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Business Associations/Corporations
University of Mississippi School of Law
Bullard, Mercer E.

You can miss up to six classes without a grade reduction.
Slideshows are posted on TWEN.
LLC Operating Agreement Team’s edited agreement is due next week.
Everyday, five minutes, to get the job you want.
–          Networking within your own class
–          Taking the right classes
–          Get twitter account
This is a Business Associations Class. LLCs are the best type of business association.
–          Sole Proprietorship
o   Can sue Chancy individually
–          Limited Liability Entities
Take Civ Pro II with Percy so that you can draft a complaint.
Trade Creditor has a fixed claim on a business.
–          File Complaint/Motion to Dismiss
o   A clear statement of the claim and plead facts sufficient to a legal theory on which he could recover.
–          Discovery
o   Depositions
o   Subpoenas
o   Documents
o   It’s Costly and Risky
“The limited liability corporation is the single greatest discovery of modern times.”
Torts are the duties that are not negotiated for.
–          Involuntary Creditors
–          Indemnification Provisions
–          Insurance
Triumvirate of Counseling your Client:
–          Limited Liability Entity
–          Indemnification Provisions
–          Insurance
Klein & Coffee – Business Organization and Finance
3 Types of Business Dealings/Liability:
·         Torts, Contracts, Regulations
o   Scope of Employment, Frolic and Detour
o   Advise Chancy to have waivers and releases on the widget contract.
o   Indemnification Clauses
o   Insurance for employee’s intentional torts
·         Lawyers are Risk Managers
·         You want to be the lead on matters of risk. You want to be the first person that they call. You want to be THE problem solver
·         Will Chancy be liable versus Will Chancy’s company be liable?
o   Business versus Individual Liability?
·         What is the insurance limit?
Second Rule of Practice: After they are done explaining the assignment, you need to grill them regarding the assignment.
First Rule of Practice: Your relationship with your secretary. Make it awesome. They will know more about practicing law than you do.
Take insurance and administrative law. Real Estate Law and Intellectual Property too.
Limits of Indemnification
1.      The company may fail
Limits of Insurance:
1.      Loss not covered
2.      Loss exceeds coverage limits
3.      Claim denied
4.      Insurance contracts are simply an invitation to litigate
5.      Insurer fails
Corporations can:
1.      Sue and be sued
2.      Own assets
3.      Enter into contracts and assume debts and other liabilities
4.      Can commit torts
5.      Make campaign contributions
6.      Free speech and religion
Personal assets are put into a “box” and Chancy no longer owns those assets, instead he has stock or shares of those assets.
Board elects the CEO.
Double Entry Bookkeeping: Every entry has an offsetting entry. If you spend $100 on machinery, $100 is subtracted from “Cash” and added to “Machinery.”
What is the liquidation value? What you have an eye on when you are thinking about investing in a company.
Loan Agreements are very common.
Ownership interest in a company is security interest. TAKE SECURITIES REGULATION AND BANKRUPTCY.
Selling shares is the same thing as issuing shares. But
Regulations – Administrative Law
·         Employment
·         Environmental
·         Energy
·         Antitrust
·         Securities
·         Healthcare
·         Financial Services
·         White Collar Criminal Law
o   Very close readings of statutes (growth area)
Two types of capital to finance companies:
1.      Loans
a.       Fixed rate
b.      You have to pay them.
c.       Constantly being ro

should be in the spirit of the default rules.
1.      Sole Proprietorship
2.      (General) Partnership (Inadvertent Partnership Rules)
[Unlimited Liability]  
[Limited Liability] (Always liabilities for your own torts)
1.      Limited Liability Partnership (May not be allowed to use it. May only be a partial shield)
a.       Partial or Complete Shield
                                                              i.      Partial shield – no liability for those things that you have paid for. But shielded from your partner’s actions
                                                            ii.      MS is a complete shield, but if you need the shield in a partial state, you can be liable for things
                                                          iii.      If the taco stand rents in a partial state, there can be liability there.
b.      Not all states have this.
                                                              i.      Some states say that only lawyers and other professions can be this entity
c.       Limited liability with respect to the business operations
2.      Limited Partnership (Have both GPs and LPs)
a.       Unlimited liability for GPs
b.      Complex structures
c.       Passive LPs (passive investors)
d.      This is private equity
3.      Limited Liability Company
a.       Taxed on revenue
b.      Go to sec of state website
c.       Forms for LLCs
                                                              i.      License to do business in state
d.      Certificate of Formation