: Business ssociations


/ / : Business ssociations
: : Business ssociations
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: Business ssociations

Business ssociations

Corporate bargain--limited liability



a)Entity Status--a corporation is a legal entity created under the authority of legislature

b)Limited Liability--as a legal entity, a corp is responsible for its own debts; its shs liability is limited to their investment;

c)Free Transferability of Interest--shares, representing ownership interests, are freely transferable;

d)Centralized Management and Control--a corps management is centralized in a board of dirs and officers. Shs have no direct control over the boards activities;

e)Duration--Continuity of Existence--a corp is capable of perpetual existence;

f)Taxation--a corp, as an entity, pays taxes on its own income; shs are taxed only on dividends;

g)Remember Attributes of the Corporation--CLIFF:

1)Centralization of management;

2)Limited liability;

3)Forever (perpetual duration);

4)Freely alienable (shares can be sold).


1.GENERAL PARTNERSHIPS--in most states, pships are governed by the Uniform Partnership Act (UPA). However, the Revised UPA (RUPA) has been adopted by a few states

a)Aggregate Status--a pship is an aggregation of two or more persons who are engaged in business as co-owners. Although not a legal entity, a pship is treated as one for certain purposes, e.g., ownership and transfer of property. RUPA confers entity status on pships;

b)Unlimited Liability--every partner is subject to unlimited personal liability on pship debts;

c)Transferability of Interests--a partner cannot make a transferee a member of the pship. She can, however, assign his interest in the pship, thus permitting the assignee to receive distributions of profits. Because the assignee does not become a member of the pship, he is not entitled to participate in pship business or management.

d)Duration and Dissolution--a pship cannot have perpetual existence. It is terminable at will unless a definite term is expressed or implied, and is also dissolved by death, incapacity, or withdrawal of any partner.

1)Wrongful dissolution--pships can also be dissolved in contravention of the pship agreement, by the express will of any partner, by a court or by a partners conduct. Upon wrongful dissolution, nonbreaching partners may seek damages for breach and, if they choose to do so, may continue the pship upon payment to the breaching partner of the value of his interest.

1)Compare--dissociation under RUPA--termination results in either the winding up of the pship or buyout of the dissociating partner, depending on the event triggering the termination. A buyout may be reduced by damages if dissociation was wrongful.

e)Management and Control--absent a contrary agreement, every partner has a right to participate equally in the partnership management.

f)Autority--each partner, as an agent of the firm, may bind the pship by acts done for the carrying on, in the usual way, the business of the pship.

1)RUPA--a pship is bound by a partners act for carrying on in the usual way either the actual pship business or a business of the kind carried on by the pship.

g)Ownership of Property--title may be held in the name of the pship, but property is owned by the individual partners as tenants in pship. There is no tenancy in pship under RUPA, which provides that property acquired by pship is owned by pship, not individual partners.

h)Capacity to Sue and be Sued--under the UPA, a lawsuit may be brought by or against individual partners, rather than pship. Partners are j......
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