Business Organizations Outline

Business Organizations Outline
I.      Intro
a.        The Role of Agency Law in Business Associations
                           i.      Restatement of the Law Third®Agency
1.        Agency Defined
a.        Principal & Agent®Restatement of the Law 3rd-Agency
                                                                                                   i.      § 1.01 Agency is the fiduciary relationship that arises when one person (a “principal”) manifests assent to another person (an “agent”) that the agent shall act on the principal’s behalf and subject to the principal’s control, and the agent manifests assent or otherwise consents so to act.
                          ii.      Actual Authority
1.        § 2.01: An agent acts w/actual authority when, at the time of taking action that has legal consequences for the principal, the agent reasonably believes, in accordance w/the principal’s manifestations to the agent, that the principal wishes the agent so to act.
a.        Express® an agent is actually told he can do a certain action
b.       Implied® an agent does what he has to in order to achieve the desired result
                        iii.      Scope of Actual Authority
1.        Apparent Authority (principal to 3rd party)
a.        Exist even though the agent didn’t have authority and knew they didn’t have authority but in some way the principal has conveyed to a 3rd party that the agent has authority
                                                                                                   i.      How much does a 3rd party need to rely on?
                        iv.      Respondeat Superior
1.        §2.04: An employer is liable for torts committed by employees while acting in the scope of their employment
b.       Kinds of Agents
                           i.      Whether an employee is an employee or an independent contractor
1.        Benefit issues
2.        Liability Issues
3.        Tax Issues (no payroll tax on indep contractors)
                          ii.      Factors to determine indep contractor vs. employee
1.        supervision
2.        set hours or not
3.        specific work location
c.        Intro to Business Forms
                           i.      The Proprietorship
1.        Single owner, simplest way of doing business, because no other entity is formed
2.        If the proprietor wants to do business under another name may need to register name doing business as, “fictitious name”
3.        The proprietor is personally liable for the losses of the business
4.        For taxes, there is only one level – all losses and gains are paid by proprietor
                          ii.      The General Partnership §358
1.        Agreement with 2 or more people as co-owners of a business for profit
2.        Unlimited liability for all partners for the debts of the business; jointly and severally liable
3.        Default rule if you do not file with the state but act as a partnership you will be treated as a partnership
4.        Flow-through taxation – the company itself is not taxed; partners must pay taxes on share of profit, even if they do not receive the actual profit
                        iii.      The Limited Liability Partnership “LLP” §358.150
1.        Same thing as Gen Partnership except creates limited liability for the partners for the various acts of the partnership
2.        you are no longer liable for the acts of the partners or company, but not free from the liability of your own actions
3.        creates a protection like being a shareholder in a corporation
                        iv.      The Traditional Limited Partnership § 359
1.        Incorporates partnership law into limited partnership governance
2.        the entity is separate from the people
3.        File with secretary of state’s office, pay a fee and draft a partnership agreement
4.        Must have at least 1 general partner and 1 limited par