BEC Ch 1 - BEC Notes Chapter 1 http/

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BEC - Notes Chapter 1 Sole Proprietorship and Joint Venture Sole Proprietorship Filing not required - simplest form of business ownership Sole proprietor not considered a separate entity from the business, so will have to personally file for bankruptcy Personally liable for all obligations of the business Life of entity limited to the life of the sole proprietor Sole proprietor can transfer interests at will Joint Ventures An association of persons or entities for a single transaction or project. JV's are treated as a partnership (P/S) General Partnership General Partnership - an association of two or more persons who agree to carry on as co-owners of an ongoing business for profit Filing not required At least two owners of the partnerships Personally liable for all obligations of the business A partnership may be dissolved after a partner dies or otherwise dissociates from the partnership unless the partners have agreed otherwise, or vote to continue the partnership Taxes flow through the P/S to the partners (taxed at their rates) A partner cannot transfer his P/S interest without unanimous consent of the other partners A general P/S may file for bankruptcy as a separate entity In a general P/S All partners are general partners All partners share equally in mgmt, profits and losses unless agreed otherwise (even when capital contributions are not equal) Within the ordinary course of business a majority vote is needed Matters outside the ordinary course of business require unanimous consent - Admitting new partners - Confessing a judgement or submitting a claim for arbitration - Making a fundamental change in the business (sale of goodwill) - Changing the P/S agreement - Assignment of P/S property to others All partners have unlimited personal liability for obligations of the P/S All partners (individually) have the actual or apparent authority to bind the P/S with respect to all normal partnership business transaction (except when a third party knows the partner lacks actual authority) - Actual authority - all authority that a principal expressively gives to an agent plus any authority that is reasonable implied from the express grant (Partner is store manager, reasonable to imply the partner has the authority to hire employees, buy merchandise, etc) - Apparent authority extends only to the ordinary course of business (sign a lease, hire/fire employees, purchasing equipment, granting warranties) - The P/S may ratify an unauthorized act (if the P/S likes an unauthorized act by partner) All partners must approve major business decisions A partner who acts outside the scope of his actual authority will be liable to the P/S for any damages caused by the unauthorized act (breach of contract) 1
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BEC - Notes Chapter 1 Intent to form a P/S (either Express, orally or in writing, or Implied, in conduct) is the key to general P/S formation. No express agreement is necessary. An agreement can be implied from conduct showing intent to
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BEC Ch 1 - BEC Notes Chapter 1 http/

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