Business Law 2 – Midterm

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-an entity that engages in profit seeking efforts
-generates more wealth than it uses
Profit seeking entity
efforts with intent to undertake activities that generate more wealth than they use
a being that has legal existence
Types of for profit businesses
-Sole Proprietorships
-General Partnerships
-Limited Liability Company
an injury from when someone hurts something and it affects someone else. can be intentional or neglatory
Prima Facie
Cash or goods used to generate income by investing in a business
Sole Proprietorship
One person owns the business; the owner is the business
Represent over 70% of businesses in America
> 50% of the working population works for small businesses
Doing business as
Equity interest
an ownership interest in a business
Right of partners
To confess judgement against the partnership or to submit partnership claims to arbitration
General partnership
an association of two or more persons to carry on as co-owners a business for profit
-2 or more persons who co-own a business
-one vote per person (unless there is an agreement)
-written agreement
tort- partnership is liable
Pass through entity
entities are not subject to income tax
one partner ceases to be a partner
Joint and several liability
plaintiff may recover all the damages from any of the defendants regardless of their individual share of the liability
Revised uniform partnership act
Dissolving, the state of having been dissolved; breaking bonds or breaking up of a group of people; death, disintegration; sinking into extreme hedonism, vice, and degradation
the closing down or dismissal of an assembly, partnership, or official body.
Transferable interest
the right to receive distributions from a limited liability company in accordance with the operating agreement, whether or not the person remains a member or continues to own any part of the right
At will partnership
the partners have not agreed to remain partners until the expiration of a definite term or the completion of a particular undertaking. It is the default form of partnership
may be dissolved at any time
Term partnership
a partnership that exists for a specified duration or until a specified event occurs
a legal entity created and recognized by state and federal law
Public corporation
corporation which sells stock through stock exchange
Private corporation
corporation which sells stock to people directly to private individuals
Closely held corporation
corporation which stock is not sold through stock exchange
Publicly held corporation
corporation which stock held by a pretty large amount of people
S corporation
-refers to the tax effect of the classification
-can avoid income taxes at corporate level
-if company makes a profit, net profits on tax returns passed through to shareholder so corporation never pays taxes
-any loss is passed to shareholders as well
C corporation
-refers to the tax effect of the classification
-profits and losses are not passed to shareholders
-loss is taken as a loss by the corporation
Cumulative voting
votes can be stacked or weighted
Noncumulative voting
votes cannot be stacked. one vote per person
Preemptive rights
the rights of corporations original investors to purchase enough shares of future stock issues to maintain their original percentage of ownership in the company
Conflict of interest
any circumstance or set of circumstances that reasonably might compromise the officer or directors objectivity
stock can be easily sold
Corporate name
the terms corporation, incorporated, company, or limited, must be included in a ______
not an agent of the corporation, absent express authority being given
an individual _____ is not an agent of the corp., absent express authority being given; usually no apparent or implied authority
Express authority
can bind a corporation, “someone is given express authority”
Implied authority
includes powers needed to implement any express authority and, in regard to officers, any powers that the courts determine an officer may have in the ordinary course of his duties
Apparent authority
an officer imply’s that an employee w/o authority has authority
Duty of care
officers and directors are required to act in good faith and exercise the care that an ordinary prudent person would exercise in similar circumstances
Duty of loyalty
officers and directors should subordinate their interests to those of the corporation
Domestic corporation
when a corporation is chartered in your state
Foreign corporation
corporation formed in one state but doing business in another state; referred by second state as ___________
Alien corporation
corporation formed in another country but doing business in America
signed appointment form or electronic transmission authorizing an agent to vote the shares
Senior officers
run day to day business of corporation
Joint venture
a relationship in which two or more persons or business entities combine their efforts or their property for a single transaction or project or related series of transactions or projects
contract to substitute a third party in the place of one of the original contracting parties
derivative lawsuit
if directors do not bring a lawsuit, shareholders can initiate the suit themselves
controlling shareholders
seems to owe some type of fiduciary duty to minority shareholders
Corporate oppurtunity
Any opportunity to engage in a business activity of which a director or senior executive becomes aware
Categories: Business Law