Business associations — страница 2

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make all p’ship liabilities joint and several. Other reforms provide that not all joint obligors need to be joined in a suit. 2)RUPA--a p’ship may sue and be sued in its own name, and partners are jointly and severally liable for all p’ship obligations. A claim against the p’ship cannot be satisfied from a partner’s personal assets unless p’ship assets have been exhausted. 2.JOINT VENTURE--a p’ship formed for some limited investment or operation, as opposed to a continued business enterprise. Joint ventures are governed by the rules applicable to p’ships 3.LIMITED PARTNERSHIP--this is a p’ship consisting of two classes of partners: general partners (with rights and obligations as in an ordinary p’ship) and limited partners (with no control and limited

liability). 4.LIMITED LIABILITY PARTNERSHIPS--in a LLP, a general partner is NOT personally liable for all p’ship obligations arising from negligence, wrongful acts, and misconduct absent his involvement in the misconduct. There is no exclusion for liability for contractual obligations. 5.LIMITED LIABILITY COMPANIES--LLC is a non-corporate business entity whose owners (members) have limited liability and can participate actively in its management. An LLC may be either for a term or at will. It can be managed either by its members or nonmember managers. Depending on the statute, distributions are made either equally to each member or in proportion to each member’s contribution. a)Withdrawal and Dissolution--some statutes provide that any event that terminates a member’s

membership (death, resignation) causes dissolution. Other statutes distinguish between fault events(member misconduct...) and non-fault events (death, bankruptcy), and some provide that dissolution can be avoided by paying the withdrawing member fair value for his interest. b)Advantages of LLCs--An LLC for a business association, not publicly held, has strong advantages: partnership taxation, virtually no restrictions in structuring ownership interests and management, limited liability for owners and managers, and no limitations on the number or nature of owners. C.DISREGARD OF CORPORATE ENTITY--since a corp is a distinct legal entity, shs are normally shielded from corporate obligations. In certain instances, however, the corporate entity will be disregarded. 1.PIERCING THE

CORPORATE VEIL--(Suits by corporate creditors against shs)--it’s more common in contract claims than in tort claims. The most important elements considered by the courts: a)Commingling of Assets--commingling of corp assets and personal assets of shs (e.g., paying private debts with corp funds) may lead to piercing of the corporate veil; b)Lack of Corporate Formalities--whether basic corp formalities (e.g., regular meetings, corporate records maintained, issuance of stock) were followed is also relevant. Statutory close corps are permitted more flexibility regarding corp formalities; c)Undercapitalization--if the corp was organized without sufficient capital or liability insurance to meet obligations reasonably expected to arise, the corp veil may be pierced; d)Domination and

Control By Shareholder--the corp veil is often pierced when an individual or other corp owns most or all of the stock, so that it completely dominates policy or business decisions. e)”Alter Ego,” “Instrumentality,” “Unity of Interest”--when no separate entity exists and the corp is merely the alter ego or instrumentality of its shs (could be a corporate shareholder), or when there is a unity of interest between the corp and its shs, the corp veil is often pierced. These terms are usually applied only if other grounds are present; f)Fraud, Wrong, Dishonesty, or Injustice--generally, the veil will be pierced only if one of these elements is available, e.g., no piercing of veil if there is a lack of corp formalities without resultant injustice. Piercing the veil usually

involves corps with a small number of shs. 2.PIERCING HAPPENS MOST OFTEN WHEN: 1)The number of shs is small--the chance of one sh dominating the corp is greater; 2)Deception--There is some kind of deception; 3)Agency--individual is a “principal” and corp is his “agent” 4)Estoppel--outsider was led to believe that he was dealing with an individual, while in fact he was dealing with the corporation. 5)Direct tort--individual and corp acted together and should be jointly/severally liable 6)Instrumentality requirement is satisfied: I)control of a subsidiary by parent ii)to commit fraud iii)to cause loss or injury. 3.PIERCING THE WALL BETWEEN AFFILIATED CORPORATIONS--this occurs when a P with a claim against one corp attempts to satisfy the claim against the assets of an