Legal Business Studyguide

Legal 2 Test 2 Studyguide Sole Proprietorships the simplest form of byplay organization. Sole proprietorships are the roughly honey oil form of business organization in the US. Major advantages * Forming a bushel proprietorship is easy and does not cost a lot. * The owner has the repair to make every perplexity decisions concerning the business, including those involving hiring and firing employees. * The doctor proprietor owns all of the business and has the right to receive all of the businesss profits. A sole proprietorship give the sack be easily transferred or exchange if and when the owner desires to do so no otherwise approval (such as from partners or helpingholders) is necessary. Disadvantages * The sole proprietors access to the capital is exceptional to soul-to- individual funds plus any loans he or she house obtain * The sole proprietor is soundly responsible for the businesss contracts and the torts he or she or any of his or her employees commit in th e course of employment. Creating a sole proprietorship is easy. There are no formalities, and no federal or responsibility government approval is required.A sole proprietor bears the risk of loss of the business. In addition, the sole proprietor has infinite individualised liability. Therefore, creditors whitethorn recover claims against the business from the sole proprietors personal assets (e. g. , home, automobile, bank accounts). A sole proprietorship is not a separate legal entity, so it does not pay levy incomees at the business level. Instead, the earnings and losings from a sole proprietorship are account on the sole proprietors personal income taxation filing. A sole proprietorship business earns income and pays expenses during the course of operating the business.A sole proprietor has to commit tax returns and pay taxes to state and federal governments. For federal income tax purposes, a sole proprietor must prepare a personal income tax Form 1040 U. S. Individual I ncome Tax Return and report the income or loss from the sole proprietorship on his or her personal income tax form. The income or loss from the sole proprietorship is reported on instrument C (Profit or Loss from Business), which must be attached to the taxpayers Form 1040. Vernon v. Schuster The father dies and the son takes over the sole proprietorship. Vernon had a imprimatur while the father was alive, and he warranty was broken because the product had failed so he wanted money from the son who took over the job. The court command that the son had form a pertly sole proprietorship and was not apt(predicate) for his fathers warranty. confederacys a voluntary association of twain or more persons for carrying on a business as co-owners for profit. Partners are personally liable for the debts and obligations of the league. Formation four criteria to qualify as a general partnership * As association of two or more persons * Carrying on a business * As co-owners * For pro fitAn agreement to share losses of a business is strong evidence of a general partnership. It is make evidence of the existence of a general partnership if a person is presumptuousness the right to share in profits, losses, and management of a business. A limited partnership agreement may specify how profits and losses from the limited partnership are to be allocated among the general and limited partners. superior general partnerships do not pay deferral income taxes. Instead, the income and losses of partnership proceed onto and have to be reported on the individual partners personal income tax returns. This is called flow-through taxation.A new partner in a general partnership takes on all of the liabilities and responsibilities that the original partners have. Zuckerman v. Antenucci A womans child was born(p) with severe physical problems. During her pregnancy, she was treated by Dr. Pena and Dr. Antenucci. She brought a medical malpractice lawsuitsetters case against t wain doctors. The jury (trial court) found that Pena was guilty of medical malpractice but Antenucci was not. The dogmatic Court found both doctors to be dually liable. Limited Partnerships a type of partnership that has two types of partners (1) general partners and (2) limited partners.Two types of partners * General partners partners in a limited partnership who invest capital, manage the business, and are personally liable or partnership debts. * Limited partners partners in a limited partnership who invest capital but do not participate in management and are not personally liable for partnership debts beyond their capital contributions. Once a limited partnership has been formed, a new limited partner can be added only upon the written harmonize of all partners, unless the limited partnership agreement provides otherwise.New general partners can be admitted only with the specific written consent of each partner. Uniform Partnership Act In 1914, the National Conference of Comm issioners on Uniform evince Laws promulgated the UPA. The UPA codifies general partnership law. Its goal was to establish consistent partnership law that was uniform throughout the US and has been adopted by 48 states. Fictitious appellations A general partnership must file a fictitious business scream statement d. b. a. (doing business as) with the arrogate government agency to unravel under a trade name. Kemmier chronicle Foundation v.Mitchell Davis and Mitchell formed a general partnership to purchase and operate rental properties for investment purposes. They entered into an agreement that provided that only Davis, and not Mitchell, would be personally liable on the note to the Foundation. They did not inform the Foundation of this agreement. They defaulted on a note, so the Foundation sued the partnership and both partners to recover on the note. The Supreme Court of Ohio held that both partners were jointly liable on the note. mints the most dominant form of business or ganization in the US, generating over 85 percent of the countrys gross business receipts.Owners of green goddesss are called shareholders. internalisation select a state, select a collective name, incorporators, pre-in stool contracts, articles of in raft, purpose of a green goddess, registered agent (often attorneys), corporate bylaws, corporate seal, organizational meeting of the board of directors. purport of a Corporation * General-purpose clause allows the corporation to engage in any activity permitted by law * Limited-purpose clause stipulates the specific purposes and activities that the corporation can engage in. Shareholders have only limited liability.They are liable only to the extent of their capital contributions and do not have personal liability for the corporations debts and obligations. Nature of the corporation * Separate legal entity for most purposes * Limited liability of shareholders * Free transferability of shares * Perpetual existence * alter manageme nt * Double taxation Nonprofit Corporation formed for charitable, educational, religious, or scientific purposes. Although nonprofit corporations may make a profit, they are veto by law from distributing this profit to their members, directors, or officers.The Model Nonprofit Corporation Act, which governs the formation, function, and termination of nonprofit corporations. Professional Corporation a corporation formed by lawyer, doctors, or other professionals. Promoter a person or persons who organize and start a corporation, negotiate and enter into contracts in clear of its formation, find the initial investors to finance the corporation, and so forth. Registered Agents a person or corporation that is empoyered to accept service of process on behalf of a corporation.Incorporator the person or persons, partnerships, or corporations that are responsible for incorporation of a corporation. Bylaws a detailed set of rules adopted by the board of directors aft(prenominal) a corpora tion is incorporated that contains provisions for managing the business and the affairs of the corporation. Organizational concussion a meeting that must be held by the initial directors of a corporation after the articles of incorporation are filled. Articles of Incorporation the basic authorities document of a corporation.It must be drafted and filed with, and approved by, the state before the corporation can be officially incorporated. Must include * The name of the corporation * The number of share the corporation is authorized to issue * The carry on of the corporations initial registered office and the name of the initial registered agent. * The name and address of each incorporator Debt securities securities that establish a debtor-creditor relationship in which the corporation borrows money from the investor to whom a debt security is issued.Notice of a Shareholders Meeting A corporation is required to give the shareholders written notice of the place, day, and time of an nual and excess meetings. For a special meeting, the purpose of the meeting must too be stated. Only matters stated in the notice of a shareholders meeting can be considered at the meeting. Special Shareholders Meetings Meetings of shareholders that may be called to consider and suffrage on important or emergency issues, such as a proposed merger or amending the articles of incorporation.Proxy a shareholders authorizing of another person to vote the shareholders shares at the shareholders meetings in the event of the shareholders absence. Quorum required number of individuals that must be represented for voting, meetings, etc. Record Dates a date specified in corporate bylaws that determines whether a shareholder may vote at a shareholders meeting. Cumulative voting a system in which a shareholder can roll all of his or her votes and vote them all for one candidate or split them among several candidates.Straight voting a system in which each shareholder votes the number of sha res he or she owns on candidates for each of the positions clean also called noncumulative voting. Supramajority Voting Requirement a requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders. Voting Trust an arrangement in which the shareholders transfer their stock certificates to a trustee who is empowered to vote the shares. Voting Agreement an agreement between two or more shareholders that stipulates how they go out vote their shares.Right of First Refusal an agreement that requires a shoping shareholder to assert his or her shares for sale to the other parties to the agreement before selling them to anyone else. preemption rights that give existing shareholders the option of subscribing to new shares be issued in balance to their current ownership interests. Dividends a distribution of profits of the corporation to shareholders. derived function Lawsuit a lawsuit a shareholder brings against an offending ships company on b ehalf of a corporation when the corporation fails to bring the lawsuit. Its also called a derivative action.Management of a Corporation * Shareholders Owners of the corporation. They vote on the directors and other major actions to be taken by the corporation. * Board of Directors Elected by the shareholders. Directors are responsible for making policy decisions and employing the major officers for the corporation. The board may initiate certain actions that require shareholders approval. * Officers Officers are responsible for the day-to-day operation of the corporation, including acting as agents for the corporation, hiring other officers and employees, and the like.Duty of Obedience a duty that directors and officers of a corporation have to act within the authority conferred upon them by state corporation codes, the articles of incorporation, the corporate bylaws, and the resolutions adopted by the board of directors. Fiduciary Duties the duties of obedience, care, and consignm ent owed by directors and officers to their corporation and its shareholders. Duty of Care a duty of corporate directors and officers to use care and diligence when acting on behalf of the corporation.Duty of Loyalty a duty that directors and officers have not to act adversely to the interests of the corporation and to infantryman their personal interests to those of the corporation and its shareholders. Proxy Contest a contest in which opposing factions of shareholders and managers solicit proxies from other shareholders the side that receives the greatest number of votes wins the legate contest. spinal fusion a land site in which one corporation is sorb into another corporation and ceases to exist. They become a similar corporation. If it is a consolidation, the two companies form into a completely different corporation.Appraisal Rights the rights of shareholders who object to a proposed merger, share exchange, or sale or lease of all or well all of the property of a corpora tion to have their shares valued by the court and receive cash payment of this value from the corporation. Proxy description a document that fully describes (1) the matter for which a proxy is being solicited, (2) who is soliciting the proxy, and (3) any other pertinent information. Share re-sentencing a situation in which one corporation fetchs all the shares of another corporation and both corporations retain their separate legal existence.Tender Offer an offer that an acquirer makes today to a position corporations shareholders in an effort to acquire the prey corporation. The shareholders each make an individual decision about whether to sell their shares to the petulant offeror. Such offers are often referred to as hostile tender offers. Short-form Merger a merger between a parent corporation and a subsidiary corporation that does not require the approval of the shareholders of all corporation or the approval of the board of directors of the subsidiary corporations.Will iams Act an amendment to the Securities veer Act of 1934 made in 1968 that specifically regulates tender offers. Severance for Executives after retiring or being removed from a company, theyre given a package. Golden parachute Section 14(a) a provision of the Securities Exchange Act of 1934 that gives the SEC the authority to regulate the solicitation of proxies. Antitakeover Statutes statutes enacted by a state legislature that protect against the hostile takeover of corporations incorporated in or doing business in the state.Poison Pills defensive strategies that are built into the target corporations articles of incorporation, corporate bylaws, or contracts and leases. These tactics make the target corporation more expensive to the tender offeror. White Knight Merger mergers with friendly partiesthat is, parties that promise to leave the target corporation and/or its management intact. Greenmail the purchase by a target corporation of its stock from an authentic or perceived te nder offeror at a premium.