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Chapter 24-25 Sole Proprietorship.docx

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Brock University

Business Organization (Chap 24-25) 1. Know three kinds and liability for each 2. Know partnership defn. And types of partnerships 3. Partners fiduciary duties 4. Corporation a. Differences b. Fiduciary duties or directors/shareholders c. Separate corporate existence d. Piercing the corporate veil-when? e. Operations of corporation f. Share characteristics Sole Proprietorship  Owned by a single individual PARTNERSHIPS 2 or more persons  Pool knowledge and skills and their physical and financial resources  Disagreements may lead to stalemate, dishonesty or incompetence of one member may lead to losses suffered by the others  The Legal Nature of Partnership o Legal Personality  A partnership is treated as a separate entity with its own assets, liabilities and financial statements o Partnership Property  Real property held by a partnership is treated according to the usual rules governing real property as far as the partnership is concerned, but insofar as the individual partners are not concerned, their interests in the real property is considered personal property, that is, they do not won the property itself, but rather an interest in that property o Creditor of the Firm  Partnership creditors have first call against partnership assets before the personal creditors of an individual partner o The Creation of a Partnership  Partnership Agreement: An agreement between persons to create a partnership and setting out the terms of the relationship o The Liability of a Partner  Contractual Liability  Joint Liability o Each partners s personally liable for the full amount of the firms debts, when the liabilities of a partnership exceed its asses, a creditors having obtained judgment against the partnership and exhausted its assets in trying to satisfy judgment, may look to the personal assets of any partner or partners  Apparent Partners o In principle, a person is liable only for the obligations of a partnership incurred while he is a member of the firms o If an outsiders sues the firm then any partners is liable to contribute his share to the firm o If an outsiders sues the partners, the partners is fully liable but is entitled to be indemnified by the firm, that is the partners can sue the firm and its co partners  Fiduciary Duties Information Partners are bound to renders true accounts and full information of all things affecting the partnership to any partners or his legal representation, thus information regarding the firms business that’s is provided to any of the partners must be made available to all of them Secret Benefits A partner may be given permission by his co-partners to use partnership property for his own purpose, or to take advantage of an opportunity offered to the firm. But without full disclose and authorization ant benefit belongs
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