business associations Flashcards
how is actual authority created
- manifestation by p to a
- p asks a to benefit p
PLUS - p agrees to be bound by a’s actions
If a third party has ____, apparent authority does not exist
actual knowledge that the agent lacked authority
is a partner in a limited liability partnership liable for partnership obligations solely by reason of being or acting as a partner?
no
can a partner become liable for partnership obligations based on her own personal misconduct?
yes
under fiduciary duty of loyalty in partnership, does a partner have an obligation to refrain from appropriating partnership assets for personal use
yes
does partner’s fiduciary duty of care include a duty not to engage in intentional misconduct and knowing violations of the law?
yes
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?
no
what kinds of actions can a partner maintain against other partner for breach of duties
- 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
to whom do partners owe duties of loyalty and care
partnership AND other partners
do shareholders have authority to amend corps bylaws with respect to director nominations
yes
With what must provisions of corp bylaws be consistent?
(1) law
(2) aoi
who has the power to amend bylaws of a corp
both board and shareholders
when does power to amend bylaws belong exclusively to shareholders of a corp (i.e., not to both board and shareholders)
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
what is a direct suit (shareholder)
s/h sues on his own behalf to redress an injury to his interest as a s/h
what is a derivative suit (shareholder)
s/h sues on behalf of corp to redress wrong to corp when it fails to enforce its right
what is the usual case for which a derivative suit is brought
breach of fiduciary duty
what does choice b/w direct or derivative suit often turn on
- who is injured
- who will receive relief sought by p
is a shareholder lawsuit for a dividend payment an individual suit or a derivative suit?
individual suit
what is a corporation entitled to when a shareholder (properly (good faith, purpose, etc.) or improperly) requests to inspect records
- written notice
- time to respond
what does the bjr protect?
directors from liability for breach of their fiduciary duties
what must a shareholder prove in a dividend payment lawsuit
directors’ refusal to declare a dividend amounted to:
- fraud
- bad faith, or
- an abuse of discretion
earmarks of “bad faith” in lawsuit for dividends (corps)
- intense hostility of controlling faction against the minority
- exclusion of minority from employment by corporation
- high salaries, bonuses, or corporate loans made to the officers in control
- fact that maj group may be subject to high personal income taxes if substantial dividends are paid
- existence of a desire by controlling directors to acquire minority stock interests as cheaply as possible
