Business Associations
Class 1 – Agency
Sole proprietorships- just you
General Partnership- more than just you
Limited Partnership: More than just you, but one person is more or less a passive investor
Limited Liability Partnerships (LLPs)- a lot of professional organizations
Limited Liability Companies (LLCs)- creature of state law
Corporations- C Corps
Sole proprietorships
-Simplest form of business association
-No paperwork required, just set up shop
-Absolute Control of your business- 100% of your business, answerable to no one
-Absolute Liability (underground studio)- can go after your personal along w/ business assets
-Pass through taxation
General Partnership
-Two or more persons carrying on as co-owners a business for profit (UPA §6) (doesn’t have to do with anything they sign or even agree on)
-No formalities required, but it’s best to seek legal counsel before setting up a partnership (absent an partnership agreement, default rules will be applied, but if you don’t want to be governed, use legal advice)
-Joint and several liability (both liable)
-Profits shared 50/50 in partnershipsC
-Disadvantage- can go after personal assets to go after the judgment
Advantage- pass through taxation
Limited Partnerships
-A partnership formed by two or more persons and having one or more general partners and one or more limited partners.
-Limited partner is going to have limited liability (can’t go after personal assets)
-Formalities required- must file with secretary of state (Third parties have to be on notice that they are dealing with a limited liability entity)
-General partner has general liability; limited partner has limited liability
-Pass through taxation
-Uniform limited Partnership Act- provides a lot of the same rules as the UPA, but you may not want to be guided by that, so seek legal advice
Limited liability partnerships (LLPs) –Not Responsible for it- No Cases
-Some states permit formation of LLPs
-Tax and flexibility advantages of partnerships (Same tax advantages as partnerships-not taxed, permitting partners to enter into partnership entities)
-Liability advantages of corporations
-Popular for professional partnerships
Limited Liability Companies (LLCs)
-Cross between part
elationship has to be based on some form of agreement. It can be implied through conduct.
*An agency relationship results from: the manifestation of consent by P to A that A shall act:
-on P’s behalf
-subjected to P’s control
-A’s consent to so act
Agency law tries to create incentives- burden of liability going to be placed on the person who is able to prevent a loss
Doty Limerick:
The court made Ms. Doty the heavy
Though Coach Garst demolished her Chevy.
When Soda Springs lost the game,
Coach accepted the blame,
But the principal pays the tort levy.
Gay Jenson Farms Co. v Cargill, Inc.
Cargill ——-Warren
Farmers
Warren and Cargill- revolving line of credit, right of first refusal on grain
Warren and Farmers- grain elevator contracts
Warren defaults to Farmers to 4 million dollars, and go after Cargill on the theory Cargill was the principal and sue Cargill
