TYPES OF BUSINESS ORGANIZATIONS
This business form has one owner who is personally liable for all business debts.
What is a sole proprietorship?
Partners in a general partnership owe each other this fiduciary obligation
What is the duty of loyalty
This feature allows shareholders to avoid personal liability for corporate debts.
What is limited liability?
Directors must act with the care of this hypothetical person under corporate law.
A: What is a reasonably prudent person?
Q: Directors must avoid transactions that serve this interest instead of the corporation’s.
A: What is their own personal interest?
This entity requires no filing and consists of two or more persons carrying on as co-owners a business for profit.
What is a general partnership?
These four elements indicate a general partnership exists under the outline.
What are (1) sharing profits, (2) sharing losses, (3) mutual right of control, and (4) community of interest?
Biz Org's Outline (2)
Corporate management is centralized in this body
What is the board of directors?
Q: The duty of care prohibits directors from engaging in this level of neglect.
A: What is gross negligence?
Q: This fiduciary breach occurs when a corporate fiduciary diverts a corporate opportunity.
A: What is a corporate opportunity violation?
This business form gives limited liability to all owners and combines contractual flexibility with partnership-style taxation.
What is an LLC?
Under RUPA, partnership property is owned by the partnership under this theory.
What is the entity theory?
Shareholders can freely transfer ownership because equity interests take this form.
What is stock?
Q: Failure to follow required board formalities (notice, quorum, majority vote) can render actions this.
A: What is ineffective?
Q: Partners owe this duty to each other because each partner is both a principal and an agent.
A: What is the fiduciary duty of loyalty?
This form of partnership requires state filing and shields partners from vicarious liability for each other’s malpractice.
What is an LLP?
In a general partnership, any transfer of ownership to a new partner requires this level of agreement among the existing partners.
A: What is unanimous consent?
A corporation generally has this duration unless the certificate states otherwise.
What is perpetual existence?
Q: Directors must act in this manner when making decisions, often shielded by the business judgment rule.
A: What is on an informed basis?
Q: A conflicted fiduciary transaction is generally reviewed under this heightened standard.
A: What is fairness review?
This hybrid form provides limited liability to general partners and requires filing under statutes modeled on LLP liability protections
What is an LLLP (limited liability limited partnership)?
Under RUPA §801, a withdrawing partner can force liquidation only if withdrawal was (1) from an at-will partnership and (2) occurred under this condition
What is the withdrawal was not wrongful?
The internal affairs doctrine says this state’s law governs a corporation’s internal affairs.
What is the state of incorporation?
Q: This doctrine prevents courts from second-guessing disinterested board decisions made in good faith.
A: What is the business judgment rule?
Q: This doctrine imputes an agent’s knowledge to the principal when the agent acts within the scope of authority.
A: What is the imputation of knowledge doctrine?