Lecture Week 9 Flashcards
what is a company?
a business that is ran as a separate legal entity
limited liability = ?
shareholders are only liable to lose only their investment in the company and no other assets in the event that the company failed/went bust
are the distribution of dividends compulsory in company law?
no
agent = ?
an agent is a person who has legal authority to conduct business on behalf of another person, known as a PRINCIPAL
who does an agent contract on behalf of?
their principal
is there normally a contract between principal and agent?
yes
what should be avoided between a principal and an agent?
conflict of interest
what are the duties of the agent?
- obey lawful instructions
- use care & skill
- perform duties personally
- fiduciary duties
fiduciary duty = ?
the legal responsibility to act solely in the best interest of another party
fiduciary duties of an agent?
- avoid conflict of interest
- not make secret profit
- not take a bribe
- keep their own property separate
- record their dealings on their principals behalf
- duty of confidentiality
rights of an agent?
- to be indemnified against losses & liabilities
- be repaid expenses and any agreed remuneration
- exercise a lien
how can an agency be created?
- agency by consent
- agency by estoppel
- agency of necessity
- ratification
what are the three types of agent authority?
- express actual authority
- implied actual authority
- apparent authority
three types of businesses?
- sole traders
- partnerships
- companies
what is a sole trader?
an individual who owns the business
can still employ others (independent contractor e.g., plumber, electrician)
unlimited liability
difference between private/public company?
private company isn’t listed on stock exchange, but public company is
what are partnerships?
two types:
- partnership under the partnership act 1890 (most usual form)
- limited partnerships under the limited partnership act
1907 (rare)
typical partnerships?
accountancy and law firms
partnerships under the partnership act 1890?
act sets out framework; if you don’t want to be bound by the act, you need a partnership agreement
unlimited liability (like a sole trader)
all partners can manage the business and are agents for each other
partners each have to share profits & losses (each pay tax on their share of the profits)
partnerships under limited liability partnerships act 2000 (LLP)
legal personality separate from its members
must register with registrar of companies
NOT companies
members are partners, not shareholders
companies?
artificial legal persons
separate legal entity from persons who own and control them
landmark case for companies?
Salomon v Salomon
how is a company limited?
by guarantee, not shares
limited by guarantee?
the members promise, when the company is first registered, to contribute a fixed amount - usually a nominal sum if the company closes down
private companies = ?
limited by shares
public companies = ?
limited by shares
name ends with PLC or public limited company
private company/public company prefix?
private = ltd
public = plc
must a company have a name?
yes
must be original
company registration requirements?
- application of registration must be sent to companies house
- memorandum of association
- certificate of incorporation
- articles of association
consequences of incorporation?
- separate legal personality
- the company is its own artificial person
- company can enter into contracts in its own name - can sue and be sued
lifting the corporate veil?
means the setting aside of the principle that a company is a distinct separate entity from its management and ownership
(for the purpose of extending civil or criminal liability to its management/ownership)
