Glossary of Law MidTerm Business Org.

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Sole Propietorship
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)
General Partner
Association of 2 or more people as co-owners of a business for profit.
Partnership by Estoppel
prevents the party from denying the existence of a partnership even though there may NOT be one
General Partnership Characteristics
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)
Termination of Partnerships (Asset distribution)
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
Limited Partner
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)
Limited Partnership Characteristics
gneral partners personally liable (limited have only limited liability, only contributed cap); not a tax paying entity; can share in some profits and losses;
Limited Liabiity Partnership
used for only certain professions; all partners are managers, but ther eis limitted liability; taxed like a partnership
Corporations Sources of Power
1. Constitution
2. Statutes
3. Common Law (Case law)
4. Charter (Articles of Organization)
5. By laws
6. Votes by the board
Corporation Characteristics
perpetually exists; limited liablity; free tranferability; seperate taxes (from personal); centralized management
Piercing the Corporate Veil
only for small businesses; designed for creditors; domination of the crop by its shareholders (alter ego); improper use of corp.
Reasons for Stock Transfer Restrictions
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"
Absolute Right of Shareholders
inspect list of shareholders and number of shares per; inspect by laws and minutes from meetings of last 3 years
Qualified right of Shareholders
inspect accounting records and board and committee meeting minutes
Limited Liability Companies (LLC)
limited liability (just like corp); can choose whether to be taxed like a corp or a partnership; anyone can manage
Duties of Principals
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
Business Judgement Rule (definition)
officers and directors are not liable for negligence when decision is within scrop of authority and complies with fiduciary duties
Business Judgment Rule (To Invoke...)
1. Managers make informed decision
2. No conflicts of interest
3. rational basis for decision
Ways Duty of Loyalty is Breached
1. self dealing (secret profits)
2. competing with business
3. usurping corp. opportunity
Usurp Corporate Opportunities
assume: seize and take control without authority and possibly with force
Free Transferability of Stock
In a Corporation - Can sell your stock (or a percentage) at any time without consent of any other (unless otherwise noted in by laws)
Home State (of Corp)
The state in which you have filed charter
Foreign State (of Corp)
Doing business in a state other than your home state (in US)
Aliens (of Corp)
Doing business in another country

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