B_LAW 210 - HouserExam # 4 Study Guide Lectures: 12-13Lecture 12 (November 5):- Sole Proprietor:o Starts doing a business aloneo No writing required to form businesso Has SOLE control of businesso Termination: Sells business Stops doing the business Deatho Fully liable for all losses and liabilitieso Owner pays business’s taxes on personal return- General Partnership:o Oral or written agreement between 2 or more parties to carry on a business for profit Technically, no writing is requiredo A general partnership can be assumed when two or more people carry on a businesso Partners have a fiduciary duty to one another – meaning they must disclose all financial aspects of the business and not co-opt a financial advantage that is properly the partnerships The duty ends after a partner leaves.o Each partner has an equal voice unless otherwise statedo Majority rules, except decisions to sell or add a partner requiring an unanimous voteo Termination: Changes in partners dissolves old partnership and forms a new one Death, withdrawal or bankruptcy will terminate partnership Many written partnership agreements provide that these events will not terminate a partnership A partnership for a specific purpose will dissolve automatically upon specified evento General partners all jointly and severally liable for all losses and liabilities.o Partners pay business’s taxes on personal return- Limited Partnership:o Must have a written agreement between 2 or more parties, must have one general partner who makes business decisions (limited partners do not have a vote) Agreement must include: name of business, type of business, address of agent, names of addresses of each partner, contribution of each partner, duration of partnership, rights of personnel changes, and share of profit to be paid to each partner May be required to register with the state (certificate of partnership)o Limited partners may not participate in management (they are merely investors) but may see finances and participate in dissolution of partnership.o General partners owe a fiduciary duty, while limited partners (generally) do noto Only General partners can voteo Termination: (With respect to the general partner, same rules) Death, withdrawal or bankruptcy of limited partner does not trigger a dissolution Limited partners receive their share of profits and their capital contributions before general partners receive anything A limited partnership may dissolve per the agreement or at the completion of a project Certificate of limited partnership may set out dissolution dateo Limited partners are not liable for anything other than their capital contributiono General partners are jointly and severally liable for all losses and liabilities If a limited partner participates in the management of the business, they will lose their limited liability protectiono Partners pay taxes on their personal returns.Lecture 13 (November 7): - Corporations:o Articles of Incorporation are filed with the State Articles of Incorporation usually include name and address of business, address of agent, names and addresses of the organizer, purpose of business, and classes and par value of stock to be issuedo Must hold an annual meeting and keep up corporate formalitieso A corporation is a legal entity separate from the shareholderso Shareholders have no fiduciary duty (unless a close corporation) Board of directors has a fiduciary duty of loyalty – must place interest of corporation above their own Officers have a fiduciary duty to the corporationo Shareholder own the corporation and elect the Board of Directors and vote on matters that change corporate structure or dissolve the corporation Board of Directors: sets corporate policy and decides on corporate matters (such as sale of assets or financing)- Officers manage the corporation and are elected by the Board of Directors (the book calls them “Managers”)o Termination: Voluntary dissolution occurs when the corporation files Articles of Dissolution with the State Involuntary dissolution occurs because of bankruptcy or piercing of the corporate veil- Creditors receive proceeds from the liquidation of a corporation prior to the shareholders.o Shareholders, Directors, and Officers generally have no liability for a corporationsdebts (absent fraud or piercing the corporate veil)o Double Taxation- Limited Liability Corporations:o File Articles of Organization with the State Articles usually include name and address of business, address of agent, whether member or manager managed, names and addresses of members, date LLC to be dissolved, and classes and whether any members are liable for the LLC’s debtso Operating Agreement and annual meeting are not required in most states Annual Report is required in most stateso Managed by Members or by a Manager appointed by the Memberso Each Member has an equal vote, but if a Manager is appointed, the Member must defer to themo Termination: An LLC may be terminated after a certain number of years set by statute or in the Operating Agreement- The death, bankruptcy, or withdrawal of a member does not terminate the LLCo Members have no personal liability Can choose to be treated like a partnership and avoid double taxationLecture 14 (November 12):- Other Forms of Entities:o Joint Ventures: A general partnership for a limited time and purpose (build a building, rent it out, and sell it). o Cooperatives: Association of individuals organized to provide an economic service to its members (buy bulk products to sell cheaper to members).o Syndicates: A group that finances a project (financing the building of a shopping center).o Franchises: A franchise exists when a franchisee pays a franchisor a franchise fee for the right to sell goods or services according to the franchisor’s marketingplan. Franchises must be registered under federal, and in many cases, state law. Franchisees:1. Must follow the exact specifications of the franchisor2. May not legally bind the franchisor Three types of franchises:- Product distributorships, Trademark licensing, Business