Bierschbach F06 Notes

Bierschbach F06 Notes - Office Hours Thurs. 4-6 Rm 943...

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Office Hours Thurs. 4-6 Rm 943 Characteristics of a corporation (1) Limited Liability, (2) Legal Fiction, (3) Separation of Ownership and Control, (4) Transferability of Ownership, (5) Indefinite Duration, (6) Formally Created, corporation must file with Secretary of State for incorporated status. Corporations need not contain all of these factors. Greatest advantage of incorporating is the ability to Raise Capital. Greatest disadvantage is way to control agents in legitimate use of corporate resources. Breach of Fiduciary Duty: R ESPONSIBILITY OF B OARD OF D IRECTORS TOWARDS S HAREHOLDERS ; J UDICIAL R EVIEW OF C ORPORATE D IRECTOR S D ECISIONS . Dodge v. Ford Facts : Director and majority shareholder allocates excess funds into corporate expansion projects instead of issuing dividends. Shareholders sue arguing that director’s actions are arbitrary and misuse of corporate funds. Director’s purpose was to lower cost of cars and to provide better working conditions for working class. Legal Test : “Courts of equity will not interfere in the management of the directors unless it is clearly made to appear that they are guilty of fraud or misappropriation of the corporate funds…” Holding : (1) It is not clear that the expansion projects would not be in the best interests of the corporation in the long run, in light of possible future competition and other factors. Judges are not business experts !!! (Court does not pay enough attention to surrounding circumstances such as competition and other compelling business concerns.) (2) Corporation should continue to pay out historical dividends where there is still a profit. (Ordering dividends to be paid out is an exceedingly rare occurrence.) Humanitarian Interests : Companies may to some extent engage in humanitarian endeavors to enhance the corporate image if it furthers the corporate purpose. A GENCY L IABILITY OF P RINCIPLE FOR ITS A GENTS ’ C ONTRACTS (1) explicit authority (2) implied authority (3) apparent authority (not actual authority but where employer “held out” employee as having that authority). Implied Authority : Exists when : Agent reasonably believes based on past or present conduct that the employer intends to grant him this authority. Factors : (1) existence of prior similar practices, (2) specific conduct between principal and agent in the past. Mill Street Church v. Hogan . Implied authority for painter to hire helper existed because: painter had hired this helper in the past; employer knew that painter would need helper; and paid the helper for half hour of work. Although employer discussed hiring different helper, such conversations was never communicated to employee.
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Apparent Authority “Holding Out” : Exists when : (a) Agent acts in a manner that would lead a reasonable and prudent person to suppose that the agent has the authority, or (b) For issues that are usual and proper for this type of employment. 370 v. Ampex
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This note was uploaded on 02/14/2008 for the course LAW 7060 taught by Professor Haas during the Fall '07 term at Yeshiva.

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Bierschbach F06 Notes - Office Hours Thurs. 4-6 Rm 943...

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