ba- halpert- john mcdonald[1]

8/9/2019 BA- Halpert- John McDonald[1]

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STATUTORTY OUTLINE BUSINESS ASSOCIATIONS

AGENCY

-The Agency Relationship

-Second Restatement of Agency-Section 1 - (P. 2 SS) The definition of agency . Main points: Fiduciary relationship,manifestation of consent by one person to another that the other shall act on his behalf and subject to his control. (2) The one for whom action is taken is the principal. (3) Theone acting is the agent.

-Section 3 - (P. 3 SS) Independent contractor defined . Contracts with another to dosomething for him but not controlled by the other nor subject to the others right tocontrol for his PHYSICAL CONDUCT. May or may not be an agent.

-Third Restatement of Agency-Section 1.01 - (P. 17 SS) The definition of agency No material differences from thesecond restatement. Just defines agent and principal within the definition of agency.

-Agency and Contract Law-Second Restatement of Agency-Section 8-8B - (P. 3-4 SS) (8) Apparent Authority, (8A) Inherent Agency, (8B)

Estoppel-Change of Position

y Apparent Authority The power to affect legal relations of another person bytransactions with third persons, professedly as agent for the other, ARISINGFROM AND IN ACCORDANCE WITH THE OTHERS M ANIFESTATIONS TO SUCH THIRD PERSONS

y Inherent Agency Indicates the power of an agent derived not from authority ,apparent authority or estoppel, but solely from the agency relation ANDEXISTS FOR THE PROTECTION OF PERSONS HAR M ED BYDEALING WITH A SERVANT OR AGENT . Protects third parties insituations where it can reasonably be assumed that the person acting is actingwithin his capacity as an agent.

y Estoppel Change of Position If others have changed their position becausethey believe the transaction was entered into by or for a person AND(1) He intentionally or carelessly caused this belief (2) Or knowing of the belief that others might change their position and didnt

take reasonable steps to notify them of the true facts

then that person may be held liable.


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Change of position indicates payment of money, expenditure of labor, suffering aloss or subjection to legal liability.

-Section 26 (P. 4 SS) - Creation of Authority; General Rule other than statutoryrequirements or explicit action in an instrument authority to do an act can be created by

SPOKEN WORDS or OTHER CONDUCT of the principal, which causes the agent to believe the principal desires him to do that act.

-Section 27 (P. 4 SS) Creation of Apparent Authority Apparent authority is createdas to a third person by WRITTEN OR SPOKEN WORDS OR ANY OTHER CONDUCTof the principal which causes the third person to believe the principal consents to have theact done on his behalf by the person purporting to act for him.

-Section 35 (P. 5 SS) When Incidental Authority is Inferred Authority to conduct atransaction includes the authority to do acts which are incidental to it, usuallyaccompany it, or are reasonably necessary to accomplish it , unless otherwise agreed.

-Section 82 (P. 5 SS) Ratification Affirmance by a person of a prior act WHICHDID NOT BIND HIM but which was professedly done on his behalf, whereby the act isgiven effect AS IF ORIGINALLY AUTHORIZED BY HIM. You have to intend toratify.

-Section 83 (P. 5 SS) Affirmance (a) manifestation of an election by one on whoseaccount an unauthorized act has been done TO TREAT THE ACT AS AUTHORIZED or (b) conduct by him justifiable only if there was such an election.

-Section 195 - (P. 6 SS) Acts of Manager Appearing to be Owner An undisclosedprincipal who entrusts an agent with management is subject to liability for the acts of that manager with third person even though contrary to the directions of the principal.

-Third Restatement of Agency

-Section 2.02 (P. 18 SS) Scope of Actual Authority An agent has authority at thetime of his action if he reasonably believes that the principal wishes the agent to act.(2) An interpretation of the principals manifestations are reasonable IF it reflects anymeaning known by the agent that is common to the principal AND, what a reasonableperson in the agents position would interpret the principals manifestations.(3) Understanding is reasonable under the reasonable person standard drawn from thecircumstances.

-Section 2.03 (P. 19 SS) Apparent Authority No material differences from thesecond restatement, but it is much easier to understand. Power held by an agent or other actor to affect a principals legal relations with third parties when a third person


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reasonably believes the actor has the authority to act on behalf of the principal ANDTHAT BELIEF IS TRACEABLE TO THE PRICIPALS M ANIFESTATIONS.

-Section 2.06 (P. 19 SS) Liability of an Undisclosed Principal MATERIALCHANGE FROM SECOND RESTATEMENT . This section requires a third part tomake a detrimental change in position induced by an agent , and it requires theprincipal have notice of the agents conduct and not take reasonable steps to notifythe third person of the facts . This is more principal friendly. It introduces the estoppelidea into the liability for the undisclosed principal. The principal must KNOW of thedetrimental change in position and then take steps to avoid it.

-Section 3.03 - (P. 20 SS) Creation of Apparent Authority Only significant change tothe second restatement is that the manifestations for anothers actions must carry legalconsequences.

RATIFICATION-Section 4.01 (P. 21-22 SS) Ratification Defined The only material difference is theinclusion of language requiring an agent to act with actual authority . Again, a littlechange with the introduction of the terms legal relations.

-Ratification DOES NOT OCCUR UNLESS , (1) the act is ratifiable according to4.03, (2) the person ratifying has capacity as stated in 4.04, (3) the ratification istimely as stated in 4.05, and (4) the ratification encompasses the ac in itsentirety as stated in 4.07

-Section 4.02 (P. 22 SS) Effect of Ratification Ratification retroactively creates

actual authority UNLESS:(1) Ratification occurs in favor of a person by misrepresentation (2) Ratification occurs in favor of an agent against a principal when theprincipal ratifies to avoid a loss.(3) Ratification occurs to diminish the rights of third persons not interested inthe ratification .

-Section 4.03 (P. 22 SS) Acts That May Be Ratified Any act in which the actor actedor purported to act as an agent.

-Section 4.04 (P. 22 SS) Capacity to Ratify A person can ratify an act if the personexisted at the time of the act and the person had the capacity to act as a principal. At alater time a principal can get out of ratification if he did not have the authority toact as a principal at that time .


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-Section 4.05 (P. 22-23 SS) Timing of Ratification A ratification mus precede theoccurrence of circumstances that would cause the ratification to have adverse andinequitable effects on the rights of third parties. See the statute for a list of exceptions.

-Section 4.06 (P. 23 SS) Knowledge Requisite to Ratification You are not bound bya ratification if you dont know of material facts involved in the original act when the

person was not aware of such lack of knowledge.

-Section 4.07 (P. 23 SS) No Partial Ratification Its all or nothing. It has toencompass the entirety of the act.

-Section 4.08 (P. 23 SS) Estoppel to Deny Ratification If someone detrimentallyrelies on your ratification, you cannot deny ratification. This does not include theknowledge factor typical in estoppel doctrine .

DISCLOSED AND UNDISCLOSED PRINCIPALS-Section 6.01 - (P. 24 SS) Agent for Disclosed Principal When an agent acts withactual or apparent authority for a disclosed principal, the principal and third party are

parties to the contract and the agent IS NOT a party unless agreed upon by the principaland third party.

-Section 6.02 (P. 24 SS) Agent for an Unidentified Principal Same as above, exceptthe agent IS a party to the contract unless the agent and the third party agree that he isnot.

-Section 6.03 (P. 24 SS) Agent for Undisclosed Principal Same as above except the principal is a party to the contract unless excluded by the contract and the agent ISALWAYS a party to the contract.

-Section 6.04 (P. 25 SS) Principal Does Not Exist or Lacks Capacity An agent becomes a party to the contract if he acts knowing that the principal does not exist or cannot act within that particular capacity.

-Agency and Tort Law -Second Restatement of Agency

MASTER AND SERVANT-Section 219 (P. 7 SS) When Master Is Liable For Torts Of His Servants

(1) when the servant is acting within the scope of his employment(2) NOT liable for acts outside the scope of their employment unless the master intended the conduct or consequences, was negligent , the conduct violated anon-delegable duty , or the servant purported to act under apparent authority .


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-Section 220 (P. 7 SS) Definition of Servant A person employed to perform servicesand is subject to the masters control for his physical conduct .

FACTORS CONSIDERED: extent of control, distant occupation or business,kind of occupation, skill required in the occupation, whether ER suppliesinstrumentalities, length of employment, method of payment, subjectivebelief, whether principal is or is not in business.

SCOPE OF EMPLOYMENT DOCTRINE-Section 228 (P. 8 SS) Scope of Employment Doctrine Conduct is within the scopeof employment if, but only if , it is the kind of employment hired to perform, occurssubstantially within the authorized time and limits, actuated by a purpose to serve themaster, force is intentionally used by the servant against another, the use of force is notunexpectable by the master.

-Section 229 (P. 8 SS) - Kind of Conduct Within the Scope of Employment Conducthas to be of the same general nature of the conduct authorized. List of factors on page 8describes whether conduct, although not authorized, is still within the scope of employment.

-Section 230 (P 9 SS) Forbidden Acts An act although forbidden or done in aforbidden manner can still be within the scope of the employment.

-Section 231 (P. 9 SS) Criminal or Tortious Acts A criminal or tortious act can still be considered within the scope of the employment.

-Third Restatement of Agency (Agency language rather than servant language)-Section 2.04 - (P. 19 SS) Respondeat Superior No material difference from thedefinition in the second restatement of agency.

-Section 7.03 (P. 26 SS) Agents Liability to a Third Party Extends the agentstortious conduct to third parties, while acting as an agent or employee within the scope of employment.

-Section 7.04 (P. 27 SS) Agent Acts with Actual Authority Same as secondrestatement. Principal is liable to acts of an agent within the scope of employment.

-Section 7.05 (P. 27 SS) Principals negligence in conducting activity through agent; Principals special relationship with another person Principal is subject to liability if the agents conduct and harm results from the principals negligence.


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-Agents as Fiduciaries (list of fiduciary duties) -Second Restatement of Agency- Section 379 (P. 10 SS) Duty of Care and Skill An agent paid to do an act for a

principal is subject to a duty to act with standard care and skill given the locality, unlessotherwise agreed.

-Section 380 (P. 10 SS) Duty of Good Conduct Unless otherwise agreed, agent issubject to a duty to conduct himself so that he does not bring disrepute to the principal.

-Section 381 (P. 10 SS) - Duty to Give Information Unless otherwise agreed, theagent has a duty to use reasonable efforts to give the principal relevant information. Theagent also needs notice tht the principal would desire to have the information and it can

be communicated without violating a superior duty to a third person.

-Section 382 (P. 10 SS) Duty to Keep and Render Accounts Unless otherwiseagreed, an agent has to keep and give to the principal an account of the money or other things he has paid out on the principals behalf.

-Section 383 (P. 10 SS) Duty to Act Only as Authorized An agent has to act withinthe principals manifestation of consent UNLESS he is privileged to protect his own or anothers interest. This cannot be agreed out of.

-Section 384 (P. 10 SS) Duty Not to Attempt the Impossible or Practical unlessotherwise agreed, Cant continue to act if it is impossible or impracticable for him to

accomplish the objects of the principal AND if he cannot communicate with the principal.

-Section 385 (P. 10 SS) Duty to Obey - Unless otherwise agreed, agent has to obeyall reasonable directions from the principal for the duties he is to perform.

-Section 386 (P. 11 SS) Duties after Termination unless they agree, agent is under aduty to stop performing the acts after termination.

-Section 387 (P. 11 SS) Duty of Loyalty agent has a duty to act solely for the benefitof the principal unless they agree otherwise.

Section 388 P. 11 Duty to account for profits arising out of employment.Section 389 P. 11 Acting as adverse party WITHOUT PRINCIPALS CONSENT(I referenced the singer case here for some reason) cant deal with your principal as anadverse party unless you agree otherwise.


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Section 390 P. 11 Acting as adverse party WITH PRINCIPALS CONSENT if you are allowed to act as an adverse party on your own behalf, you have the duty to dealfairly ith the principa and disclose all facts he should know, unless he manifests that healready knows the facts or that he doesnt care about them.Section 391 P. 11 Acting for adverse party WITHOUT PRINCIPALS CONSENT

again, an agent cannot act on behalf of an adverse party in a transaction connected withhis agency unless otherwise agreed.Section 392 P. 11 Acting for adverse party WITH PRINCIPALS CONSENT anagent who acts for both principals (and they know it) has to act fairly and disclose allinformation to EACH of them.Section 393 P. 12 Competition as to subject matter of agency Unless they agree,an agent cannot compete with the principal concerning the subject matter of his agency.Section 394 P. 12 Acting for one with conflicting interests Unless they agree, agenthas a duty not to act for persons whose interests conflict with the principal in matters in

which the agent is employed.Section 395 P. 12 Using or Disclosing Confidential Information self explanatory,exception of information that is a matter of general knowledge.Section 396 P . 12 Using confidential information after termination of agency (Ireferenced the Town Homes case here) Again, self explanatory, agent has a duty not todisclose confidential agency after the relationship is terminated unless otherwise agreed.He does not have a duty NOT to compete with the principal though.Section 397 P. 12 When agent has a right to patents agent gets the rights to his

patents and discovery made within the relationship unless they agree otherwise.Section 398 P. 12 Confusing or appearing to own principals things agent has a

duty not to act like the principals things are his own when dealing with third persons.Section 399 P. 13 Remedies of Principal (List of Remedies) see the statute. Allactions generally available are available against the agent.

LIABILITY FOR ACTIONSSection 401 P. 13 Liability for loss caused agent is subject to liability for losscaused to the principal by a breach of dutySection 402 P. 13 Liability for M isuse of Principals Property agent is liable for the value or money of a possession if the agent misuses the property.Section 403 P. 14 Liability for things received in violation of duty of loyalty (Ireferenced the military guy carrying stolen goods here ) If an agent reveives anythingBECAUSE of a violation of his duty, he owes it to the principal.Section 404 P. 14 Liability for Use of Principals Assets If an agent uses an asset of the principal or a third party for personal purposes outside the scope of his employment,then he is liable for the value of that use.


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-Third Restatement of Agency THE LIST IS THE SAME AS THE SECONDRESTATMENT, WITH TWO PRIMARY ADDITIONS OUTLINED BELOW

The third restatement limits the authority concept to actual authority

-Section 8. 14 P. 30 Duty to Indemnify A PRINCIPAL has a duty to indemnify anagent in accordance with the terms of their contract and unless agreed when the agentmakes a payment within the scope of his actual authority beneficial to the principal.Section 8.15 P. 30 Principals duty to deal fairly and in good faith The principalalso has a duty to deal with the agent fairly and in good faith, including disclosinginformation about risk and pecuniary loss that the principal would have reason to know

PARTNERSHIP

Introduction to PartnershipsUniform Partnership ActSection 6 P. 32 Partnership Defined An association of tow or more persons to carryon as CO-OWNERS OF A BUSINESS FOR PROFIT.Section 7 P. 32-33 Rules for Determining the Existence of a Partnership

(1) Persons partners to each other are not partners to third persons(2) Common ownership of something (like joint tenancy) does not alone establish a

partnership(3) Sharing gross returns does not itself establish a partnership(4) Receipt of a share of profits of a business is prima facie evidence that a person is a

partner.

Section 16 P. 35-36 Partner by Estoppel If a person represents himself as a partner inwhich he is not actually a partner, he is liable to a person for those representation if the

person has VEN CREDIT TO THE ACTUAL OR APARENT PARTNERSHIP. When thishappens he is liable as though he was an actual partner. If he is represented as a partner byothers actually in a partnership he is an agent of that partnership and he is treated as thoughhe is a partner in fact.

Revised Uniform Partnership ActSection 101(6) P. 48 Partnership Defined no material difference from the uniform

partnership actSection 201 P. 51 Partnership as Entity A partnership is an entity distinct fom its

partners and a limited liability partnership continues in this fashion after conversion.


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Section 202 P. 51 Formation of Partnership A partnership can be formed whether the partners intend for its formation or not. The same rules for existence apply as section 7 of UPA.

Section 308 P . 55-56 Liability of a Purported Partner - (I cited young v. jones for thiscase) same substance as section 16 of UPA with a few additions. If the representation of a

person as a purported partner is made in a public manner, than he can be held liable to a third person even though he is not aware that he is being held out as a partner to that particular person. Also, if no partnership liability exists, then the purported partner is liable jointly andseverally. The same concept applies if fewer than all of the partners agree to hold that personout. The partners who do hold him out, if partnership liability ensues, are jointly andseverally liable.

Partnership Property, Capital and Governance Uniform Partnership Act

Section 8 P. 33 Partnership Property All property originally brought into partnershipstock or subsequently acquired is partnership property.

Section 9 P . 33 Partner Agent of Partnership as to Partnership Business Every partner is an AGENT of the partnership for the purposes of its business. The act of very partner for carrying on the business binds the partnership, unless the partner actually has noauthority to act for the partnership in that particular manner AND the person he is dealingwith has knowledge of this. Section three lists acts a partner CANNOT do on behalf of the

partnership unless authorized by all the partners.Section 18 P. 36-37 Rules Determining Rights and Duties of Partners Each partner shall be repaid his contributions and share equally in the profits. (2) The partnership has toINDEMNIFY every partner for personal liability while conducting the partnership business.(3) Partners who make advance payments are to receive interest on those payments. (4) ALLPARTNERS HAVE EQUAL RIGHTS IN THE M ANAGE M ENT AND CONDUCT OFTHE PARTNERSHIP BUSINESS . (5) No person can be a partner without the consent of all the partners. (6) Majority of partners decides any differences in opinion.Section 24 P. 38 Extent of Property Rights of a Partner The property rights of a

partner are HIS RIGHTS IN SPECIFIC PARTNERSHIP PROPERTY, HIS INTEREST INTHE PARTNERSHIP, AND HIS RIGHT TO PARTICIPATE IN MANAGEMENT.Section 25 P. 38 Nature of a Partners Right in Specific Partnership Property A

partner is a co-owner with his partners of specific partnership property holding as aTENANT IN PARTNERSHIP. This right is not assignable unless it is in connection with theassignment of rights of all the partners. His right cannot be attached except against the

partnership . When he dies, his right to specific partnership property vests in the remaining partners.

Partners Interest


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Section 26 P . 38 Nature of Partners Interest in the Partnership his interest is hisshare of the profits and the same is PERSONAL PROPERTY.Section 27 p 38-39 Assignment of Partners Interest A partner assigning his interest inthe partnership does not itself dissolve the partnership nor does it give the assignee the rightto interfere in the management and administration of the partnership. IT MERELYENTITLES THE ASSIGNEE TO RECEIVE THE PROFITS THE PARTNER WOULDGET. Same for dissolution.Section 28 P 39 Partners Interest Subject to Charging Order just describes whathappens if a judicial order dissolves the partnership.

Revised UPASection 203 P. 52 Partnership Property no material changes from UPASection 204 P . 52 When Property is Partnership Property Only a few additions toUPA. First, property is acquired by the partnership if it is transferred to the partnership in its

name or one or more partners in their capacity as partners. Second, property is PRESUMEDto be partnership property if purchased with partnership assets.Section 401 P . 56 Partners Rights and Duties no material change to UPASection 501 P . 58 Partner Not Co-owner of Partnership Property a partner is NOT aco-owner of partnership property and has no interest in it which can be transferred.DIFFERENT FROM UPA.Section 502 P . 58 Partners Transferrable Interest in Partnership same as UPA just

profits and losses are personal property that is transferrable.Section 503 P . 58-59 Transfer of Partners Transferable Interest Same as UPA with afew VERY MATERIAL ADDITIONS. (1) Upon transfer, the transferor retains the rights and

duties of a partner other than the interest in the distributions! Thats the really big difference.It allows the partner to retain his right to participation in management after he has transferredhis rights.Section 504 P . 59-60 Partners Transferable Interest Subject to Charging Order nomaterial differences from UPA.

Partners as Fiduciaries (very big difference in the statutes here duty of care and loyaltytreated as very important in UPA and LI M ITED to a great extent in RUPA)

UPASection 21 P. 37 Partner Accountable as a Fiduciary Every partner has to account tothe partnership for any benefit and hold as TRUSTEE for it any profits derived by himWITHOUT THE CONSENT OF OTHER PARTNERS.

RUPASection 404 P. 57-58 General Standards of Partners Conduct Pretty damned differentat least from the language of UPA. THE ONLY FIDUCIARY DUTY A PARTNER


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OWES TO THE PARTNERSHIP AND THE OTHER PARTNERS IS THE DUTY OFLOYALTY AND THE DUTY OF CARE .

DUTY OF LOYALTY: limited to-

(1) Duty to account and hold as trustee partnership profits

(2) Refrain from dealing with partnership in the conduct or winding up of the propertyas or on behalf of an adverse party

(3) Refrain from competing with the partnership before its dissolution

DUTY OF CARE: limited to refraining from engaging in grossly negligent conduct,intention misconduct, or knowing violation of law.

Partnership Dissolution UPASection 29 P. 39 Dissolution Defined Change in the relation of the partners caused by

any partner ceasing to be associated in the carrying on as distinguished from the winding upof the business.Section 30 P. 39 Partnership Not Terminated by Dissolution when a partnershipdissolves, the partnership is not terminated, but continues until the winding up of partnershipaffairs is complete.Section 31 P. 39 Causes of Dissolution first in compliance with agreement

(1) Termination of the definite term specified (2) Express will of any partner without specific term (3) Express will of all partners who havent assigned their interests (4) Expulsion of any partner from the business

ALSO , in contravention of the agreement where you cant otherwise dissolve under thestatute it can be done at will by any of the partners. Finally, by any event which makes itunlawful for the partnership to be carried on.Section 32 P. 39 Dissolution by Decree of Court Can apply to the court for dissolutionof the partnership under various circumstances including (this is not comprehensive, there isa long list of examples in the SS); one partner is declared a lunatic, partner incapable of

performing his duties, guilty of some offense making it prejudicial to carry on business, business can only be carried on as a loss etc.

Section 33 P. 40 General Effect of Dissolution on Authority of a Partner dissolutionterminates all the authority of a partner except in winding up the business and finishing dealsstarted before the dissolution.Section 34 P. 41 Right of Partner to Contribution from Co-Partners after Dissolution

Each partner is liable to others for his share of any liabilities created by other partners UNLESS partner acting had no knowledge of dissolution OR if death or bankruptcy occursand the partner had knowledge.


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Section 35 P . 41 Power of Partner to Bind Partnership to Third Persons afterDissolution partner CAN bind partnership after dissolution by: any act appropriate for winding up, any transaction which would bind them if dissolution never happened. Thesecond part of the statute determines the liability of partners and how it is satisfied out of

partnership assets. PARTNERSHIP IS IN NO CASE BOUND AFTER DISSOLUTION IF:it is dissolved because of unlawfulness unless proper for winding up, or a partner has become

bankrupt, or the partner has no authority to wind up partnership affairs.Section 36 P . 42 Effect of Dissolution on Partners Existing Liability dissolution doesnot of itself discharge the existing liability of any partner. Can agree to be discharged thoughwith the partnership.Section 37 P . 42 Right to Wind Up Unless otherwise agreed, partners who have notwrongfully dissolved the partnership have a right to wind up the affairs.Section 38 P . 42 Rights of Partners to Application of Partnership Property unlessotherwise agreed, each partner can apply partnership property to discharge its liabilities.

Partners can also bring a suit for damages against the partner who wrongfully dissolved the partnership.Section 39 P . 43 Rights Where Partnership Is Dissolved for Fraud orM isrepresentation when a contract is rescinded on the ground of fraud or misrepresentation, the party entitled to rescind is entitled to a lien on surplus partnership

property, to stand in the place of the creditors of the partnership after all debts satisfied, andto be indemnified by the person guilty of the fraud.Section 40 P . 44 Rules for Distribution This section lists the rules of how assets aretreated and how liabilities of partnerships rank. See Section, probably too technical for test.Section 41 P . 45 Liability of Persons Continuing the Business in Certain Cases if the

partnership is carried on creditors to the first partnership are creditors of the next partnership.This section essentially says that you can continue the business if just one partner retires.

RUPASection 801 P. 65 Events Causing Dissolution and Winding Up of Partnership EXLUSIVE LIST of how a partnership is dissolved.

(1) In partnership at will, an express will to withdraw as partner (2) In partnership of definite term, express will of ALL partners or completion of the

undertaking.

(3) Event agreed to in partnership agreement resulting in the winding up of the partnership.

(4) Event that makes it unlawful for the partnership to continue

ALSO, this section deals with judicial determination. By application of partner, a partnershipcan be judicially dissolved (VERY DIFFERENT FROM UPA):

(1) Economic purpose is likely to be unreasonably frustrated


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(2) Cant reasonably carry on with a particular partner.(3) Not otherwise reasonably practicable to carry on the partnership business within the

scope of the partnership agreement.(4) DIFFERENT FOR A TRANSFEREE: judge will only dissolve partnership for these

transferees at the end of the specified time period of at any time if the partnershipwas at will at the time of the transfer.

Section 802 P. 66 Partnership Continues After Dissolution Partnership continuesafter dissolution ONLY FOR the purpose of winding up. After winding up completed,

partnership terminates. At any time after dissolution and before winding up, ALLPARTNERS may agree to waive the right to wind up and terminate. In that case, the

partnership resumes its business as if dissolution had never occured.Section 803 P. 66 Right to Wind Up Partnership Business Can apply to have

judicial supervision of winding up. Otherwise same as UPA.Section 804 P. 67 Partners Power to Bind Partnership After Dissolution only twoactions that can bind are listed whatever appropriate for winding up and any act thatwould have bound the partnership under 301 before dissolution if the other party had nonotice of the dissolutionSection 807 P. 67 Settlement of Accounts and Contributions Among Partners regular procedures for how money and property is distributed. Partners have to contributeto the partnership an amount equal to any excess of liability charges over the credits in a

partners account.

THE CORPORATE ENTITY

Model Business Corporation ActSection 2.01 P 179 Incorporator s One or more persons can act as the incorporator/s of acorporation by delivering articles of incorporation to the secretary of state.Section 2 .02 P 179 Articles of Incorporation The articles of incorporation must have some things included, which are listed on P 179

(1) Corporate name(2) Number of shares authorized to issue(3) Street address(4) Name and address of each incorporator

The articles of incorporation may set forth other things as well

(1) Names and addresses of initial directors(2) Provisions for the purpose of the corporation, managing the business and regulating the

affairs of the corporation(3) Defining limiting and regulating the powers of the corporation, its board, and

shareholders


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(4) Par value for authorized shares or classes of shares(5) Provision eliminating or limiting the liability of a director to the corporation or its

shareholders(6) Provision permitting or making obligatory indemnification of a director for liability

Section 2.03 P. 180 Incorporation Corporate existence begins with the articles of incorporation are filed and the sec states filing of the articles is conclusive proof thatincorporators satisfied all conditions for incorporation.Section 2.04 P 180 Liability for Preincorporation Transactions anyone purporting toact on behalf of a corporation knowing no incorporation had taken place yet are jointly andseverally liable individually.Section 2 .05 P 180 Organization of Corporation After incorporation, if the directorsare named in the articles, then those initial directors SHALL hold an organizational meetingat the call of the majority of the directors to complete organization by appointing officers andadopting bylaws. If directors are not named in the articles, the incorporator/s hold thismeeting to elect directors and complete the organization.Section 2 .06 P 180 Bylaws incorporators or board of directors have to adopt initial

bylaws for the corporation. They may contain any provision for management of the businessand regulation of the affairs that is not inconsistent with law or the articles themselves.Section 3 .01 P 181 Purposes Every corporation has the purpose of engaging in ANYlawful business UNLESS a more limited purpose is set forth in the articles.Section 3 .02 P 181 General Powers (VERY I M PORTANT SECTION) Unless articlessay differently, EVERY corporation has PERPETUAL DURATION and succession incorporate name has same powers as an individual to do all things necessary to carry out

business, including power:(1) To sue and be sued(2) To have a corporate seal(3) To make or amend bylaws not inconsistent with articles(4) To purchase or somehow hold property(5) To sell or dispose of property in any way(6) To purchase or dispose of any interests in another entity(7) To make contracts(8) To lend money

(9) To be any type of member in a partnershipTo conduct business inside and outside of the stateTo elect directors and appoint officersTo pay pensionsTo make donationsTo transact any lawful businessTo make payments or donations that further the affairs of the corporation


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Section 3.04 P 182 Ultra Vires the validity of corporate action may not be challenged onthe ground that the corporation lacks/lacked the power to act except: in a shareholder

proceeding against the corporation to enjoin the act, any direct or derivative suit, and actionunder 14.30Section 4.01 P 182 Corporate Name - A corporate name has to contain a wordresembling corporation and has to be distinguished from another corporate name already inuse, reserved, a fictitious name made by a foreign corporation, or a corporate name from anot for profit incorporated in the state.Section 5.01 P 183 Registered Office and Registered Agent - Each corporation has tocontinuously maintain in the state: a registered office, and a registered agent, who may be anindividual residing in the state, a domestic corporation, or a foreign or not for profit foreigncorporation authorized to do business within the state.

Alternative Entities: Limited Partnerships and Limited Liability Companies

Uniform Limited Liability Company Act---------First, Florida Revised Uniform Limited Partnership Act of 2005 in XS at P. 9 alimited partner does not have to right or power as a limited partner to act for or bind thelimited partnership.Section 201 P. 77 Limited Liability Company as Legal Entity a limited liabilitycompany is legally distinct FROM ITS MEMBERSSection 202 P . 77 Organization One or more persons can organize an LLC by deliveringarticles of organization to sec state.Section 203 P. 77 Articles of Organization The articles M UST set forth

(1) Name of the company(2) Address(3) Name and street address for initial agent for service of process(4) Name and address of each organizer (5) Whether company is a term company and if so the term specified(6) Whether the company is manager-managed and if so the name and address of each initial

manager (7) Whether one or more of the members will be personally liable

ALSO, MAY set forth provisions permitted to be set forth in an operating greement or other

matters (whatsoever) not inconsistent with the law.

Section 301 P 79 Agency of M embers and M anagers Each member of the LLC is anagent for the purpose of its business and each member can bind the business unless theyhave no authority to act in a particular manner and the person they acted with knew or hadnotice that they could not act that way.


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In a manager managed company , A member is NOT an agent solely by reason of being amember. Each manager is an agent.Section 302 P. 80 Limited Liability Company Liable for M embers or M anagersActionable Conduct An LLC is liable for loss or injury or penalty caused by a member or manager acting in the ordinary course of business of the company or with the authority of thecompany.Section 303 P. 80 Liability of M embers and M anagers Liabilities of the company aresolely liabilities of the company, not the members and managers. Failure of the company toobserve usual company formalities is NOT grounds for holding members/managers

personally liable. BUT a member or manager CAN be liable if it is specified in the articlesAND that member has consented in writing to that provision.Section 404 P . 81 M anagement of Limited Liability Company

(1) In a MEMBER MANAGED LLC, each member has equal rights in management and anymatter relating to the business of the company can be decided by a majority of them

(2) In a MANAGER MANAGED LLC, each manager has equal rights in the managementand any matter relating to the business of the company may b exclusively decided by amajority of them.

The only matters requiring consent of all members/managers are: (not exclusive)

(1) Amendment of the operating agreement(2) Authorization/ratification of acts otherwise violating duty of loyalty(3) Amendment to articles(4) Compromise of an obligation to make a contribution

(5) Admission of a new member

CORPORATE FIDUCIARIES

The Duty of Care Delaware General Corporation LawSection 141 (a) P. 113 Board of Directors Business and affairs of every corporation shal

be managed under a board of directors except as may be provided in the statute or in thecertificate of incorporation. Even if it is in certificate, those people still have to act likedirectors.

Section 141 (e) P. 116 Board of Directors A member of the board shall be protected byrelying in good faith on corporate records or committees reporting to him.Section 102(b)(7) P . 108 Contents of Certificate of Incorporation a provisioneliminating or limiting the personal liability of a director of a corporation can be included,

provided that it shall not eliminate or limit the liability of a director for any breach of duty of loyalty to the corporation, for acts or omissions not in good faith or which involve intentionalmisconduct.


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Model Business Corporation ActSection 2.02(b)(4) P. 179 Same provision in M BCA different from DGCL because itDOES NOT MENTION THE DUT OF LOYALTY. Instead, it just says it does not apply if the director intentionally inflicts harm on the corporation or shareholders.Section 8.01 P. 203 Requirement for and Functions of Board of Directors Eachcorporation must have a board of directors. All corporate powers are exercised under their authority and they manage the affairs. Then lists oversight responsibilities of (business

performance plans, major risks to which corporation is exposed, performance andcompensation of senior officers, policies and practices to comply with law) and ethicalresponsibility for oversight of (preparation of financial statements, effectiveness of internalcontrols, arrangement for providing adequate and timely info to directors and composition of the board and its committees.)Section 8.30 P. 209 Standards of Conduct for Directors Each member of the board hasto act IN GOOD FAITH and IN A MANNER THE DIRECTOR REASONABLY

BELIEVES TO BE IN THE INTERESTS OF THE CORPORATION. Also have to usereasonable care. Board has to disclose material information about decisions. Also says thatthe directors may rely on their committees.Section 8 .31 p. 210 Standards of Liability for Directors A director is NOT liable to thecorporation of its shareholders UNLESS P CAN SHOW:-Conduct not in good faith, or a decision which the director didnt reasonably believe to be inthe best interest of the corporation.-A lack of objectivity due to conflict of interest with another person have a material interestin the challenged conduct. These relationships include relationships where: 1 domination or control could be expected to affect judgment 2 then maybe can show that it was still in best

interest-A sustained failure to devote attention to oversight of the business (Caremark)-Receipt of financial benefit to which the director was not entitled.Party seeking to hold director liable carries the burden of proof that : harm has beensuffered and it was proximately caused by the director.

The duty to act in GOOD FAITH No statutory material

The Duty of LoyaltyDGCLSection 144 P. 118 Interested Directors; Quorum No contract or transaction between acorporation and on or more of its directors or between a corporation and anything else adirector may be interested in is void SOLELY for this reason IF:


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-The material facts of the relationship are disclosed or are known to the board AND the board in good faith authorizes the contract by affirmative votes of a majority of disinterested directors even though LESS THAN a quorum.-The material facts are disclosed and there is a good faith vote of shareholders .-The contract is inherently fair to the corporation anyway.Common or interested directors can be counted in determining a quorum.

MBCASection 1.43 P. 178 Qualified Director A qualified director is a director who at the timeof the action:-does not have a material interest in the outcome of the proceeding or a material relationshipwith a person who has such an interest-is not a party to the proceeding or a director for a party who has a material interest in the

proceeding

-is not a director who has a conflicting interest or who has a material relationship withanother director with a conflicting interestMATERIAL RELATIONSHIP = familial, financial, professionalMATERIAL INTEREST = actual or potential benefit or detriment that would reasonably beexpected to impair the objectivity of the directors judgment when participating in the actionSection 8.60 P. 219 Definitions of Subchapter Directors conflicting interesttransaction means a transaction to which the director is a party or at the relevant time thedirector knew that a related person was a party or had a material financial interest.-Control means having the power directly or indirectly to elect or remove a majority of themembers of the director or being subject to a majority of the risk of loss from the entitys

activities-Relevant Time means time at which directors action under 8.62.-Material Financial Interest means a financial interest in a transaction that wouldreasonably be expected to impair the objectivity of the directors judgment.-Related Person means spouse, child or familial interest, individual living in the samehome of the director, an entity controlled by the director etc.-Fair to corporation means that the transaction a sa whole was beneficial to the corporation.Section 8.61 P. 220 Judicial Action A transaction will not be judicially voidable only onthe grounds that a director had an interest in the transaction. It will only be judiciallychallengeable if it is a CONFLICTING INTEREST transaction.Section 8.62 P. 221 Directors Action Directors action respecting a conflicting interesttransaction is effective if the transaction has been authorized by the affirmative vote of amajority of qualified directors after the required DISCLOSURE BY THE CONFLICTEDDIRECTOR provided that:-the qualified directors have deliberated and voted outside the presence of the interesteddirector


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-all members of a committee (if it is done by committee) were qualified directors or thecommittee was appointed by a majority of qualified directorsHOWEVER, if there is a COI simply because of the existence of a related person, thedirector IS NOT OBLIGATED to make the required disclosure if he reasonably believes thatdoing so would violate a duty imposed under law, a legally enforceable obligation of confidentiality, or a professional ethics rule as long as he discloses everything he can ANDthe existence and nature of his conflicting interest .Section 8.63 P. 222 Shareholders Action these are effective if a majority of the votescast by holders of all qualified shares are in favor of the transaction after:-Notice describing the action-provision to the corporation of the information received-communication to the shareholders who can vote on the transaction of the information that isthe subject of required disclosureSO generally they can act to approve the transaction if these requirements are met. ALSO,

the provision in the end says that if the voting requirement applicable is not met, independentaction to satisfy those authorization requirements MUST BE TAKEN by the shareholders.Section 8.70 P. 222 Business Opportunities If a director takes advantage of a businessopportunity, he is not liable if he brings it to the attention of the corporation prior to hisactivity and action by qualified directors disclaiming the corporations interest is taken or shareholders action disclaiming the interest.-Has to make all material facts disclosure concerning the business opportunity.

NYSE Corporate Governance StandardsSection 303A.01 P. 31 of XS Independent Directors Listed companies must have a

majority of independent directors capable of exercising independent judgment.Section 303A .02 P. 32 of XS Independence Tests No director qualifies as independentunless the board affirmative determines that he has no material relationship with the listedcompany. Companies have to identify which directors are independent and disclose the basisfor that determination.-A director is NOT INDEPENDENT if he is or in the last three years was an employee of thelisted company. Same goes for his family members.-NOT INDEPENDENT if he or an immediate family member has received during 1 year of the past three, more than 100K in direct compensation from the listed company other thandirector and committee fees and pension.-NOT INDEPENDENT if the director or immediate family member is or has been anexecutive officer of another company or is a current employee that has made payments to, or received them from, the company in excess of 1 million bucks or 2% of the companysconsolidated gross revenues.


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Section 303A.03 P. 35 of XS Executive Sessions Non-management directors of eachlisted company must meet at regularly scheduled executive sessions without management

present. This serves to empower a more effective check on management.Section 303A.04 P. 36 of XS Nominating/Corporate Governance Committee Listedcompanies have to have a committee for this composed entirely of independent directors.They must have a written charter stating the committees purpose and responsibilities ANDan annual performance evaluation of the committee.Section 303A.05 P. 37 of XS Compensation Committee listed companies have to havea compensation committee composed entirely of independent directors. They also have tohave a charter stating the purpose and responsibilities, a review and approval or corporategoals relevant to CEO compensation, make recommendations to the board with respect tonon-CEO officer compensation, and produce a report as required by the SEC.

SHAREHOLDER DERIVATIVE LITIGATION

MBCASection 7.40 P. 201 Definitions Derivative proceeding means a vivil suit in the right of a domestic corporation. Shareholder includes a beneficial owner whose shares are held invoting trust or held by a nominee on the beneficial owners behalf.Section 7 .41 P. 201 Standing A shareholder cant commence a DERIVATIVE

proceeding unless he 1 was a shareholder of the corporation at the time of the act and 2 fairlyand adequately represents the interests of the corporation in enforcing the right of thecorporation.Section 7 .42 P. 201 Demand No shareholder can commence a derivative proceedinguntil 1 a written demand has been made upon the corporation to take action and 2 90 dayshave gone by unless the shareholder was notified that demand was denied.Section 7 .43 P. 202 Stay of Proceedings If the corporation starts an inquiry intoallegations the court can stay the 90 period.Section 7.44 P. 202 Dismissal A derivative proceeding SHALL BE dismissed by thecourt if one of the groups described below has made a good faith determination thatmaintenance of the proceeding is not in the best interest of the corporation.-These determinations are made by 1 a majority vote of qualified directors if they constitute aquorum or 2 a majority vote of a COMMITTEE consisting of two or more quoalifie directorsappointed by a majority vote of qualified directors (dont have to constitute a quorum)

-If a proceeding starts AFTER demand has been rejected, the COMPLAINT has to say either 1 a majority of the board of directors were not qualified directors or 2 there has been nodetermination described in A.-If a majority of the board was at that time qualified directors, the plaintiff has the burden toshow that none of this has been met.-ALSO THE COURT CAN APPOINT A PANEL OF ONE OR M ORE INDIVIDUALSTO DECIDE!!


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Section 7.45 P. 202 Discontinuance of Settlement Court has to approve a settlement or discontinuance.Section 7 .46 P. 203 Payment of Expenses the court can order the corporation to pay the

plaintiffs expenses if result actually was beneficial to corporation. It can also order thePlaintiff to pay corporations fees.

OFFICER AND DIRECTOR INDE M NIFICATION AND INSURANCE DGCLSection 145 P. 118 Indenification of officers, directors, employees and agents,insurance A corporation can indemnify any person who was or is a party by reason of thefact that the person is or was a director, against expenses, judgments, fines and amounts paidin settlement.-Requires that the person acted in good faith and in a manner the person reasonably believedto be in the best interest of the corporation, or didnt know that conduct was criminal.

Corporation can also have the power to indemnify any person threatened by or in the right of the corporation. Again this has the good faith requirement.-NO INDEMNIFICATION SHALL BE MADE FOR ANY CLAIM UNLESS THE JUDGEAPPROVES IT!!! 145B-If any director is successful on the merits, then they shall be indemnified against expense(watch out for on the merit vs. settlement).-The indemnification has to be authorized (unless ordered by the court) by 1 a majority voteof directors, 2 committee of such directors, 3 with no directors, then by independent legalcounsel or 4 the stockholders.-Corporation can prepay expenses for matters-Corporation CAN PURCHASE AND MAINTAIN INSURANCE for this-Court of Chancery has exclusive jurisdiction to hear cases on indemnificationM AIN DIFFERENCE BETWEEN THESE: DELAWARE EXTENDSINDE M NIFICATION TO ALL E M PLOYEES WHILE M BCA ONLY TODIRECTORS AND OFFICERSMBCASection 8.51 P. 214 Permissible Indemnification This is almost the same as DGCL main difference is definitely that the corporation CANNOT INDE M NIFY a director if it is

brought in a derivative action (unless ordered by the court) except for reasonable expenses

incurred in connection with the proceeding IF its determined that the director met therelevant standard of conduct. Again I think this limits it to judicial approval.Section 8 .52 P. 215 M andatory Indemnification This makes it mandatory to indemnifya director who was WHOLLY SUCCESFUL, on the merits or otherwise, in the defense of any proceeding because he was a director of the corporation.Section 8 .53 P. 215 Advance or Expenses Corporation can before final dispositionadvance funds to pay for or reimburse reasonable expenses Little difference here, where the


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-Balance sheet for not more than three preceding fiscal years-Profit and Loss statements for not more than three preceding fiscal years-any further financial statements the commission says are necessary.Very very broad power given to the commissioner to ensure fair dealing in the security.Section 12 (g) P. 265 Every issuer engaged in interstate commerce or affectinginterstate commerce or the mails (so everyone) shall: -report within 120 days after the last day of its first fiscal year ended after the effective dateof the subsection on which the issuer ha assets exceeding one million and a class of equitysecurity held by 750 or more people.-the rest of this rule just further elaborates on the commissions power to proscribe periodsfor reportingSection 14 (a) P. 269 Proxies Unlawful for any person to solicit or to permit the use of his name to solicit any proxy or consent or authorization in respect of any security registeredunder section 12.

Rule 14 (a) 8 Shareholder Proposals In order for a shareholder proposal to beincluded on a companys proxy card, and included along with any supporting statement in its proxy statement, the shareholder must be eligible and follow certain procedures.-A shareholder proposal is a shareholder recommendation or requirement that the companyand/or its board take action, which is intended to be presented at a meeting of theshareholders.-Eligibility is determined by holding at least 2K in market value or one percent of thecompanys securities.-Only one proposal can be presented per each shareholder at each meeting, and it cannotexceed 500 words.

-Reasons for excluding it by the company are found on pages 298-300-The company may elect to include in its proxy statement reasons why it believesshareholders should vote against a proposal.Rule 14a9 P. 301 False or misleading statements cannot make a solicitation subjet tothe regulation by means of proxy or any other communicative device which is false or misleading with respect to any material fact, or which omits to state any material fact

DGCLSection 220 P. 144 Inspection of books and records Upon written demand under oathstating the purpose for it, any stockholder has the right during the usual hours of business toinspect for any proper purpose and make copies of a corporations books and records.-If the corporation refuses the inspection, stockholder can apply to the Court of Chancery tocompel such inspection.-Directors are afforded the same rights for a purpose reasonably related to the directors

position as director.


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MBCASection 16.02 P. 257 Inspection of Records By Shareholders this is pretty much thesame as Delaware, but it is a little more specific about exactly what you can ask to inspect.

Federal Anti-Fraud Law: Rule 10b5SEC ActSection 10 b P. 263 Regulation of the Use of M anipulative and Deceptive Devices touse any manipulative or deceptive device or contrivance in contravention of such rules andregulations proscribed by the commission is illegal in the public interest or for the protectionof investors.-Applies mainly to fraud, manipulation, and insider trading.

Rule 10 b 5 P. 279 Employment of manipulative and deceptive devices it is unlawfulto use any device, scheme, or artifice to defraud, to make any untrue statement of a material

fact or to omit to state a material fact, and to engage in any act which operates as a fraud or deceit on any person while purchasing or selling a security.

Federal Anti-Fraud Law: Restrictions on Insider Trading SEC ActSection 16 a P. 271 Directors, Officers, Principal Shareholders Directors, officers, and

principal stockholders are required to file disclosure if they are the beneficial owner of morethan 10 percent of any class of any equity security registered under section 12-Have to file this within 10 days of becoming such an owner Section 16 b P. 272 Insider Trading for the purpose of preventing the unfair use of

information, any officer, director, or beneficial owner by reason of his relationship with thecompany, cannot exchange securities is not allowed in LESS THAN 6 MONTHS unless suchtransaction was acquired in good faith in connection with a debt previously contracted.-All the proceeds from illegal insider deals go back to the issuer Section 20A P. 274 Liability to Contemporaneous Traders for Insider Trading ANYPERSON who violates the title by engaging in insider trading while in possession of material, nonpublic information is liable in an action in any court of competent jurisdiction toany person who has purchased or sold securities of the same class.-STATUTE OF LIMITATION IS FIVE YEARS!!!Section 21A P. 275 Civil Penalties for Insider Trading - heavy civil penalties are alsoadministered by action by the commissionRule 10b5-1 P. 279 Trading on the basis of material nonpublic information in insidertrading cases A purchase or sale of a security is on the basis of material, nonpublicinformation if the person making eh purchase or sale was AWARE of the material nonpublicinformation when he made the purchase or sale-Various alternative defenses are listed


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Rule 10b5-2 P. 281 Duties of trust or confidence in misappropriation insider tradingcases a duty of trust or confidence exists whenever a person agrees to maintain informationin confidence, whenever the person communicating the info and he person who receives ithas a history or pattern of sharing such confidences, such that the recipient of the informationreasonably should know that its material and nonpublic, or when you receive it from your family (THIS ALL FALLS UNDER THE MISAPPROPRIATION THEORY)

Control of Closely Held Corporations DGCLSection 218 P. 143 Voting Trusts and Other Agreements One or 2 or morestockholders can by a written agreement deposit capital stock to any person or entity whomay be designated by them as a voting trustee for the time proscribed in the agreement. It can

be amendd by amending it with a written agreement.

MBCASection 7.30 P. 199 Voting Trust One or more shareholders can create a voting trust,conferring on a trustee the right to vote or otherwise act for them, by signing an agreementsetting out the provisions of the trust. Not materially different from Delaware.Section 7 .31 P. 199 Voting agreements Can agree to vote a particular way according tothe agreement. This is SPECIFICALLY ENFORCEABLE.Section 7.32 P. 199 Shareholder Agreements An agreement among the shareholdersthat complies with this section IS EFECTIVE EVEN THOUGH IT IS INCONSISTENTWITH ONE OR MORE OTHER PROVISIONS OF THE ACT BECAUSE:-it eliminates the board of directors or restricts their discretion or poer

-it governs the authorization of making distributions whether or not in proportion otownership of shares-it establishes who shall be directors or officers of the corporation-it governs, in general and specifically, the exercise or division of voting power -it establishes terms and conditions of any agreement-it transfers to shareholders authority to exercise corporate powers or to manage the business-it requires dissolution at the request of one or more shareholders-it otherwise governs the exercise of corporate powers-an agreement authorized by this section shall cease to be effective when thecorporation becomes a public corporation!-these agreements relieve directors of liability for decisions they would normally make-Still no ground to impose personal liability though

DGCL


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Section 341 P. 51 of XS Law Applicable to Close Corporations unless a corporationelects to become a close corporation under the subchapter, it shall be subject in all respects tothis chapter Section 342 P . 51 of XS Close corporation defined a close corporation is a corporationwith a certificate providing that:-All of the corporations issued stock is held by no more than 30 people-All the issued stock is subject to 1 or more restriction is section 202-The corporation makes no offering of any stock which would be considered a publicoffering under the SEC actSection 343 P. 51 of XS Formation of a close corporation A close corporationscertificate shall contain a heading stating the name of the corporation and THAT IT IS ACLOSE CORPORATION.Section 350 P. 51 of XS Agreements restricting discretion of directors a writtenagreement of the stockholders in a close corporation holding a majority of stock entitled to

vote, is ok even though it may interfere with the business and affairs of the corporation andthe powers and discretion of the directors. Again, this relieves directors of their liabilites for acts or omissions forced upon them.Section 351 P. 51 of XS M anagement by Stockholders certificate can provide that the

business will be managed by the stockholders rather than a board of directors. No meetingsneed to be called to elect directors and the stockholders of the corporation shall be subject toal liabilities of directors. Can be an amendment later with unanimous agreement amongstockholders

Florida Business Corporation Act

Section 607.1430 Grounds for Judicial Dissolution a circuit court can dissolve acorporation. It must be established that the corporation attained its articles through fraud, or that the corporation has continued to abuse the authority conferred upon it by law.-In a SHAREHOLDER PROCEEDING, it must be established that the directors aredeadlocked in the management of corporate affairs, the shareholders are unable to break thedeadlock, and irreparable injury to the corporation is threatened or being suffered.-In a proceeding by a shareholder or group of shareholders in a close corporation, it must beestablished that the corporate assets are being misapplied or wasted, the directors or those incontrol are acting in a manner that is ILLEGAL OR FRAUDULENTSection 607.1435 Provisional Director A provisional director may be appointed in thediscretion of the court to remedy a deadlock. The director will have all the rights and powersof an ordinary director, and he shall be an impartial person. From time to time, the

provisional director has to report back to the court about the proceedings.


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Dissolution in a Close Corporation MBCASection 14.30 P. 251 Grounds for Judicial Dissolution The court can dissolve acorporation:-In a suit by the attorney general if it is established that the corporation obtained its articlesthrough fraud or the corporation has continued to exceed or abuse the authority conferredupon it by law.-In a proceeding by a shareholder if it is established that the directors are deadlocked in themanagement of corporate affairs, the shareholders are unable to break the deadlock, andirreparable injury to the corporation is threatened or being suffered, or the business of thecorporation can no longer be conducted to the advantage of the shareholders because of thedeadlock.-Also in a proceeding by a shareholder, if the directors of the corporation acted/are acting ina manner that is illegal, oppressive, or fraudulent. Finally if the shareholders are deadlocked

in voting power, or the corporate assets are being misapplied or wasted (Alaska v. Coppack).-Section 3 describes necessary factor in suit by creditors-Can always apply for voluntary dissolution or in a proceeding by a shareholder if thecoporation has abandoned its business and has failed within a reasonable time to liquidate.Section 14.34 P. 253 Election to Purchase in Lieu of Dissolution-In a shareholder proceeding to dissolve a corporation, the corporation may elect, or if it failsto elect, one or more share holders can elect, to buy out the petitioning shareholders at thefair market value of their shares.-If a shareholder does this, the corporation has to give notice to all shareholders and advisethem of their right to join in the election to purchase shares.

-The court must determine that discontinuance of the proceedings is equitable after theelection to purchase.

DGCLSection 353 P. 53 of XS Appointment of a provisional director in certain cases materially the same as Florida only apparent difference is the fact that a certain number (more than half directors and more than a third shareholders) have to apply for itSection 355 P. 53 of XS Stockholders option to dissolve certificate of any closecorporation may include a provision granting any stockholder an option to have thecorporation dissolved at will or upon the occurrence of any specified event or contingency.

FBCASection 607.1436 P. 54 of XS Election to purchase instead of dissolution exactly thesame as MBCA


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BUSINESS ASSOCIATIONS STATUTORY OUTLINETable of Contents

Agency .1

The Agency Relationship ....1

Agency and Contract Law ...1

Agency and Tort Law ..4

Agents as Fiduciaries ...6

Partnership ....8

Introduction to Partnership ..8

Partnership Property, Capital and Governance 9

Partners as Fiduciaries ...10

Partnership Dissolution ..11

The Corporate Entity ...13

Alternative Entities: Limited Partnerships and Limited Liability Companies ....15

Corporate Fiduciaries ..16

The Duty of Care ...16

The Duty to Act in Good Faith ..17

The Duty of Loyalty ..17

Shareholder Derivative Litigation ...20

Officer and Director Indemnification and Insurance ..21

Introduction to Federal Regulation of Public Companies ...22

Federal Anti-Fraud Law: Rule 10b5 ...24

Federal Anti-Fraud Law: Restrictions on Insider Trading ..24


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Control of Closely Held Corporations ....25

Fiduciary Duties is Close Corporations ..25

Dissolution of the Close Corporation .26

ba- halpert- john mcdonald[1]

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