Summary
Corporations and Partnerships Summary
- Course
- LAW745
- Institution
- Pace University School Of Law
Case briefs, Class notes and textbook summaries
[Show more]
Seller
Follow
Content preview
CORPORATIONS AND PARTNERSHIPS 2024CORPORATIONS AND PARTNERSHIPS- FALL 2024
Class notes
Key terms
Cases
General advice
No set office hours, just email and time will be scheduled.
In the exam (MCQ), if RUPA applies, he will tell us.
Doesn’t care about case names but you should know the story and the holding (that you could summarise two
sentences) because there will be similar circumstances in hypos on the MCQ exam.
This course is based on the non-litigious approach but will be useful for litigation too. It will help you on the bar
exam in business and contracts.
Create 1 document for reading and class (directly below reading, type class notes), then synthesize them all
together after class. This will be our outline which will guide us to success for an exam.
o Make final exam outline using the headings within the casebook.
Grade based on final exam and class participation.
o Thoughtful contributions to class discussions, offering assistance to other students (ie volunteering to be
co-counsel to others who are stuck on things) etc
o Exam is a four-hour exam (60 questions, 35 first ones are short and the final 25 questions long form and
applying the facts. On the final exam, expected to apply the rules you have learnt to the facts. To be
successful, you need to know the law well.
o Subject to a grading curve- but the curve is maximised in favour of the class.
All classes will be recorded.
More time may be spent on some topics to ensure full understanding, topics on the syllabus which are not covered
will not be examined.
Readings will be provided for the following week by the Friday before that week- there is no syllabus list.
o If you want to get ahead, just follow the casebook (chance that you’ll read something which isn’t
relevant which is not taught but unlikely).
What you need to memorise are the rules that inform the bylaw agreements etc…. not the actual bylaws.
Google drive via classes (on syllabus) is where we will find the live reading assignments.
The big picture
Review the table of contents regularly- this is your roadmap to success.
Different entities/corporate forms and formation of those, tax treatment of different entities and how that relates to
the types of entities (only basic knowledge on corporate taxation), piercing the corporate veil (when courts are
willing to look past the corporate identity and focus their attention on the individual behind the corporation),
agency (important part for the bar exam).
o Fiduciary duty- what is the duty of care, what happens when the duty is breached etc?
o Looking at how shareholders are paid…
Investors either receive distributions or the back sell to receive profit from the shares which
they purchased.
Protections that the law provides for minority shareholders.
Regulation of public companies (NYSE companies- those on the FTSE)
Securities regulations
Proxy voting
Insider trading
Using corporate form to do the heavy lifting
o Unincorporated entities= LLC, LPs, LLCs etc
o Many of the concepts relating to CE will also apply to UE so this allows us to not find the course
repetitive.
You will always be given the answers to hypotheticals by Mamaysky- so the answer will not be hidden from us.
o In a similar way, casebook will always give the answers, thus if you know the casebook you should be
prepared for the exam.
1
,CORPORATIONS AND PARTNERSHIPS 2024
o DON’T USE QUIMBEE- IT OFTEN GIVES THE WRONG ANALYSIS.
SESSION 1:
Lawyer advises on what type of entity to form, drafts operation agreement etc- often without litigation.
o Non-litigious- help to create contracts, help clients achieve business goals, draft compliance agreements etc.
CHAPTER ONE- THE SIX MOST COMMON BUSINESS FORMS
1. SOLE PROPRIETORSHIP
Business owned by a single person/single business owner who has not filed the paperwork to operate the
business in some other legal form (IE a sole plumber).
RE governing law- there is no need for laws and rules to govern their rights and duties. Thus, there is no
separate body of SP law.
SP will be entitled to make any and all business decisions.
Liability exposure-
i. They have personal liability for their personal/business obligations. Therefore this is high risk
for the individual.
Entitled to any income and loss. They are to report net income or losses from the business on their personal
federal income tax return- attaching Schedule C to their Form 1040.
Legal name of the business- usually the name of the sole proprietor of the business but it can be a DBA
name (doing business as). A DBA name is a fictitious name that you choose to trade under, to do so you
need to file a document for doing business under an assumed name.
i. No liability protection from trading under a DBA name. It is a material name change and it
does not create any separate legal entity. Therefore, it does not provide any shield against
liability.
2. PARTNERSHIP (General)
For-profit business where two or more people begin to do business together without filing paperwork to
operate the business.
o The difference between a partnership and SP= there remains no liability protection, it is simply
an increased number of people.
o Default rules- if you don’t have a partnership agreement/PA silent on a particular topic, this
governs.
o Governed by the state law (based on the Uniform Partnership Act or the Revised Uniform
Partnership Act)- states do not have to use the model laws.
Most partnerships will have a written agreement which is signed by each partner.
o Agreement normally addresses, management structure, allocation of profits and losses,
taxation, partner admission and withdrawal, dissolution etc.
o Does not have to be in writing.
Management usually set out in a partnership agreement, otherwise default rules will dictate this.
Personal liability for each of the partners for the obligations of the partnership (RUPA s306(a))- they are
jointly and severally liability.
The partnership itself does not pay taxes. Profits and losses are allocated to the individual partners and
each of them are to report on the individual tax returns (pass-through taxation under Chapter K- it passes
through the partnership, to the individual partners.
3. LLPs
LLP partners are protected by a liability shield.
Partners who have filed a certificate of limited partnership with a state’s secretary state office.
Governed by same as general partnerships.
4. LIMITED PARTNERSHIPS
General partners in this case are personally liable, but the limited partners do not have management
rights but they are protected from liability.
i. Limited partners would only lose the amount they put in- but they are not personally liable for
debts and obligations. There is an exception to this which is where a limited partner
participates in the control of the limited partners business because the law will not regard them
2
,CORPORATIONS AND PARTNERSHIPS 2024
as limited partners, but as general partners. Therefore, according to the control rule would hold
them personally liable.
Each state has own limited partnership statute based upon Uniform Limited Partnership Act.
The general manager of a hedge fund is usually not personally liable for debts and obligations because
they usually are an LLC and are therefore entities. It is common that the general partner(s) is a company.
Income tax- treated the same as general partnerships.
5. CORPORATION
Owned by shareholders.
Started by filing the articles of incorporation with the SoS.
Usually management authority vested in a board of directors elected by shareholders and has limited
liability for all those with a shareholders.
Most important statutes- Model Business Corporation Act and Non-MCBA law (Delaware).
A corporation is required to have a charter and bylaws.
i. The bylaws are like the model articles in Business LLM studies.
Managed by the board of directors- they make the day-to-day decisions. In the largest corporations, SHs
have no management authority whatsoever but in a closely held corporation, this is different.
Liability exposure
i. Even if a SH is directly responsible for the management of the company, they are not
personally liable unless the courts pierce the corporate veil.
Taxation-
i. C- Corporations
1. Sub chapter C of the internal revenue code. This means they are taxed at the entity
level as a separate entity and the shareholders pay taxes on their income- this means
double taxation.
ii. S-Corporations- taxed similar to a general partnership.
6. LLCs
Governed by the laws in their states-
i. Revised Uniform Limited Liability Company Act adopted in 18 states.
Business which has filed articles of organisation at the SoS office and provides its owners with a full-
liability shield and
pass-through taxation.
Owners called member-
i. Default rule is that an LLC is member managed instead of management managed.
SESSION 2:
LLCs are increasingly common in corporate practice.
Professional corporations (PLLCs and PLLPs) are a different form of companies reserved for only some
professions- ie law, medical etc but depends on state.
Close corporation is a small corporation which have few shareholders.
Non-profit corporations- corporations with a religious or charitable purpose. 1053C status which allows them
to hold a tax exempt status. Our focus is on for profit corporations,
Benefit Corporations (B-Corps)
Joint ventures- Two or more businesses or individuals combine resources to pursue a discrete business
opportunity. A JV is not a corporate form, these businesses are working together to achieve the same goal. If
they house the joint venture as a new corporation, then they will be better protected, as otherwise they would
fall under a general partnership (potentially).
In a general partnership, partners are not protected for liability purposes BUT in these situations
they will not be at risk as the partners are corporations and not personally liable partners.
A business can be incorporated in whichever state they want…
IE you may want to choose a state with fewer onerous requirements, lower fees or preferable
articles of incorporation.
A corporation typically will incorporate in the state that the management sits in OR in Delaware.
WHY DELAWARE???
HYPO: What if the business is incorporated in Delaware but the business sits in NY and commits a
tort in NY where they are also sued?
3
, CORPORATIONS AND PARTNERSHIPS 2024
If something like a car accident... the internal affairs doctrine governs the internal
corporate affairs. A car accident is an external matter meaning that the local laws would
most likely apply.
State of incorporation governs and determines issues relating to a
corporation’s internal affairs. The DOIA protects justified expectations of
the parties with interests within the corporation.
The doctrine of internal affairs:
Applies to matters that pertain to relationships among and between the corporation and its officers,
directors and shareholders.
When something involves a third party it would not be considered an internal affair (think
about toxic torts).
The Restatement (Second) of Conflict of Laws ss301 provides “application of the local law of the
state of incorporation will usually be supported by those choice-of-law factors favoring the need of
the interstate and international systems…”
A default role can be modified by the parties. It only applies if the people involved in the incorporation of the
company did not elect to do something different.
A mandatory rule cannot be amended, regardless of what the parties elected to do.
WHENEVER YOU SEE RULES, THE FIRST THING YOU ARE TO THINK OF IS WHETHER A RULE
IS DEFAULT OR MANDATORY.
Majority v Minority Owner Perspective
Minority SHs are often very interested in modifying the default rules to allow them to have more control- IE
to require that some decisions can only be made by unanimous consent. Changes to the default rules are thus
often driven by minority SHs and therefore whether amendments are made to the rules will ultimately depend
on whether your client is a majority or minority SH.
A majority SH may need more business/a cash influx and therefore, to make the minority shares more
appealing, modifications to the default rules may be made to entice them.
PUBLIC V PRIVATE
Most public companies are C companies and they are much larger. The shares in these companies are
HIGHLY LIQUID.
Private company shares are far more challenging to trade.
CHAPTER 2
AGENCY LAW- TESTED ON THE BAR EXAM
Principal gives consent, to act on their behalf.
Based through case law.
Needs…
Principal must manifest assent (must agree)
That the agent will act on P behalf and be subject to their control; AND
The agent agrees to this.
Can be established verbally or in writing- most common when a company employs an individual.
A fiduciary has to put the other person’s needs above their own
Section 13 Restatement- Where the rules are satisfied, the agent owes a duty of disclosure, specifically a duty
to use reasonable efforts to give his principal information which is relevant to affairs entrusted to him and that
the principal would desire to have AND a duty to account for all profits arising from the agent’s employment
that do mot form part of his agreed upon compensation.
JOHNSON V PRICELINE CASE
Facts:
Punitive class action lawsuit.
They had three business models to offer consumers hotel room reservations through their website.
The name your own model was the issue- Priceline did not disclose to the plaintiffs that they were
charging more than what was being paid and instead they marketed themselves as a travel agent
with customer’s best interest in mind.
4
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller mishamitchem62. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $9.65. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
48756 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 15 years now