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Business Associations (Partnership (Organization (liability (joint and…

- - - - no writing required
      - no statutory formalities required
      - Types
        
        for a specific undertaking
        
        for a term
        
        at will
      - key test = intent of the parties
      - sharing of profits is prima facie evidence
    - - types of partners
        
        general - manage business and are personally liable without limitation for partnership obligations
        
        limited - contribute capital and sher in profits, but take no part in the control or management of the business, and whose liability is limited to their contributions
      - Formation
        
        filing certificate of limited partnership with Secretary of State
        
        must have at least one general partner and at least one limited partner
  - - - every partner is an agent of the partnership for the purpose of its business
      - Authority
        
        express
        
        apparent
        
        restrictions - 3rd party must know about restriction on authority or the partnership will be bound
        
        partner who acts without authority may be liable for breach of the partnership agreement
    - - partners are not entitled unless specific in partnership agreement
    - - joint and several for obligations of partnership
      - individual for entire amount fo partnership obligation
      - entitled to indemnification
      - may seek contribution from other partners (if pay more than pro rata share of liability)
  - - - reducing partnership assets to cash
        and distributing to entitled parties
        
        partnership propery
        
        originally brought in - part of capital of partnership
        
        subsequently acquired
        
        purchased with partnership funds
        
        partner's individual property
        
        intent evidenced that any property originally brought in was not to be partnership property
        
        partners can have contrary intention from applicable law
        
        distributed in specific order
        cost of sale
        outside creditors
        inside creditors
        capital contributions
        profits
      - if there are insufficient funds to cover partnership's obligations, then partners must contribute amount to cover liabilities
- - - - promoter is a person who causes a corporation to be formed, organized, and financed
      - personally liable as the corporation's agent on pre-incorporation contracts entered on corporation's behalf
        
        contract can specifically disclaim promoter's personal liability
        
        corporation not liable unless it assumes liability
        can be express or implied
        
        personal liability continues until a novation
    - - de jure
        
        organized in compliance with statute but failed to comply with a statutory provision
      - de facto
        
        statutory compliance is insufficient for de jure status
        formed if:
        good faith, colorable attempt to comply and
        corporate principals acted as if they were a corp
      - by estoppel
        
        creditor who has always dealt with principals as if they were a corp cannot later allege the corp is defective
        
        defendant who held himself out to be a corp cannot avoid liability by claiming there is no corp
    - - member-managed or manager-managed
        if not stated in operating agreement, LLC is presumed to be member-managed
      - Treated like a corp for limited liability purposes in protecting members, managers, and agents from liability for obligations of the company. But it has attributes of a partnership for federal income tax
      - member's withdrawal results in dissociation, but does not result in dissolution. Dissolution requires consent of all members.
  - - - elements
        
        misrepresentation of a material fact
        
        knowledge by D of the misrepresentation
        or reckless disregard for the truth
        
        scienter
        
        reliance by the P
        
        Damages
    - - requires two transactions in stock
      - strict liability offense
      - damages
      - prevent unfair use of information
        and internal manipulation of price
      - profit recoverable
  - - - no personal liability for corporation's debts
        UNLESS
        1) corporate veil pierced
        alter ego
        inadequate capitalization
        failure to comply with corporate formalities
        2) commit a tort (i.e. fraud)
      - Meetings
        
        annual
        
        special
        requires written notice with place, date, hour, and purpose no less than 10 and no more than 60 days prior to meeting
        
        quorum = majority of the shares entitled to vote
      - voting agreements = contracts to ensure shareholders will vote in concert with regard to issues designated by the agreement
      - voting trusts = involves transfer of legal title to a trustee who votes the shares according to the trust terms
      - shareholder derivative suit =
        shareholder sues on behalf of the corporation
        to redress a wrong when the corporation fails
        to enforce its right
        
        must be shareholder at time of transaction
        
        must make demand upon corporation, unless futile
      - majority shareholders owe fiduciary duty to refrain from exercising control to obtain benefit not shared proportionately with minority shareholders
    - - manage corporation
      - protected from liability by Business Judgment Rule
      - fiduciaries of the corporation
        
        duty of care
        
        duty of loyalty
        
        indemnification
        
        ultra vires
    - - same duties as directors
      - agents of the corporation
      - hired and can be removed by directors
  - - - not automatic
      - must be in Articles of Incorporation
    - - shareholder has no inherent right to be paid a dividend
      - BoD has discretion to decide whether and when to declare a dividend
  - - - written
      - states place, date, hour, and purpose
      - no less than 10 and no more than 60 days prior to meeting
        can be waived
- - - - Is Principal liable for Agent's actions?
        Factors for independent contractor v. employee:
        Distinct occupation or business
        Work customarily done under principal's supervision
        Skill required in the agent's occupation
        Who supplies the tool and place of performance
        Length of time the agent is engaged by principal
        Whether agent is paid by the job or hourly
        Intent of the parties
        Whether the principal is in business
        
        Independent Contractor
        
        Employer has no right to control performance
        No liability UNLESS:
        inherently dangerous activities
        loaned agents
        nondelegable duty
        negligent selection of contractor
        
        Employee
        
        Employer has right to control performance
        respndeat superior - scope of employment
        
        Principal's liability is in addition to agent's liability
    - - individuals are liable for their own torts
    - - agent liable for breach of duties to principal
        
        Duties Owed
        
        Duty of Care
        
        Duty of Loyalty
        
        Duty of Obedience
        
        Duty to account
    - - individuals are liable for their own torts
  - - - agent acting within scope of authority may bind principal in contract
        
        ratification
        
        principal grants retroactive authority to his agent's earlier unauthorized actions
        
        actual
        
        manifestation of the principal to the agent that the agent acts for the benefit of the principal in a particular way and that the principal agrees to be bound by the agent's actions
        
        apparent
        
        agent is "cloaked" with authority
    - - disclosed vs. undisclosed principal
        
        fully disclosed = agent not liable
        
        undisclosed = agent is personally liable
        
        partially disclosed = agent is personally liable
        when 3rd party learns of identity of principal they must elect to EITHER go after the principal OR the agent
      - breach of warranty of authority
        agent acts beyond authority on behalf of principal
        agent is fully liable
    - - contractual duties owed to agents
        
        compensate
        
        indemnify
        
        reimburse
        
        cooperate
    - - based on terms of the contract