Test one Flashcards
Sources of Law
Common Law (from England)
Regulation
Constitutuion
stare decisis
precedent - to abide by decided cases
Teleogical theory
based on consequences - where ethical good is judged by the effect of the action on others
Deontological theory
focuses on motivation behind action
Kantian theory
looks to the form of the action rather than the intended result. (Deontological)
Error of Commission
Omission (What you did not do - but you should have done)
Example: in regards to Ford case - where something like a disclosure could have been helpful but Ford chose not to do since it may decrease profits
Error of Omission
(What you did not do - but you should have done)
Example: in regards to Ford case - where something like a disclosure could have been helpful but Ford chose not to do since it may decrease profits
corporate opportunity doctrine
officers and directors may not take personal advantage of a business opportunity that rightfully belongs to the corporation
preemptive rights
When shareholders, usually a majority shareholder or a shareholder committing large amounts of capital to a start up company, purchase shares, they want to ensure they have as much voting power in the future as they did when they initially invested in the company. By getting preemptive rights in its shareholder’s agreement, the shareholder can ensure that any seasoned offerings will not dilute his/her ownership percentage.
cumulative voting
he procedure of voting for a company’s directors; each shareholder is entitled one vote per share times the number of directors to be elected
For example, if you owned 100 shares and there were three directors to be elected, you would have 300 votes. This is advantageous for individual investors because they can apply all of their votes toward one person.
Officers & BOD
Officers of a corporation are hired and fired by Board of directions
BOD are hired by shareholders
Merger
combination of two or more corporations into one
A + B = A. disappearing company no longer exists and the surviving company continues. the surviving company assumes the assets and liabilities of the disappearing company
Sale of Asets
where a company acquirs the assets of another company but not its liabitits (w/ out merging) the sale of majority of a companies assets must be approved by BOD and shareholders
Business Judgement Rule
where a court will presume that the directors have acted in good faith and in best interest of the corporation - and court will not question whether action was wise of whether bod had error of judgment
Piercing corporate Veil
Alter Ego theory - applies when owners of corp have so mingled their own affairs with those of the corp that the corp does not exist as a seperate entity - instead is an alter ego of its owner
Undercapitalization theory
applies when the corp. is a separate entity but its deliberate lack of adequate capital allows it to skirt potential liabilities
Bylaws
after the certificate of incop is files, the incorprorators adopt bylaws that are the rules governing the cop including the number of authorized BOD
Ending of Partnership Agreement
Dissolution - occurs when partners no longer carry on the business together
Winding up - settliing the accounts and liquidating the assets
Termination ccurs when all the partnership affairs are settled and the partners’ authority to act for the partnership is extinguished
articles of incorporation
name of entity nature/purpose of entity registered agent place of businss at minimum one owner
Limited liability company
•combines pass-through tax advantage and limited liability to investment
•creature of state law
•give at the founders and investors flexibility to shape their duties and responsibilities by contract
•owners are called members general with operating agreement
•general partners and investors can limit their liability to their investment
•assets protected
•full participation of all members
all partners can participate is control of partnership
Close corporations
cannot sell shares no more than 30 shareholders must elect to be close corporation must annually register w/ state secretary usually operated like partnership
S Corp
flow through taxation
must elect to be s-corp
cannot have more than 100 shareholder
if s-corp election not made…the corp is automatically a C Corp
LLLP (limited liability limited partnership
general and limited partners
all partners have limited liability but not all partners participate in management or operation of business
general partners manage partnership
Limited partnership
General and limited partners
limited partners cannot participate in the control or management of organization
General partners have full liabitlity and control of organization
harder to form
Liability of Principle for Intentional Torts of Agent
- the employer may be liable for the employees action if
- employer intended employees action/conduct
- employee’s high rank in the company make her the company’s alter ego
- employees action can be attributed to employers negligence
- employee uses apparent authority
- the employer aided the employee when committing tort
