Bar 10

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  1. Duties between Partners
    • Duty of Loyalty
    • 1) to account for all profits derived by the partner
    • 2) not to deal with the partnership with adverse interests, AND
    • 3) not compete with the partnership
    • Duty of Care - refrain from engagint in negligent, reckless, or unlawful conduct
  2. Duties of an Agent
    • 1) Duty of Care
    • 2) Duty to Obey
    • 3) Duty of Loyalty
  3. Insider Trading Liability
    Breaching a duty not to use inside info for personal benefit.
  4. Tipper's and Tippee's Liability
    • Tippers are liable if:
    • 1) gives inside info to someone else
    • 2) who trades on the basis of the info, AND
    • 3) tip was made for improper purpose
    • Tippees are liable if:
    • 1) tipper breached a duty, AND
    • 2) tippee knew tipper breached duty
  5. Missappropriator's Liability
    Trading info about supply and demand for a stock in breach of a duty of trust and confidence owed to the source of info.
  6. Corporations become Liable on Preincorporation Contracts if...
    • The Corp adopts the contract by:
    • 1) Express Board of Directors Resolution OR
    • 2) Implied Adoption through knowledge of the contract and acceptance of its benefits.
  7. Anti-Fraud 10b
    • Elements:
    • 1) Misrepresentation of a material fact,
    • 2) Use of Interstate Commerce,
    • 3) Scienter, AND
    • 4) Connection with actual purchase of sale of a security.
    • For recovery of damages, also:
    • 5) Reliance
    • 6) Cause of Loss
  8. Derivative Actions
    • A shareholder may assert the corp's rights if:
    • 1) shareholder had ownership at time of the wrong, AND
    • 2) shareholder made a written demand on the directors to sue
  9. Business Judgement Rule
    For directors and officers, there is no liability for consequences of a business decisions if they exercised due care, acted in good faith, and had a rational basis for the decision.
  10. Duties of Directors
    • Duty of Care
    • Duty to Disclose material corp info to other members
    • Duty of Loyalty
  11. Indemnification
    • Mandatory Indemnification: if won
    • Discretionary Indemnification: if did not win, grant of indeminfication if:
    • 1) acted in good faith AND
    • 2) believed action was in the best interests of the corp,
  12. Procedure for Fundamental Change
    • 1) Board adopts a resolution,
    • 2) Written notice given to shareholders,
    • 3) Approval by majority of votes entitled to be cast by shareholders,
    • 4) Filing with the state.
    • Also, there is a Dissenter's Right of Appraisal.
  13. Dissenter's Right of appraisal
    • A shareholder who dissents to a fundamental change may force the corp to buy her shares at FMV.
    • Procedure:
    • 1) Before vote, file written notice of objection,
    • 2) Not vote in favor, AND
    • 3) Written demand to be bought out.
  14. Involuntary Dissolution
    • A shareholder may take action to dissolve the corporation if:
    • 1) the directors become deadlocked in management,
    • 2) the directors are committing fraud or crimes, OR
    • 3) the directors are wasting corporate assets.
  15. Rule 16b
    • Any profits realized by directors, officers, or shareholders owning >10% must return profits to the corporation if made a purchase and sale within 6 months.
    • Applies to publically held corporations:
    • 1) with >$10mil in assets and 500+ shareholders, OR
    • 2) whose share are traded on a national exchange.
  16. Principal's is Liable for Agent's Torts if...
    There is a principal-agent relationship and the tort was comitted within the scope of that relationship.
  17. Principal-Agent Relationship
    • Req's:
    • 1) Assent - an informal agreement b/w Principal and Agent
    • 2) Benefit - Agent's conduct is for Principal's benefit, AND
    • 3) Control - Principal must have Right to Control by having power to supervise the manner of the Agent's performance
  18. Scope of Principal-Agent Relationship
    • Scope is determined by factors:
    • 1) Kind of conduct
    • 2) Frolic or Detour
    • 3) Intent of Agent to benefit the Principal
  19. Actual Express Authority
    • Principal uses written or oral words to express authority.
    • EXCEPTION: Must be in writing if Contract is subject to the Statute of Frauds.
    • Revocable by:
    • 1) Unilateral Act of either Principal or Agent, OR
    • 2) Death or Incapacity of Principal, UNLESS Agent has Durable Power of Attorney.
  20. Actual Implied Authority
    • Agent reasonably believes he has authority through Principal's conduct or circumstances.
    • Factors:
    • 1) Necessity
    • 2) Custom
    • 3) Prior Dealings
  21. Apparent Authority
    • Elements:
    • 1) Principal cloaked agent with appearance of authority, AND
    • 2) 3rd Party reasonably relies on the appearance of authority.
  22. Ratification
    • Authority can be granted after the contract has been entered if:
    • 1) Principal has knowledge af the material facts of the contract, AND
    • 2) Principal accepts its benefits,
    • EXCEPTION: No altered terms
  23. Agent's Liability on Contracts
    • Generally: Agent is not liable
    • Exception: if principal is partially disclosed or undisclosed, authorized agent may be liable at the election of the 3rd party
  24. General Partnership
    An association of 2 or more persons who are carrying on as co-owners of a business for profit.
  25. Priority of Distribution
    • 1) All Creditors must be paid, THEN
    • 2) All Capital Contributors must be paid, THEN
    • 3) Profits and Surpluses are shared equally, absent agreement to the contrary.
Card Set:
Bar 10
2011-07-13 01:30:30
Agency Partnership Corporations

Agency, Partnership, Corporations
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