Full Summary
Law
Document made to be studied at 150-180% zoom (do this for best experience)
Document is concise and includes table of contents, as the exams are open-book
,Introduction to (business) law and legal systems
Reading: Entrepreneurial decisions and legal issues in early venture stages: Advice that shouldn’t be ignored
➢ About: decisions entrepreneurs have to make, where they typically go off of the price to evaluate
o Lack time | constraints: cash flow, time and knowledge | 3 with big impact: entity formation,
founders’ agreements & other contracts and IP | reliance on professionals/seek help
Reading: Introduction to Law – Chapter 1: sources of law
➢ About: why law is there, the history of law, the families of law and bodies of law
o Legal rules: Positive law (& why beneficial) | Law history (Customary Tribal (precedent
decisions), codification, Common & civil law (equity)) | Westphalian duo & Transnational law
Reading: Introduction to Law – Chapter 2: legal reasoning
➢ About: constructing legal reasons & how lawyers do this
o Syllogism & classification of facts | Ratio decidendi & Obiter dicta | 4 consequences of
juridical acts | product legislation can conflict in rules 3 principles
Reading: Introduction to Law – Chapter 3: basic concepts of law
➢ About: the functional fields of law, the structure of rules, duties & rights
o Public & private law | Substantive and procedural law | Conditional structure | Duties (&
obligations), immunity and rights | Property & fundamental rights
Lecture 1: Introduction to (business) law and legal systems
➢ About: what law is, where to find it, the resources, the construction, categories & concepts
o Definition of law | Sources of law (web) | Map of families of law | legal categories & concepts
Tutorial 1: Introduction to (business) law and legal systems
➢ About: legal reasoning with premises, types of law, details about when a rule is a rule
o Fields of law (spider web) | when is a rule a rule | legal syllogism | IRAC for legal reasoning
Case: Warner Bros. v. Am. Broadcasting Companies
➢ About: Warner Bros sued ABC over a character (Ralph Hinkley), but they ruled it as different
o IP/copyright | significantly different | minimis rule & fair use doctrine
Case: Shell
➢ About: Shell having a high impact on climate change, which ‘torts’ people and violates human rights
o Tort law | International & national public law about the climate
Business formation & the law
Reading: The anatomy of corporate law – Chapter 1: What is corporate law?
➢ About: what law means in corporations, the types of law and what it entails for stakeholders
o Entity shielding/limited liability | Transferable shares & Investor ownership |
Board/management structure | Corporate law definition | Law and contract
Reading: Form and function in business organizations
➢ About: why we have standard form firms, what the rationale behind it is and some types
o Standard form firms | Why do people form firms | Corporation, LLC & Partnership
Lecture 2: Business formation & the law
➢ About: business forms, the AoA and 2 out of 5 characteristics of companies, Tort
o Corporations, partnerships & sole proprietorship | European law | Articles of Associations &
shareholder agreements | Legal personality & limited liability (asset partitioning) | Tort
Tutorial 2: Business formation & the law
➢ About: types of corporations and veil piercing
o US Delaware | the 3 types of firms | Veil piercing
Case: Salomon vs. A. Salomon & Co
➢ About: how someone bought their own sole proprietorship with an LLC and was not found liable after
o Type of business | Liability in corporations/limited liability | Claims from debtors
Case: Prest vs. Petrodel Resources Limited
➢ About: houses being held under a corporation but actually belonging to the husband
o Piercing the corporate veil
,Business organization & the law
Reading: The Social responsibility of business is to increase its profits
➢ About: the CSR of corporations, their actual duties, the doctrine
o CSR | the duty is to increase profits | employees of the shareholders | doctrine
Reading: The anatomy of corporate law – Chapter 2: Agency problems and legal strategies
➢ About: agency problems that occur and how law can help
o Functions of corporate law | 3 agency problems & law strategies in reducing them | entry &
exit | Initiators of enforcement
Lecture 3: Business organization & the law
➢ About: Last 3 out of 5 characteristics of companies
o Transferability of shares & capital terminology | boards (1 & 2 tier) | shareholders | CSR
purpose & stakeholder theory | agency problems & legal strategies
Case: Adidas AoA
➢ About: the articles of association at Adidas
o Articles of Association | Board structure
Case: Aberdeen Railway Co v Blaikie Brothers
➢ About: Blaikie Bros having a contract with Aberdeen Railway, but chairman was Thomas Blaikie
o Contracts | Conflict of interest | Fiduciary duty
, Reading: Entrepreneurial decisions and legal issues in early venture stages: Advice that
shouldn’t be ignored
Abstract
Entrepreneurs have to make numerous business decisions a day, many of which have significant legal
implications. Due to a lack of time and knowledge, they often make decisions on only a few factors
(one of which cost), focusing on the short term.
➢ With better understanding of legal implications, entrepreneurs can reduce mistakes and
improve their chances at success.
No time to think; no time to learn
Entrepreneurs are likely to prioritize their time and energy toward more interesting and creative
aspects. The constraints are cash flow, time and knowledge.
➢ Our cognitive resources are limited, so these individuals often make decisions based on a few
easily accessible decision factors.
➢ Cost is concrete and simple to understand & measure (comparing). It involves tangible
numbers. Using it manages all 3 constraints: cash flow, time and knowledge.
o Cash is saved by opting for the lower filing amount; time is saved by quickly utilizing
a concrete variable (cost) as opposed to researching more fluid ones; and knowledge
is ‘saved’ by easily comparing numbers against each other.
3 immediate legal issues impacted by short-term decisions
Business entity formation
➢ Personal assets need to be protected from the liabilities of the business, tax implications,
attractiveness to investors and lenders, costs associated.
o May choose an easier and less expensive form (putting them at personal risk)
Founders’ agreements and other contracts
➢ Usually entrepreneurs negotiate and sign contracts without assistance of legal counsel due to
cost and time involved. Often, they are asked to sign it themselves early on, but a legal
counsel should check the clauses (arbitration clause).
o The founders’ agreements state the portion of equity owned, should include a
buyback clause, as well as clauses regarding non-competition, confidentiality, non-
solicitation of employees and time commitments.
Intellectual Property
➢ To protect ideas (to benefit from it as opposed to others benefiting from it). Can be
registered (trademarks, patents, copyrights) and unregistered (trade secret).
o Costs are high, but it is a valuable asset and should be protected for the long term.
A team-based approach to professional advice
Early start-up decisions are complex & confusing, making it crucial to seek professional advice and
education. They should work with multiple, to have different views on things.
➢ Under-reliance on professionals
o Entrepreneurs do not compare the fees with the value of the service
o Focusing on risk management is considered preventative law (even though costly,
likely cheaper than when dealing with the potential legal issues)
➢ Over-reliance on one investor
o Should not rely on 1 professional (are all concerned with something else/focus area)
