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Ferguson - Business Associations Flowcharts Spring 2009

Ferguson - Business Associations Flowcharts Spring 2009

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Published by biferguson
business associations, corporations, flowcharts, law outline
business associations, corporations, flowcharts, law outline

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Published by: biferguson on May 05, 2009
Copyright:Attribution Non-commercial

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12/15/2013

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Authority
Actual
Express
ApparentInherentRatificationEstoppel
ImpliedRTA s.2.01RTA s.2.03RSA 8A(RTA Strikes)RTA 4.01RTA s2.05P to AP to TPP ratifies ANO AGENT
Agent actsreasonably onPsmanifestationsthat P wants Aso to act.Conduct,words, orimplied byconduct
Based on A’s
reasonableperceptionPower held byA to affect Pwhen TP rblybelieves A hasauthority to actbased on Psmanifestationto TP
Sub AgentRTA 1.04(8)
A of A to
conduct P’s
business inscope of AauthorityLook to pastconduct
“Such powers
are asreasonablynecessary tocarry out the
duties”
UndisclosedPrincipalOr
“Rogue” A
DisclosedPrincipal
Agent & TP areparties toagree.
Liability ofAgent on K
R3rd s.6.03
Duty is on A to disclose P
Look to K to
clarify A’s
authorityApp ImpAuthority: putagent in placefor TP to rblybelieve A hasauth.
P liable for A if A’s
acts are within authusually confided inan agent whonormally has thatauth (can K out)Look forundisclosed P
P gen. Undiscl.RSA 161
RTA expands RSA
capture “Rogues”
No act or app
 –
Pmay be liable to TPbased on A if:P isintentionorcarelessof TPbeliefP is onnotice ofTP beliefand doesnot try tostopAffirmance of prioract done by AManifestassentthat actwill affectlegalrelationsP acts to justify rnblassumptnof consentA must be
acting ON P’s
BEHALF!IMPLIEDaffirmance = Pconduct, Pmust havereason toknowP must havechoice, cannotbe AFTER act
UndisclosedPrincipalUnidentifiedPrincipal
A is
NOT
partyUNLESSagreeotherwiseA
IS
partyUNLESSagreeotherwiseA & TP
ARE
 party UNLESSagreeotherwise
Nonagent Ind.Contractor
Liability of P onTP on Tort
EmployeeNonempleeAgent
NOT Liable
NO CONTROL
UNLESS:P
NOT
liableunless:P liable ifwithin scope ofemployment
CONTROL
Not on Agency, on KIND of Ag
RTA 7.03(1)
Direct
RTA 7.07
Employee
RTA 7.08
Apparent A
Day-to-day control, distinct operation, custom, skill, tools, time,compensation, party belief, business or not (7.07)POLICY
 –
Control, esp ownershipand profits tends to infer agency
Labels don’t matter 
RSA 1.01
 –
P must have controlControl over actual instrumentRespondeat superior as limit
7.07
 –
SCOPE
:Engaging in conduct subject
to P’s control
Liability = if harm isforeseeable from conduct ofEEs
7.07
 –
Intentional
Look at type of tort
P assert controlP negligentNon-delegableP volunteers totake dutyApparentAuthority
“Nuisance per se”
IncomptContractor ORFinanc. Incom.Nondelegableduty
OFFICERS areAGENTS OFCORPORATIONSPRES has inh auth tobind C for K
 
Agent’s Duties
Duty of CareRTA 8.08, .09Loyalty
W/in Scope &Comply w/Instructions8.09ReasonableCare 8.08AdverseDealings8.03PersonalBenefit8.02ProprietaryInform8.05Competing8.04PersonalProfits fromPosition
Reading 
Grabbing &Leaving
Town &Contry 
UsurpingBusiness
Singer 
FiduciaryDuties
Waiver Waiver Waiver Waiver Waiver 
May take stepsin preparationto competeWhen inconnection toagencyrelationshipNot useproperty of Pfor own or TPCannot communicate confidential information for Aor TPs benefit
P MAY consent toConflict of Interest8.01
A must act ingood faithDiscloseMATERIALinformationDeal fairly
P’s consent
must bespecific to actor transaction
If Breach:
Disgorgeprofits to PWorse than Kcase b/c notdamages,disgorgeTrade securedthrough yearsof bus. andadvertise, $$
Partnership
Unlimited liability, limittransferability, single taxation,limited access to capital,informal, less regulation w/inPS agreement, life limited topartner
101(6); assc of2 or more asco-owners, forprofit101(10):almost anyentity can bepartner201(a): PS isdistinct frompartnersRUPA is basisdefault rules
Non-Waivable
Duty of Loyalty,Care, Good Faith,Inspection
(1) Agreementb/t parties(2) Written, notneeded(3) Co-property notdeterminative(4) Share inprofits,presumed,UNLESSdebtwagesrentAnnuity/retireDebt serviceSale goodwillor property(5) Share inmanagement401(f)(6) Partnersmay becreditors
Partnership Windup
306(a): AllPs j/sliable forallliabilities308(e): ifnot PSs w/ eachother, notPSs to 3
rd
 parties807(a):aftercreditors,surplus toPS byrights todistribution(7) Look at
who’s at risk at
dissolution301(1): Each partner is agentof allUNLESS (1) P does nothave authority,
AND
(2) TPknows or should know P
doesn’t have author 
Allows APPARENT AGENCY(ordinary)305(a): PS isliable for act ofPs if act inordinarycourse ofbusiness306(a): all Ps j/ s/l for allLate-ComingPartners NOTliable forpreviousincurred oblg
Partnership By Estoppel
P must showexpress orimpliedholding out ofPS by DRepresentwas made byD or personalleged PSReason.Reliance byTP in goodfaithTP is harmed
Effect of PS by Estoppel
If D purportsto be PS andTP relies, D isliable to TPIF MADE INPUBLICMANNER, Das PSbE isliable even if
doesn’t know
If PS liability,then thatPSbE is liableas if P werepartner
Good Conduct
“catch
-
all”
8.10
 
PartnershipDuty
RUPA 404(b):duty of loyalty,
inc “approp of 
partnershipopportunity
“Punctilio of an
honor most
sensative”
Meinhard 
Notice+Opportunity
RUPA 103b3
:Cannot elim loyalty,but can id certaincategories,
if not manifestly unreasonable 
Elim duty of loyaltywhen poss, limit notice,time period limit,
change “PSopportunity” meaning
Interested partycannot vote inratification of self-interestedopportunity
Perreta v.Prometh 
RUPA404(d):
PS mustdischarge w/ obligation ofgood faith &fair dealing
PartnershipDisassociation
RUPA 601(3)P may beexpelled asterms of PSAgrRUPA 602b1:Wrongfulexpel ONLYIF breachexpress termof PS Ag
Partnership Transfer
401(i):All Ps mustconsent to sellPS interest502 & 503:PS haspersonalinterest in prof& losses &distributions501:P is not co-owner of PSproperty,cannottransfer504(a)-(b): Creditor MAY get judgment against P interest(8) Mgmt equalrights for all Psunless PS Agsays otherwise401(j): Diff in mgmt, majority wins, if notordinary, must have consent of all Ps
PS FREEZEOUTS!
 –
P v. TP305(c) & 401(c): PS is liable forordinary bus of P tort, mustindemnify P if in ordinary course
103(a)
 –
PS Ag may alter relations B/T Ps &103(b) lists non-alter in PS Ag
 
PartnershipDisassociation603(a)
FOR TERM602(b)(2): if interm:
Owen v Cohen 
: if P provides loan to PS,
presumed “for term” if pay of loan is out of 
profits
Dissolution & Wind UpArticle 8Continuation of BusinessArticle 7
602(a)
P may disassany time, rightor wrong, byexpress will
602(c)
Wrongfuldisass = Pliable fordamages toPS for disass
RUPA 801(5)
(i) economicpurposefrustrated(ii) one Pengag inconduct thatmakes PS notreasonablyconduct(iii) no longerreasonablypracticable tocontin PSunder PS Ag
(i) P withdraws byexpress will(ii) P expelled by judicial determ.(iii) P becomesdebtor in bankrupt.(iv) P expelled ordisass b/c dissolvor termination
AT WILL601(1): noticeby P to withdrP may be creditor and P,and may pursue owninterests - 404(d)
RUPA 701
Value atwindup isgreater of:Liquidationvalue, ORValue basedon sale of busas
going concern w/o disass P 
(1) Voluntary Association(2) Primacy of K PS Ag
EXPULSION
: if notpermitted in PS Ag, cannotexpel, can seek dissolve but404d
BUYOUT:
“Some objectivedetermination of value”
needed
Fair Market Value
Wind UpProcess
807a-b:
Creditors paid, then Ps
807b
: profits & losses from liquidation chargedto Ps accounts
803c
: person WU may dispose of and transferthe assets
Kovacik Rule:
Ps share in profits and lossesUNLESS one P is only skill & laborConflict w/ 401(b)
 –
proportionate sharesAmount = Capital Account (book) + avg prior 3years profits/gains paid to GP802(a)
 –
PS continues after dissol andterminates when WU done
 –
fees split as in PS
Shareholder SuitsDirectDerivative(recovery goes to Corp)
(1) personal action by SH for injuryof SH(2) SH as individual(3) recovery to P-SH(1) SH files on behalf of injury tocorporation(2) COA belongs to corp(3) recovery to corp(4) special pleading required 23.1Evaluate the HARM, who isharmed?Who would recover?P was SH at time of act orbecame through transfer ofSH who was at time
MBCA 7.41
SH fairly & adequatelyrepresents interests of corpin enforcing corp
MBCA 7.42Demand Requirement
Written, specific demandmade upon C to takesuitable action (wrongdoers)90 days have expired fromdemand, OR demandrefused, OR 90 too longFRCP 23.1
 –
Muststate desired resultin demand
Demand Futility -(1 of 3)
Majority BoD conflicted intDel: Majority BoD not indp bydomination or control (NY: notinformed themselves)Charged transaction not subjectto BJR
 –
BD no BJR
Show by reason. Doubtthat BD cannot decidedemand w/ part. facts
BD AcceptsBD Denies
BD takes over the lawsuitDenial issubject toBJRP-SH mustoverturnBJR topass denialIf demandmade,cannotclaim futility
BUSINESS JUDGMENTRULE
Presume BD acts with goodfaith and promoting best intof corpOverturned w/ part. factsshowing bad faith, conf int,AND breach of fid dutyNY Rule: part facts
 –
 (2) fail to inform(3) trans = BJR notpossibleDel Rule: reas doubt -(2) bd lacks indp(3) trans not validexercise of BJR
Special Litigation Committee(SLC)
 –
small comm of non-interestBD members to review demand(1) SLCmember selcprocessreview(2) procedused by SLCto reach subreview(3) SubstanoutcomeNOTreviewedBd member experience with contested trans,prior affilitations, completeness of inquiry, goodfaith, no pro-forma/shallow investig,
“eminentspecial counsel”
- but TAINTED BD can appointSLC members
Auerbach 
standard
Zapata 
standard
 
(1) Bd Indp &good faith(2) Basessupp decision(2) Ct applies
own “indp BJ”
whether todismissMore substantive review intodecision & eliminates potentialstructural bias
 –
subject to SummJudgment Standard Rule 56
 –
lookat personal ties (Stanford Conspir)
SHC
Standing
NYDelDemand Sent
Demand Requirement
Blasius 
Standard:
(1) P must show Bd acts witheffort to deny SH vote right(2)
Bd must provide “compelling justification”
Revlon 
Duty:
Duty of Bdchanges onliquidation
 –
 duty to maxvalue for SHs
If SH loses derivative suit 
 –
SH may have to pick up tab for D/O and must pay own fees 
When Ds aredef in case

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