business associations

Question 1

how is actual authority created

Answer 1

• manifestation by p to a
• p asks a to benefit p
  PLUS
• p agrees to be bound by a’s actions

Question 2

If a third party has ____, apparent authority does not exist

Answer 2

actual knowledge that the agent lacked authority

Question 3

is a partner in a limited liability partnership liable for partnership obligations solely by reason of being or acting as a partner?

Answer 3

no

Question 4

can a partner become liable for partnership obligations based on her own personal misconduct?

Answer 4

yes

Question 5

under fiduciary duty of loyalty in partnership, does a partner have an obligation to refrain from appropriating partnership assets for personal use

Answer 5

yes

Question 6

does partner’s fiduciary duty of care include a duty not to engage in intentional misconduct and knowing violations of the law?

Answer 6

yes

Question 7

are claims for breach of duties by partners in limited liability partnership subject to the rule of limited liability applicable to claims by outside parties?

Answer 7

no

Question 8

what kinds of actions can a partner maintain against other partner for breach of duties

Answer 8

• action for violating fiduciary duties to partnership and thus causing harm
• equitable or legal action against partner or partnership to enforce partner’s rights under partnership agreement and applicable law

Question 9

to whom do partners owe duties of loyalty and care

Answer 9

partnership AND other partners

Question 10

do shareholders have authority to amend corps bylaws with respect to director nominations

Answer 10

yes

Question 11

With what must provisions of corp bylaws be consistent?

Answer 11

(1) law
(2) aoi

Question 12

who has the power to amend bylaws of a corp

Answer 12

both board and shareholders

Question 13

when does power to amend bylaws belong exclusively to shareholders of a corp (i.e., not to both board and shareholders)

Answer 13

if
(1) aoi reserves power exclusively to shareholders, or
(2) s/h in amending, repealing, or adopting a bylaw expressly provide the bod maybe not amend, repeal, or reinstate bylaw

Question 14

what is a direct suit (shareholder)

Answer 14

s/h sues on his own behalf to redress an injury to his interest as a s/h

Question 15

what is a derivative suit (shareholder)

Answer 15

s/h sues on behalf of corp to redress wrong to corp when it fails to enforce its right

Question 16

what is the usual case for which a derivative suit is brought

Answer 16

breach of fiduciary duty

Question 17

what does choice b/w direct or derivative suit often turn on

Answer 17

• who is injured
• who will receive relief sought by p

Question 18

is a shareholder lawsuit for a dividend payment an individual suit or a derivative suit?

Answer 18

individual suit

Question 19

what is a corporation entitled to when a shareholder (properly (good faith, purpose, etc.) or improperly) requests to inspect records

Answer 19

• written notice
• time to respond

Question 20

what does the bjr protect?

Answer 20

directors from liability for breach of their fiduciary duties

Question 21

what must a shareholder prove in a dividend payment lawsuit

Answer 21

directors’ refusal to declare a dividend amounted to:
- fraud
- bad faith, or
- an abuse of discretion

Question 23

earmarks of “bad faith” in lawsuit for dividends (corps)

Answer 23

1. intense hostility of controlling faction against the minority
2. exclusion of minority from employment by corporation
3. high salaries, bonuses, or corporate loans made to the officers in control
4. fact that maj group may be subject to high personal income taxes if substantial dividends are paid
5. existence of a desire by controlling directors to acquire minority stock interests as cheaply as possible