Legal and Business Structure Flashcards

What is intellectual property (IP)?

Answer: Creations of the mind legally protected by patents, trademarks, copyrights, or trade secrets

Intellectual property refers to creations of the mind—inventions, designs, brand names, artistic works—that are legally protected from unauthorized use.

What is a non-disclosure agreement (NDA)?

Answer: A contract requiring parties to keep specified information confidential

An NDA (or confidentiality agreement) is a legal contract in which parties agree not to disclose certain shared information to third parties.

What is a non-compete agreement?

Answer: An agreement restricting an employee or partner from working for competitors for a set time after leaving

A non-compete agreement legally restricts an employee or business partner from working with competitors or starting a competing business for a defined period and geographic area.

What is 'double taxation' in the context of a C corporation?

Answer: Corporate profits being taxed at the corporate level and again when dividends are paid to shareholders

C corporations face double taxation: profits are first taxed at the corporate rate, then shareholders pay personal income tax on dividends received.

What is a franchise?

Answer: A business model where a franchisor licenses its brand, systems, and support to franchisees

A franchise is a contractual arrangement where a franchisor grants franchisees the right to operate a business using its brand, systems, and ongoing support in exchange for fees and royalties.

What does 'piercing the corporate veil' mean?

Answer: A legal action holding business owners personally liable when the business and personal affairs are improperly mixed

Piercing the corporate veil occurs when a court holds owners personally liable for business debts because they failed to maintain proper separation between personal and business finances.