such as personal injury or property damage. Commonly, the aggrieved party does not have to prove that the producer (or supplier) was negligent because the fault is inherent to the item. See also absolute liability.
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Question 12 of 25
12. Question
The elimination or reduction of the frequency, magnitude, or severity of exposure to risks, or minimization of the potential impact of a threat or warning.
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Question 13 of 25
13. Question
Fraudulent acts which keep a person from obtaining information about his/her rights to enforce a contract or getting evidence to defend against a lawsuit. This could include destroying evidence or misleading an ignorant person about the right to sue.
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Question 14 of 25
14. Question
Undertaking given to compensate for (or to provide protection against) injury, loss, incurred penalties, or from a contingent liability. A shipping company, for example, will ask for a bank’s indemnity for releasing a shipment to a consignee who has lost original shipping documents. The bank in turn will require the consignee to sign a counter-indemnity before issuing its indemnity to the shipping company. This way the consignee gets the release of shipment in completion of a transaction, and both the shipping company and the bank are protected in case some dispute arises out of that transaction.
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Question 15 of 25
15. Question
A legal standard by which evidence that is illegally obtained may not be used during the presentation of a case.
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Question 16 of 25
16. Question
Assumed value of the attractive force that generates sales revenue in a business, and adds value to its assets. Goodwill is an intangible but saleable asset, almost indestructible except by indiscretion. It is built painstakingly over the years generally with (1) heavy and continuous expenditure in promotion, (2) creation and maintenance of durable customer and supplier relationships, (3) high quality of goods and services, and (4) high quality and conduct of management and employees. Goodwill includes the worth of corporate identity, and is enhanced by corporate image and a proper location. Its value is not recognized in account books but is realized when the business is sold, and is reflected in the firm’s selling price by the amount in excess over the firm’s net worth.In well established firms, goodwill may be worth many times the worth of its physical assets. GAAP require the firm’s purchaser to write off (amortize) the amount paid as goodwill over a period (usually 10 to 30 years) for financial reporting purposes.
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Question 17 of 25
17. Question
An agreement to take over assets from one company during a potential hostile buyout. Coining the phrase from The Godfather, the acquiring company gives the desired company an offer they cannot refuse.
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Question 18 of 25
18. Question
1. Dishonest use of another’s funds or property for one’s own use.2. Unfair competition whereby an individual or firm appropriates or dishonestly copies a creation of another that is not protected under copyright, patent, or trademarks laws.
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Question 19 of 25
19. Question
Type of vertical integration where a manufacturer acquires the channels of distribution of its outputs to achieve greater economies of scale or higher market share.
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Question 20 of 25
20. Question
Extra time allowed for meeting with a requirement, satisfaction of an obligation, or implementation of an agreement.
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Question 21 of 25
21. Question
Legally mandated document published by every firm offering its securities to public for purchase. It must comply with strict legal requirements and is filed for approval with the country’s securities inspectorate such as the Securities & Exchange Commission (SEC) of the US, or the Securities & Investment Board (SIB) of the UK. A prospectus must disclose essential information such as (1) firm’s objectives, (2) primary business activity, (3) background and qualification of principal officers, (4) current financial position, (5) projected financial statements, (6) assumptions underlying the projections, (7) foreseeable risks to the firm, (8) offering price on the stock (shares), and (9) (in case of bonds and notes) how the interest and principal will be paid.
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Question 22 of 25
22. Question
Amount granted to an employee whose job has been eliminated, under a union (collective bargaining) agreement and for no other reason.
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Question 23 of 25
23. Question
International commercial terms. Thirteen terms of sale accepted worldwide in assignment of costs and responsibilities between the buyer and the seller. Proposed, updated, and copyrighted by the International Chamber Of Commerce (ICC), they serve as global standards for uniform interpretation of common contract clauses in international trade. The last revision (1999) is named ‘INCOTERMS 2000.’ In brief these terms are (1) C&F (Cost And Freight), (2) CIF (Cost, insurance, And Freight), (3) Delivered At Frontier, (4) Delivered Duty Paid, (5) Ex quay, (6) Ex ship, (7) Ex works, (8) FAS (Free Alongside Ship), (9) FOB (Free On Board), (10) FOB Airport, (11) FOR/FOT (Free On Rail/Free On Truck), (12) Free carrier, (13) Free Carriage Paid To and Free Carriage Paid To And insurance.
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Question 24 of 25
24. Question
Basis of determining fair market value (FMV), it is a dealing between independent, unrelated, and well informed parties looking out for their individual interests. Transactions involving family members, and parent companies and subsidiaries, are deemed arm-in-arm dealings. To qualify as an arm’s length transaction, neither of the involved parties may have any interest in the transaction’s consequences to the other party.
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Question 25 of 25
25. Question
Corporate raider who makes an acquisition bid deemed unwelcome by the target firm’s management. The threatened management may then seek a white knight to rescue it.
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