Law Midterm Business Org.

Front 1

Sole Propietorship

Back 1

the owner is the business; complete responsibilities; sole rights to all profits; personally owns all assets; LIABLE for all debts (and torts); taxes paid out by person (personal, not business)

Front 2

General Partner

Back 2

Association of 2 or more people as co-owners of a business for profit.

Front 3

Partnership by Estoppel

Back 3

prevents the party from denying the existence of a partnership even though there may NOT be one

Front 4

General Partnership Characteristics

Back 4

partners are managers; parnters are agents of each other; patners are fiduciaries of each other; share all profits and losses; UNLIMITED LIABLITITES for partnership; LIABLE for tortss of OTHER partner and self; taxes paid by individuals (not business)

Front 5

Termination of Partnerships (Asset distribution)

Back 5

1. payment of 3rd party debts
2. refund of loans made to benifit the partnership by partner
3. Return of capital contribution by partner(s)
4. Distribution of balance in accordance with % of interest in partnership

Front 6

Limited Partner

Back 6

1 or more general partners manage the business and personally liable for debts and one or more limited parnters contribute capital and share profits and losses (but do not manage or incur liability for partnership beyond contributed capital)

Front 7

Limited Partnership Characteristics

Back 7

gneral partners personally liable (limited have only limited liability, only contributed cap); not a tax paying entity; can share in some profits and losses;

Front 8

Limited Liabiity Partnership

Back 8

used for only certain professions; all partners are managers, but ther eis limitted liability; taxed like a partnership

Front 9

Corporations Sources of Power

Back 9

1. Constitution
2. Statutes
3. Common Law (Case law)
4. Charter (Articles of Organization)
5. By laws
6. Votes by the board

Front 10

Corporation Characteristics

Back 10

perpetually exists; limited liablity; free tranferability; seperate taxes (from personal); centralized management

Front 11

Piercing the Corporate Veil

Back 11

only for small businesses; designed for creditors; domination of the crop by its shareholders (alter ego); improper use of corp.

Front 12

Reasons for Stock Transfer Restrictions

Back 12

1. choice of who is part of your company
2. Maintain balce of power
3. Require the liquidity of stock
4. Ensure your compliant with subchapter "S"

Front 13

Absolute Right of Shareholders

Back 13

inspect list of shareholders and number of shares per; inspect by laws and minutes from meetings of last 3 years

Front 14

Qualified right of Shareholders

Back 14

inspect accounting records and board and committee meeting minutes

Front 15

Limited Liability Companies (LLC)

Back 15

limited liability (just like corp); can choose whether to be taxed like a corp or a partnership; anyone can manage

Front 16

Duties of Principals

Back 16

1. Act within the scope of their authority
2. Duty of Care
3. Duty of Loyalty
4. Duty of confidentiality
5. Duty to disclose info material to business

Front 17

Business Judgement Rule (definition)

Back 17

officers and directors are not liable for negligence when decision is within scrop of authority and complies with fiduciary duties

Front 18

Business Judgment Rule (To Invoke...)

Back 18

1. Managers make informed decision
2. No conflicts of interest
3. rational basis for decision

Front 19

Ways Duty of Loyalty is Breached

Back 19

1. self dealing (secret profits)
2. competing with business
3. usurping corp. opportunity

Front 20

Usurp Corporate Opportunities

Back 20

assume: seize and take control without authority and possibly with force

Front 21

Business Judgement Rule (definition)

Back 21

officers and directors are not liable for negligence when decision is within scrop of authority and complies with fiduciary duties

Front 22

Business Judgment Rule (To Invoke...)

Back 22

1. Managers make informed decision
2. No conflicts of interest
3. rational basis for decision

Front 23

Ways Duty of Loyalty is Breached

Back 23

1. self dealing (secret profits)
2. competing with business
3. usurping corp. opportunity

Front 24

Usurp Corporate Opportunities

Back 24

assume: seize and take control without authority and possibly with force

Front 25

Free Transferability of Stock

Back 25

In a Corporation - Can sell your stock (or a percentage) at any time without consent of any other (unless otherwise noted in by laws)

Front 26

Home State (of Corp)

Back 26

The state in which you have filed charter

Front 27

Foreign State (of Corp)

Back 27

Doing business in a state other than your home state (in US)

Front 28

Aliens (of Corp)

Back 28

Doing business in another country