In Hooper vs. Yoder, David Yoder sued Steven Hooper for half of the company’s assets and half of salary previous paid to Mr. Hooper. The decision reached was in Mr. Yoder’s favor and was reaffirmed upon appeal (Hooper v. Yoder, 1987). The case was heavily influenced by the Uniform Partnership Act, which governs the business dealings of partnerships. This case in particular highlights the legal cadence of dissolving and forming businesses and partnerships as well as places an emphasis on the preferred legal structure for companies where sales and production are managed by two separate individuals, a common structure when companies start.
The details of the case state that in 1976 Mr. Yoder and Mr. Hooper engaged in an equal partnership to manufacture …show more content…
This is also what the judges used to judge the outcome of this case as well. Specifically when Mr. Yoder and Mr. Hooper deferred the issuance of stock they prevented to partnership from dissolving and thus Mr. Yoder still had a legal write to 50% of the companies assets. When Mr. Hooper and Mr. Bradley issued stock to themselves and not to Mr. Yoder in the amount of 50% of the companies assets they essentially violated his rights in the company. Because of this reason, Mr. Yoder was awarded half of all compensation paid to Mr. Hooper and 50% of the company …show more content…
The clear solution would have been to issues 100 shares of stock and split them evenly. Other alternatives would have been to structure the company differently entirely. A limited liability partnership would have allowed the two partners to form a legal business that absolved them of personal liability but maintained the conditions of the partnership, however shares could not have been given to a third party. Separately the company could have simply been two LLC’s engaged in a joint venture or a tenants in common structure. This would have allowed the to work together but manage liabilities and assets separately. The preferred method for a business arrangement where one person is running sales and the other person is running operations would be to create to legal entities. An operating entity and a holding entity. The operating company would then lease any assets it needs from holding company. Both companies would then be setup as LLC’s where one partner would maintain 51% of one company and the other partner would maintain 51% of the other. This would allow the partners to issue stock against the holding company as well as maintain that each person has total control on the piece of the company they operate. A strong operating agreement between the two could then be drafted. This would both protect the
The details of the case state that in 1976 Mr. Yoder and Mr. Hooper engaged in an equal partnership to manufacture …show more content…
This is also what the judges used to judge the outcome of this case as well. Specifically when Mr. Yoder and Mr. Hooper deferred the issuance of stock they prevented to partnership from dissolving and thus Mr. Yoder still had a legal write to 50% of the companies assets. When Mr. Hooper and Mr. Bradley issued stock to themselves and not to Mr. Yoder in the amount of 50% of the companies assets they essentially violated his rights in the company. Because of this reason, Mr. Yoder was awarded half of all compensation paid to Mr. Hooper and 50% of the company …show more content…
The clear solution would have been to issues 100 shares of stock and split them evenly. Other alternatives would have been to structure the company differently entirely. A limited liability partnership would have allowed the two partners to form a legal business that absolved them of personal liability but maintained the conditions of the partnership, however shares could not have been given to a third party. Separately the company could have simply been two LLC’s engaged in a joint venture or a tenants in common structure. This would have allowed the to work together but manage liabilities and assets separately. The preferred method for a business arrangement where one person is running sales and the other person is running operations would be to create to legal entities. An operating entity and a holding entity. The operating company would then lease any assets it needs from holding company. Both companies would then be setup as LLC’s where one partner would maintain 51% of one company and the other partner would maintain 51% of the other. This would allow the partners to issue stock against the holding company as well as maintain that each person has total control on the piece of the company they operate. A strong operating agreement between the two could then be drafted. This would both protect the