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Unformatted text preview: 1 Corporations Outline Introduction I. Incorporation: establishment of a business under the umbrella of a corporation, a legal fiction A. Advantages 1. limits losses so you cant go after private property: limited liability 2. notion that w/o a corporation an injured party can come after personal property b people are liable as well as the company 3. illustrative case: Walkovsky v. Carlton (NY 1966 cab co. incorporation limited liability to corporations insurance) B. Disadvantages 1. double taxation on corporations a. taxed on profits at corporate level b. shareholder taxed on same profits at individual level II. Limited Liability Companies (LLCs) A. recent development; not subject to double taxation (no corporate tax) 1. called pass-through taxation B. Why have a corporation when there are LLCs? 1. public companies have significant differences a. trades on the stock exchange b. shareholders removed from what goes on in the company c. people more willing to invest if you issues them shares 2. LLCs: gets membership interest not shares; therefore harder to get investors 3. people trust corporations: theyve existed for a long time 4. differences between the two not that automatic for tax purposes C. corporate governance issues are really the big areas to consider: 1. Who manages the business? 2. What happens when an owner is unhappy and wants out? D. developed law for corporations; when LLC disputes arise, courts still look to corporate law -- piercing the corporate veil, e.g. E. In practice not only establishing new businesses, but maintaining old ones which are more likely to be corporations 2 AGENCY Restatement of Agency 2d: 1 Agency; Principal; Agent 2 Master; Servant; Independent Contractor 3 General Agent; Special Agent 4 Disclosed Principal; Partially; Undisclosed 7 Authority 8 Apparent Authority** 8A Inherent Agency Power** 8B Estoppel; Change of Position 13 Agent as a Fiduciary 14 Control by Principal 26 Creation of Authority: General Rule 27 Creation of Apparent Authority: General Rule 33 General Principle of Interpretation 82 Ratification 83 Affirmance 140 Liability Based Upon Agency Principles 144 General Rule 159 Apparent Authority 160 Violation of Secret Instructions 161Unauthorized Acts of General Agents 161A Unauthorized Acts of Special Agents 194 Acts of General Agents** 195 Acts of Manager Appearing to be Owner** 219 When Master is Liable for Torts of Servants 220 Definition of Servant 387 General Principle (Duty of Loyalty)** 388 Duty to Account for Profits from Employment** 393 Competition as to Subject Matter of Agency** I. The distinction between servants and independent contractors A. Corporation: legal fiction created by filing within a state 1. operates by interaction w/ human beings b agency law a. example: gas station 1) Humble Oil & Refining Co. v. Martin (Tex. 1949) 2) Hoover v. Sun Oil Company (Del. 1965) B. spectrum of possibilities...
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- Fall '07