CLEP Introductory Business Law key terms

The doctrine that courts should follow the rules established by earlier decisions in the same jurisdiction when deciding similar cases, promoting consistency and predictability in the law.

A prior court decision that serves as authority for deciding later cases involving similar facts or legal questions, whether binding or merely persuasive on the current court.

Judge-made law developed through court decisions over centuries rather than through statutes, forming the foundation of much American contract, tort, and property law.

A body of remedial principles historically administered by chancery courts, offering relief such as injunctions and specific performance when money damages would be inadequate.

The constitutional grant to Congress of power to regulate trade among the states, with foreign nations, and with Indian tribes, and the basis for much federal business regulation.

The constitutional rule that federal law, including the Constitution and valid federal statutes and treaties, prevails over conflicting state law.

The principle that a valid federal law displaces conflicting state law, either expressly, by occupying the entire field, or by making compliance with both impossible.

The constitutional guarantee that government will not deprive a person of life, liberty, or property without fair procedures and substantively reasonable law.

The constitutional requirement that government treat similarly situated persons alike, with courts applying heightened scrutiny to suspect classifications such as race or sex.

The first ten amendments to the U.S. Constitution, protecting individual liberties such as speech, religion, and jury trial against government intrusion, now largely applied to states.

A court's authority to hear a particular kind of case, such as federal courts hearing federal-question or diversity cases, which cannot be waived by the parties.

A court's power over a particular defendant, generally requiring minimum contacts with the forum state such that exercising authority comports with fair play and substantial justice.

The geographic location within a court system where a case should be filed, typically the district where the defendant resides or where the events giving rise to the claim occurred.

Federal court authority over civil disputes between citizens of different states where the amount in controversy exceeds the statutory threshold, allowing an out-of-state party a federal forum.

The formal written statements by parties setting out claims and defenses, such as a complaint and answer, which frame the issues the court will decide.

The pretrial process by which parties obtain evidence and information from each other through interrogatories, depositions, document requests, and requests for admission.

A pretrial ruling deciding all or part of a case without trial when no genuine dispute of material fact exists and the moving party is entitled to judgment as a matter of law.

A definite proposal to make a bargain that creates a power of acceptance in the offeree and is communicated with the intent to be bound upon acceptance.

An unequivocal assent to the terms of an offer, made in the manner invited or required by the offeror, which completes the bargain and creates a contract.

A bargained-for exchange of value, such as a promise, act, or forbearance, that induces each party to enter the agreement and makes the promise legally enforceable.

A doctrine enforcing a promise without consideration when the promisor should reasonably expect reliance, the promisee actually relies, and injustice can be avoided only by enforcement.

A statute requiring certain contracts, such as those for land, suretyship, or goods over a stated value, to be evidenced by a writing signed by the party to be charged.

The principle that a fully integrated written agreement cannot be contradicted or varied by evidence of prior or contemporaneous oral statements, though ambiguities may sometimes be explained.

The determination that a writing represents the parties' final and complete agreement, which triggers the parol evidence rule and limits admission of outside terms.

An event or act that must occur before a party's duty to perform arises, such as obtaining financing before a contract to purchase real estate closes.

Doctrine allowing a party who has performed most of its contractual duties, with only minor deviations, to recover the contract price minus damages for the defects.

A significant failure to perform that excuses the other party's remaining duties and permits that party to sue for damages or treat the contract as ended.

An unequivocal indication before performance is due that a party will not perform, allowing the other party to treat the contract as breached immediately and sue.

Failure to exercise the care a reasonable person would use under the circumstances, breaching a duty of care and causing harm within the scope of foreseeable risk.

A cause that is a substantial factor in bringing about harm and is close enough in the chain of events that the defendant should fairly be held responsible.

A doctrine permitting an inference of negligence when the accident is of a kind that ordinarily does not occur without negligence and the instrumentality was under the defendant's exclusive control.

Liability imposed without proof of fault for harm caused by abnormally dangerous activities or defective products, based on the nature of the activity or product rather than carelessness.

The legal responsibility of manufacturers and sellers for harm caused by defective products, based on theories of negligence, strict liability, or breach of warranty.

A seller's automatic promise, arising in sales of goods by merchants, that the goods are fit for the ordinary purposes for which such goods are used.

The uniform model statute governing sales of goods, providing default rules on contract formation, performance, risk of loss, and remedies that parties may often vary by agreement.

The UCC rule allowing a buyer to reject goods that fail in any respect to conform to the contract, subject to the seller's right to cure and other limitations.

A relationship in which one person, the agent, is authorized to act on behalf of another, the principal, and to bind the principal in dealings with third parties.

An agent's power to bind a principal based on the principal's manifestations to a third party that reasonably create the impression the agent is authorized.

The obligation of an agent, partner, or corporate director to act loyally and in the best interests of the principal, avoiding self-dealing and conflicts of interest.