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Agency and Business Entities > Agency and business entity > Flashcards

Agency and business entity Flashcards

1
Q

Business Entity Registration w/Secretary of State (gral) - NAB

A
  • Name (assumed, of reps, of people carrying)
  • Address
  • Business activity of applicant
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2
Q

Cause of rejection of Registration w/Secretary of State (2)

A

1) name non distinguishable from registered/reserved/person name
2) With the intention to create confusion

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3
Q

Cause of Revocation of Registration w/Secretary of State

A

Intentional creation of confusion

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4
Q

Cause of Cancellation of Registration w/Secretary of State (2)

A

1) Domestic corp = if disolved
2) Foreign Corp = if authority to transact in state revoked

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5
Q

Cause of amendment of Registration w/Secretary of State (2)

A

1) Change of name/address/ID of reps-persons carrying out activity
2) Change in location of address of ppal place of business OR new/different counties than originally stated

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6
Q

Agency concept

A
  • Fiduciary relationship
  • 1 persons (agent) consents to act on behalf of another (the ppal)
  • affecting legal relations with 3rd parties.
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7
Q

Agency - Authority formation (6)

A

1) Express
2) Implied/Inherent
3) Apparent
4) Estoppel
5) Ratification
6) Necessity

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8
Q

Agency - Examples of SOF for express authority

A

1) Real Estate
2) For over 1 year
3) “At will” contract
4) Sales rep compensation

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9
Q

Agency- Effects of ratification (2)

A

1) Cures lack of authority 2) Relates back to time of original contract

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10
Q

Agency - Reqs for valid ratification (4)

A

1) Ppal w/knowledge of all material facts of action 2) Agent represent he was acting on behalf of ppal 3) Ppal exist at time of contract 4) Once ratified - binding for ppal and for 3rd party (no withdrawal - unilateral rescission)

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11
Q

Agency - Contract Liability of Agent (4)

A

1) Ppal undisclosed/unidentified/lacked capacity 2) Misrepresentation of scope of authority 3) Deals for himself 4) Del credere agent

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12
Q

Agency - Contract Liability of Ppal (2)

A

1) Agent with authority 2) Ratification

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13
Q

Agency - Tort Liability of Ppal

A

Respondeat Superior - if within scope/course of agency

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14
Q

Agency - Tort Liability of Ppal - Contractors Rule

A

Ppal not liable if no control/supervision on means/manners/details of work UNLESS - dangerous activities.

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15
Q

Agency - Agent duties

A

1) Fiduciary duties 2) Reasonable care standard 3) Shop rights doctrine

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16
Q

Agent Fiduciary duties to act in good faith

A

1) HOLT 2) Full disclosure to ppal 3) Avoid conflict of interest and delegation of duties w/o permission

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17
Q

Agent Fiduciary duties - HOLT

A
  • Honest dealing - Obedience - Loyalty - Trust of ppal is followed
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18
Q

Agency - Ppal duties (4)

A

1) Reimburse business expenses 2) Indemnify for liability arisen from following instructions (includes follow servant rule and not assumption of risk) 3) Compensation 4) Maintain safe work-place

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19
Q

Agency - Voluntary causes of termination (4)

A

1) Completion of job/task - expiration of date 2) Terms of agreement - breach 3) Revocation by ppal 4) Renunciation by agent - including “at-will” employees

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20
Q

Agency - Involuntary causes of termination (4) - ISIS

A
  • Incapacity / death of ppal - Source of agency supply destroyed - Illegality of agency agreement (bc of susbsequent legislation) - Subject Matter of agency destroyed
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21
Q

Irrevocable agency when (2)

A

1) written + 2) coupled with interest in property

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22
Q

Agency termination - Notices to avoid liability

A

1) Actual: to 3rd parties w/ past dealings 2) Constructive: gral 3rd parties - publication

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23
Q

Partnership - gral concept

A
  • Association of 2 or more persons - W/intention to carry/manage as co-owners - Business for profit
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24
Q

PSX - Gral Rule on interests/ loss allocation/distrubiton

A

Similar unless agreed differently

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25
Q

Types of PSX on duration

A

1) For definite term 2) For particular undertaking (joint venture) 3) At-will (not time limit - default)

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26
Q

PSX Optional Statement of PSX Authority content

A

1) name of psx 2) address of CEO 3) office 4) List of partners 5) Special authority to transfer real estate

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27
Q

PSX Formation methods (3)

A

1) Express (oral/written if SOF) 2) Implied (by share of profits or other) 3) Estoppel (presents himself as partner OR allows use of name in psx trade name)

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28
Q

PSX rule of type of contribution

A

Any type (services, cash, promissory notes, etc)

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29
Q

Content of partner ownership interest

A

1) Share of profits/loses 2) Right to receive distributions (Can be subject to Charging Order by individual creditor to partner after judgment)

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30
Q

Partner Fiduciary duty of loyalty - CAP

A
  • Competition prohibited - Avoid Adverse Interests - Psx accounting for benefits
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31
Q

Modern view of conveyance of partner’s ownership interest

A
  • Assignee receives share of profit and loss - Assignee does not receive mgmt rights or rights to inspect psx books or info/accounts of transactions
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32
Q

Exceptions to gral rule of no compensation for partners on psx activties

A

1) “wind down” activities 2) extraordinary efforts 3) reimbursement for expenditures and personal obligations from ordinary/proper cause of business

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33
Q

Mgmt rule for psx

A

All partners by majority rule (out of ordinary decision by unanimous decision)

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34
Q

Psx liability gral rule

A

All partners personally joint and several liable (except for entering partner liable only for extent of contribution for psx torts/contractual obligation prior to admission)

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35
Q

Entering partner exception to liability

A

entering partner liable only for extent of contribution for psx torts/contractual obligation prior to admission UNLESS - waiver of liability shield - express assumption of responsibility beyond

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36
Q

Psx agency liability

A

All partners are agents (same rules)

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37
Q

Transfer of psx property under psx’ name rule

A

By any agent authorized - if not psx can recover from 3rd party knowing of lack of authoirty

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38
Q

Transfer of psx property under partner’s name rule

A

Only by partner under whose name - if not psx can recover from 3rd party knowing of lack of authoirty

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39
Q

Effects of dissociation of partner from psx

A

1) partner looses right to manage/conduct business 2) Duty of loyalty survives only for pre-dissociation matters 3) Psx doesn’t terminate - UNLESS partner at will who dissociates by express will 4) Entitled to current value of interest

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40
Q

Psx events of dissociation

A

1) Express will - anytime unless agreement on contrary 2) Expulsion : by partners/ judicial / Insolvency

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41
Q

Psx dissociation by partners

A
  • unanimously w/ or w/o reason for limited reasons
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42
Q

Psx dissociation by judicial

A
  • wrongful action - material breach of agreement/fiduciary duty - making it impracticable to continue business with that partner
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43
Q

Psx dissociation bc of insolvency (unless vacated within 90 days)

A
  • petition for bankruptcy or appointment of bankruptcy trustee - assignment of essential rights to creditor - court “charging order” on interest
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44
Q

Price for dissociated partner’s interest

A

Pro-rata share of net assets (or as agreed) - any dx are offset against it.

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45
Q

Dissociated partner liability

A
  • For 2 years- for lingering authority UNLESS Statement of Dissociation (90 days) - For obligation prior to dissociation (also with right to indemnification)
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46
Q

Psx dissolution causes (4)

A

1) Decided by half of remaining partners 2) Terminating event in psx agreement 3) Illegality 4) Judicial determination bc of economic frustration / equitability of dissolution / impractical continuation with current partners.

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47
Q

Statement of psx authority cancellation

A

By filing Statement of dissolution - as constructive notice after 90 days

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48
Q

Psx termination - Liquidation distribution priority (CPU)

A
  • Creditors (including partner creditors) - Partners for capital account contribution - Undistributed profits equally among partners (unless agreed differently)
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49
Q

LP partners/liability/management

A

1) Gral partner: manager - joint-several liable 2) Ltd partner: no manager (OK under ULPA), liable only for amount of contributed capital (Similar rights for voting, receive financial state, inspect records)

50
Q

LP - Effect of failure to file Certificate with secretary of state

A

LP turns into grl psx - no cut off point of joint and several liability

51
Q

LP - Exception to restricted exposure of ltd partners to 3rd party liaiblity

A

1) Use of name in trade name + lack of knowledge of thrid party he is not gral partner 2) Hold out as gral partner (estoppel)

52
Q

LP - Gral rule on distribution of loss/profits

A

Pro rata to capital contribution according to LP certificate

53
Q

PSX- Conversion/merger rigths with dissenter partner

A

Right to fair value of interest

54
Q

LP - Gral partner duties

A

1) Fiduciary duty 2) Authority to present derivative action (if refusal ltd partner entitled)

55
Q

LP - Dissolution

A

1) Any partner demand decree of dissolution 2) Last gral partner dies/withdraws (cure w/appointment in 90 days) 3) ULPA - any last partner withdraws (cure w/appointment in 90 days)

56
Q

LLP - creation

A

Filing of application + statement on qualification

57
Q

LLP - partners status/liability

A

As shareholders - liability to amount of shares and/or from own torts/tort from someone directly supervised subordinate.

58
Q

Corps - Incorporator’s liability

A

Personally liable for all pre-formation contracts if if:

  • act as or on behalf of non-existing corp
  • Doesnt disclose not yet existence of corp to 3rd party

Unless later Corp : accepts benefit, implied/express adoption, ratification.

59
Q

Corps - Articles of incorporation mandatory content (RINS)

A
  • Registered office + agent - Incorporator(s) - Name (corp, company, ltd, inc, co) - Stock info: nr of sahres / types of class
60
Q

Corps - Articles of incorporation optional content - Restrictions to director indemnification (FICE)

A
  • Fiduciary duty breach - Intentional wrong doing - Criminal Act - Excess distribution to shareholders
61
Q

Corp - Articles ammendment

A

1) Minor matters - by BOD 2) Significant changes - by majority of shareholders

62
Q

Corp- Organization Meeting required mattters (post filing) (3)

A

1) Stock subscription 2) Distribution of shares 3) Initial board election - adopt by-laws + ratify/adopt pre-formation contracts

63
Q

Corp - By-laws content

A

1) Corporate governance rules 2) Define number of directors

64
Q

Corp - Report obligations

A

1) Initial report filed with secretary of state with info on officers, directors, registered agent+address, description of nature of business 2) Annual report - with info above + total of authorized/issued/outstanding shares 3) license fee paymern

65
Q

Corp - Factors to determine if company “transacting business” in the state (foreign/domestic) (4)

A

Nexus - activities permanent/substantial/continuous - Not enough: one time, sales by mail , passive website, own property, appear as D in court

66
Q

Corp- Effects of being foreign corp

A

1) Incorporate / registrate 2) Obtain local license/ certificate of authority 3) Pay tax 4) Appoint in-state agent 5) Application of long-arm statutes for jdx -Failure to: Copr cant suit in state court (contracts unenforceable)

67
Q

Corp Liability - Gral Rule

A

1) Contractual: contracts by officer/agent w/authority or later ratified 2) Vicarious tort liability - respondeat superior

68
Q

Corp - Ultra Vires Doctrine

A

Defense available for shareholders, corps, attorney gral arguing that contracts beyond scope of corporate power is illegal

69
Q

Corp - Agency rule

A
  • Officer- agent - BOD: Only if express in corp articles
70
Q

Corp- BOD -removals

A

1) By shareholders: w/ or w/o cause in special meeting + prior notice 2) By court: when finding fraudulent conduct / gross abuse of position / intentional inflection of harm / for the interest of corp

71
Q

Corp - Rule on dividends

A

Sole power of BOD - potential liability if causes insolvency

72
Q

Corp - Exceptions to director’s deemed assent when present in BOD meeting (3)

A

1) Dissent/object at beggining of meeting 2) Dissent/object into minutes 3) Deliver written dissent within reasonable time

73
Q

Corp- Notice for special BOD meeting

A

Gral rule: 2 days in written.

74
Q

Corp- Fiduciary duty of directors/officers - Conflicts of interest (CUT)

A

1) Compete w/corp during their term (“self dealing”) 2) Usurp corp opportunity UNLESS corp rejected it first + after full disclosure of opp + intent 3) Trade secret opp

75
Q

Corp- Fiduciary duty of directors/officers - Conditions for Interested Transactions

A

1) Disclosed + recorded in minutes 2) Market price 3) Fair reasonable terms 4) Approved by majority of non-interested directors/shareholders

76
Q

Corp - Officer appointment/removal

A

By BOD

77
Q

Business Judgment Rule

A

Presumption that directors/officers have acted with due care and good faith - under “prudent business person”. - Limits personal liability - Usually court upholds when fraud, illegal, self dealing

78
Q

Business Judgment Rule - Prudent Business Person Standard - RIS

A

1) Reasonable at time - based on reliance on info by officers, employees, committees, expert opinions 2) In good faith 3) Supported by rational basis after appropriate investigation given the importance of the matter (Protects from honest mistake)

79
Q

Corp - Indemnization Agreement

A
  • Corp to pay dx, legal fees, attorney fees of officer/director/employees personally named as party in suits. - Judgment on the merits
80
Q

Corp - Exceptions to Indemnization Agreement (FICE)

A
  • Fiduciary duty breach - Intentional wrong doing - Criminal act - Excess distribution to shareholder
81
Q

Corp - Stock shares Price

A

Decided by board

82
Q

Corp - Stock shares transfer

A

Completed with presentation of endorsed stock certificate to corp

83
Q

Corp - Preemptive Rights

A
  • To maintain proportional ownership interest - On issuance of new shares = shareholder entitled to purchase pro-rata shares - Under RMCBA: not unless specified in articles / Other unless provide contrary
84
Q

Corp - Types of shares

A

1) Preferred 2) Authorized 3) outstanding 4) Redeemed

85
Q

Corp- Shareholders Special Meetings

A
  • Called by board OR 10% of shareholders w/written demand w/specific purpose OR Court bc of shareholder seeking remedy because disregard of request for meeting or not holding annual meeting
86
Q

Corp- Shareholders Meetings Notices

A
  • No less than 10 days no more than 60 days - No less than 20 for significant changes - No more than 70 to define whom gets notice
87
Q

Corp- Shareholders Quorums

A
  • Gral Rule: Simple Majority
88
Q

Corp- Shareholders Voting trust reqs

A

written +max 10 years

89
Q

Corp- Legal Remedies (2)

A

1) Direct Action: corp w/direct negative effect in personal finances of shareholder 2) Derivative Action: corp bc boards fails to enforce corporate right - dx for corp

90
Q

Corp- Distribution of dividends

A
  • Discretion of BOD - Once declared is corporate obligation - Unless agreed = for = class
91
Q

Corp- Shareholder Liability Gral Rule

A

Not liable beyond investment in shares - UNLESS: - “pierce of corporate veil” - Statutory liability

92
Q

Corp- Shareholder Statutory Liability (3) (very narrow exceptions to gral rule)

A

1) Subscription agreement set amount for liability 2) Equitable Insolvency of corp 3) Balance Sheet Test: post-distribution liabilities exceed assets.

93
Q

Corp- Equitable Veil Piercing reqs (2)

A

1) Corp used to avoid payment duty and intentionally grossly undercapitalized 2) Disregard of corp form to prevent aiding fraud/wrong suffered by innocent injured party

94
Q

Corp liability for debts of other corps (4)

A

1) Concurrent affiliates (integration + cross finances) 2) Successor Affiliates 3) “Mere sham”: alter ego: fraud/failure to separate 4) Estoppel: intentional + fraudulent mislead of 3rd party

95
Q

Stock-for-stock Statutory Merger

A

Company absorbs all merging entities

96
Q

Merger - Reqs

A

1) BOD disclosure + notice by both boards 2) Approval by target corp shareholder 3) File Articles of Merger with Secretary of State 4) Fundamental change - appraisal right for dissenting shareholders

97
Q

Corp-Consolidation

A

New corp created, old corps cease to exist

98
Q

Corp - Takeover - Reqs for non-hostile

A

1) Equality: same price per share offered to all shareholders 2) Procedure: bona fide written proposal - BOD recommends or not to shareholders 3) Highest Price duty for BOD

99
Q

Corp - Dissolution Causes (3)

A

1) Voluntary 2) Administrative - by sec of state 3) Judicial: possible appointment of receiver, custodian

100
Q

Corp - Voluntary Dissolution

A

1) Shares not issued: By BOD discretionary 2) Shares issued: BOD proposal to shareholders - majority vote - submit Articles of Dissolution to Secretary of States - then wind up

101
Q

Corp - Voluntary Dissolution - Deadline for creditors to present claim

A

-120 days since since notice of dissolution (Rejected: 90 days to file suit). - 3 years since publication notice for unknown claims.

102
Q

Corp - Administrative Dissolution by Sec of State - Reason (3)

A

1) Non-filing of annual report 2) Non payment of license fees 3) Failure to maintain registered agent/office

103
Q

Corp - Judicial Dissolution - Possible P’s (2)

A

1) Shareholder 2) Creditor unsatisfied after default judgment.

104
Q

Corp - Judicial Dissolution - Cause for shareholder’s action FOWD

A
  • Fraud/ Illegal activities by officers/directors - Oppression of minority shareholders - Waste of assets - Deadlock on BOD/among shareholders - risk of irreparable harm.
105
Q

Professional Services Corporation (PSC) Requirements

A

1) Only for licensed professionals (legally qualified in at least 1 state) 2) Have corp provision (in articles or by-laws) to buy out in case of disqualification

106
Q

PSC - Idle funds rule

A

Can be invested in anything not necessarily related with the required professional purpose of PSC

107
Q

PSC effect of death of partner

A

Corp/shareholder required to purchase share at fair value

108
Q

PSC - Shareholder liability rule

A

No personal liability for malpractice of other professionals, ONLY for own N and of those under supervision

109
Q

LLC - Formation

A

File with Secretary of state: - Articles - Certificate of formation (failure to file: treated as gral psx)

110
Q

LLC- Articles content NOMAD

A
  • Name - trade name LLC - not use copr, inc, psx, ltd, etc. - Organizer name + address - Manager or member managed - Address + Register Agent - Date of dissolution or statement of perpetual nature
111
Q

LLC - Management rules

A
  • Operating agreement (as by-laws) - Authority: 1) Managing member / 2) All members
112
Q

LLC - Member Manager

A
  • designated by articles (elected/removed by majority rule) - Resignation w/notice: dissolution if not replace within 90 days
113
Q

LLC - All members mgmt

A
  • In proportion to membership interest - Dissociation doesn’t dissolve LLC (new member requires unanimous approval to be able to engage in mgmt)
114
Q

LLC - Distribution Allocation

A

Manager decision when assets exceeds liabilities and other funds

115
Q

LLC - member rights

A

1) Inspection/copy of records 2) Similar rights to mgmt 3) Gral rule of majority vote

116
Q

LLC - Mgmt fiduciary duties (2)

A

1) Loyalty - account, old property, appropriation of property, competing 2) Due Care: refrain from grossly N, intentional misconduct, knowingly violation of law

117
Q

LLC- Agency

A

Members not with automatic authority

118
Q

LLC- Derivative actions (4)

A

1) Breach of contract 2) Use of proprietary info 3) Breach of fiduciary duty 4) Distribution when knowing it will cause LLC insolvency

119
Q

LLC - Dissociation Causes WIDE

A
  • Withdrawal - w/notice and w/o right to have interest purchased - Insolvency: bankruptcy / appointment of trustee, receiver, liquidator - Death or Incapacity - Expulsion: judicial order / breach of operating agreement / unanimous vote by other members
120
Q

LLC - Dissolution

A
  • In gral similar to Corp - Possible term/event in agreement - Consent by all members - Dissociation of last mast members (90 days to continue by assignee)
121
Q

LLC - Dissolution - Asset Distribution Gral Rule

A

Pro rata of shares of each class + no contribution requirement

122
Q

LLC - Dissolution - Asset Distribution - Priority

A

1) Creditors 2) Members/former members owed distribution 3) Return of member’s contribution 4) Shares of profits to members

Agency and Business Entities (1 decks)

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