Business Associations - Luts Outline

BUSINESS ASSOCATIONS OUTLINE
I. AGENCY 5
A. Who is an agent 5
4. Types of agency relationships 5
B. Liability of principal to third parties in contract 6
1. The agent’s authority 6
2. Ratification 6
3. Estoppel 6
4. Agent’s liability on the contract 7
C. Liability of principal to third parties in tort 7
1. Servant vs. independent contractor 7
2. Tort liabilityand apparent authority 7
3. Scope of employment 8
D. Fiduciary obligation of agents 8
1. Duties during agency 8
2. grabbing and leaving 9
II. PARTNERSHIPS 9
A. What is a partnership? And who are the partners? 9
1. Partnerships vs. corporations 9
2. Partner compared with employees 10
3. Partners compared with lenders 10
4. Partnership vs. contract 10
5. Partnershipby estoppel 10
B. Fiduciary obligations of partners 11
2. Opting out of fiduciary duties 11
3. Grabbing and leaving 11
4. Expulsion 11
C. Partnership property 11
D. Rights of partners in management 12
E. Partnership dissolution 12
1. Right to dissolve 12
2. Consequences of dissolution 13
3. Sharing of losses 13
4. Buyout agreements 13
F. Limited partnerships 14III. THE NATURE OF THE CORPORATION 14
A. General 14
B. Promoters and the corporate entity 15
C. Corporate entity and limited liability 15
1. Corporate veil 15
3. Enterprise liability 15
5. Tort vs. contract creditors 15
D. Role and purposes of corporations 16
IV. LIMITED LIABILITY COMPANY 17
A. General 17
B. Formation 17
C. Operating agreement 17
D. Piercingthe LLC veil 17
E. Fiduciary obligation 17
F. Dissolution 17
V. PROBLEMS OF CONTROL 18
A. Proxy fights 18
2. Strategic use of proxies 18
3. Reimbursement of costs 18
c. Policy 18
4. Private actions for proxy rule violations 18
5. Shareholder proposals 19
6. Shareholder inspection rights 19
d. Statutes 20
B. Shareholder voting control 20
2. Voting agreements20
3. Acquisition 21
C. Control in closely held corporations 21
4. Employment contracts 21
VI. SHAREHOLDER DERIVATIVE ACTIONS 22
A. Introduction 22
B. Requirement of demand on the directors 22
b. Delaware approach 23
d. NY rule 23
C. Role of special committees 23
2. Auerbach v. Bennett (NY version) 23
3. Zapata Corp v. Maldonado (Delaware version) 23
VII.DUTIES OF OFFICERS, DIRECTORS, AND OTHER INSIDERS 24
A. Obligations of control: duty of care 24
B. Duty of loyalty 24
1. Directors and managers 24
2. Corporate opportunities 25
3. Dominant shareholders 25
4. Ratification 26
C. Obligation of good faith 26
1. Compensation 26
2. Oversight 26
D. Indemnification and insurance 27
E. Disclosure and fairness 27
VIII.CONTROL AND DISSOLUTION (CON’T) 27
A. Control, duration, and statutory dissolution 27
4. Four types of auctions 28
B. Transfer of control 29
4. Planning problem 29
IX. MERGERS, ACQUISITIONS, AND TAKEOVERS 29
A. Mergers and acquisitions 29
1. De facto merger doctrine 29
c. Appraisal right 30
e. Planning problem 30
2. Freeze out mergers 30
4) Fairness 30
3. De factonon merger 31
4. LLC mergers 31
B. Takeovers 31
2. Introduction 32
b. Greenmail 32
3. Development 32
b. Poison pills 32
4. Extensions of the Unocal/Revlon framework to negotiated acquisitions 34
5. Extension of the Unocal/Revlon framework to shareholder disenfranchisement 34

BUSINESS ASSOCATIONS OUTLINE

I. AGENCY
A. Who is an agent
1. Gorton v.Doty
a. Father/son sued Doty who let the coach use her car to drive
b. Coach was acting for her; she directed that he was to drive her car, not anyone else
c. Control; she directed that he drive; he followed her instructions
d. Car was loaned for the benefit of the school, not the principal
e. No written agreement; no formal contract...