Various business forms:
· Sole proprietorship: person is the business, no distinction (eg. painter, lemonade stand)
· Partnership: 2 or more ppl doing business together, like sole proprietorship in that they pay out of pkt and $ goes back into pkt
o Ptrs. are agents for one another
o Can arise out of contract or virtue of default provision in the statute
· Limited Partnership: benefit over reg partnership b/c limits the liability of some partners, responsible only for the $ they put in
· LLC: Limited liability corporation (NOT a corporation) Aspects of bth ptrnshp and corp
o Benefit over LP is it does not have the limitations of management
o Still have benefit of flow through taxes
o This entity has pretty much replaced LPs
· Corporations: various types (S Corp, C Corp), distinguished b/c it is a separate taxpaying entity, owners generally shareholders, manager is the Board which then hires the CEO. Ownership and control is separate.
Notes of framing:
· 1/3 of class abt agency: it is in all entities b/c someone is acting for someone else
· Then formal partnership rules
· Finally LLC – little law, borrows from corp law and partnership law
· Transactional approach: backup, how could this have been fixed or avoided in the future. Good lawyer needs to know how to plan. Solution has to make practical as well as legal sense.
New York Times Art.
· Founders should consider the structure: corp or ptrnsp. May depend on whether the entrepreneur expects to have:
o Outside investor in add’n to friends & family members
§ Corp. insures more security: limited to investment, can transfer ownership/stock, law is solid & known, board members can have some oversight w/o being involved in day-to-day decision-making
o Whether client needs to limit liability
o While having tax benefits of gains & losses from business (flow through tax benefits)
· Exit strategies are really important
Goals of business:
Love of the work
Who’s An Agent?
Gordon v. Doty (Doty “loaned” car to Mr. Garst who had accident. Gordon father & son injured)
· Agency: Relationship which exists where one person acts for another. Three principal forms:
o Principal and agent
o Master and servant
o Employer or proprietor and independent contractor
· Restatement of Agency §1: “agency” is the relationship which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act
· Does not have to involve a matter of business, but only where one undertakes to transact or manage some affairs by the authority of the other
· No K necessary to find agency
· Find agency: Doty said she would loan her car w/express condition Garst would drive it himself
o She consented he should act for her and in her behalf in driving her car
o She did not use the language of “loaning” or “borrowing”
o Ownership creates a presumption of agency
o Find her saying he has to drive is evidence of her controlling him
· Dissent: agency means more than mere passive permission. It involves request, instruction, or command.
· In future: write “I am Loaning you my car,” “You are not my agent (I do not consent to you being my agent”…
· Teacher also an agent of school (master/servant) → did school get out b/c of soveignty? You CAN be an agent of 2 ppl at once
· Every lawyer is an agent of their client: spell out terms in the engagement letter, set the scope of your represent tation
· Set of fiduciary responsibilities owned all principal’s even if not spelled out: confidentiality, loyalty, and diligence
· Agency basically a K – mutual agreement. Consideration flowing in bth directions. Does not need to be formalized in writing.
o Mutual benefits: giving up legal right nd other party receiving authority they didn’t previously have
· To establish agency, need agreement (consent) but also control – control is hallmark of agency
· Lawyer (classic agent) v. Roofer (classic independent contractor) → emp usually has no control, not an agent §2.3
MJ & Partners v. Zadikoff
· Through a chain of contracts, Zadikoff allegedly act
; Giamatti: NY
· Citizenship of Reds may be disregarded as they were nominal Δ whose interests were not adverse to Rose-not nec. to give relief
· MLB a “unique organization” and “extraordinary powers” are vested in the commissioner
· Main issue: are the other Δs nominal?
o 1st look at the question of the case: is it against giamatti alone, or against MLB?
§ MLB owners created the position of the commissioner to have limiteless authority.
§ MLA gives the Commissioner exclusive jurisdiction to investigate violations
§ MLB & its clubs have no control over such an investigation
§ B/c the Comm. is not subject to their control re: such an investigation, and the suit is only about the investigation, Rose is only suing Giamatti and all other Δs are nominal
§ Nothing in Rose’s K w/reds or in the MLAs gives any right or duty to prevent Comm. from conducting hearings
§ MLA empowers Comm. to formulate his own rules of procedure outside the MLA – his actions impose no contractual liability on the Reds or any other MLB members
o 2nd looks to determine if Giamatti is an agent of MLB
§ baseball can’t be analogized to any other business… Baseball’s management through a comm. is an exception, anomaly, aberration…”
§ W/regard to disciplinary matters, the MLB clubs have made the comm. totally indep. of their control
§ Analogous w/an indep. contractor, a person emp. by MLB to act as an arbitrator and judge indep. of any control by the members of MLB.
§ NOT an agent: a party cannot be held liable for the conduct of a person over whom they have no control.
· You can be responsible as a principal for some aspects of the work, and not responsible for others.