Business Associations/Corporations Outline

I) Introduction
A Basics of BA
1) Business – a broad term defining all kinds of profit-making activities
a. Unincorporated associations
i. Agencies, partnerships
b. Corporations
2) “Closely Held” businesses
a. Business with few owners
3) “publicly held”
a. Business with hundreds of owners
B Role of Agency Law
1) Agency
a. The fiduciary relationship that arises when one person (principle) manifests assent to another person (agent) that the agent shall act on the principles behalf and subject to the principles control, and the agent manifests assent or otherwise consents to the act. (R3Agency 1.01)
b. Co-agents
i. Disclosed principle – when an agent and a third party interact, the third party ahs notice that the agent is acting for a principle and has notice of the principles identity
ii. Undisclosed principle – when an agent and a third party interact and the third party has no notice the agent is acting for the principle
iii. Unidentified principle – when the third party knows the agent is acting for a principle but does not know the identity of the principle
2) Master-Servant
a. Principle who employs an agent to perform service in her affairs and who controls or has right to control the physical conduct of the other in the performance of the service
3) Independent Contractor
a. A person who contracts with another to do something for her, but who is not controlled by the other nor subject to the others right to control with respect to the physical conduct in the performance of the undertaking
C The Business Forms
1) Types of Business Forms
a. Proprietorship
b. General partnership
c. Limited liability partnership (LLP)
d. Limited liability limited partnership
e. Limited liability companies
f. Corporations
II) The Partnership
A Introduction
1) An association of two or more persons to carry on a business as co-owners for profit (UPA 6)
® Note: cannot be formed for nonprofit purpose
2) Each partner is the agent of the copartners
a. When any partner acts within the scope of the partnership, the acts will bind the other partners
B Characteristics of a Partnership
1) Partners are jointly and severally liable for the obligations of the partnership
2) For tax purposes the income or losses of the partnership are attributed to the individual partners; not the partnership itself
3) The partnership is treated as a separate entity apart from its individual partners
a. Capacity to be sued
i. Jurisdictions are slit
® However under Fed Rules of Civ P. they can sue or be sued under the name of partnership
b. Can own and covey property in its own name
C Formation of Partnerships
1) Partnership by contract
a. Since it is a voluntary association there must be an express or implied agreement in order to form partnership
i. Watch for statute of frauds issues (must put in for more than one year)
ii. If not expressed termination at will is assumed
iii. New members must be consented to by all current partners
2) Partnership by Estoppel
a. Liability
i. One who holds themselves out to be a partner, or expressly or impliedly consents to representations that she is a partner, is liable to any third person who extends credit in good faith reliance on such representations (UPA 16)
D Profits and Losses
1) Each partner in the absence of agreement, shares profits and losses equally (UPA 18(a))
a. When the partners do not specifically agree on how losses are to be shared, then the UPA control (Richert v. Handly-timber case dealing with issues about payment for services he rendered)
E Law Firm Partnerships
1) Compensation schemes are different
a. Based off productivity and billable hours, business brought in, activities
2) Retirement Policies
a. The plans should be set on in the contract (look to terms of K)
b. Current partners do not have a fiduciary duty to former partners (Bane v. Ferguson-retirement fund that was to end on dissolution of partnership)
F Limited Liability Partnershi