BU231 Lecture Notes - Lecture 18: Legal Personality, Sole Proprietorship, Letters Patent
Document Summary
Chapter 25: the nature of a corporation and its formation. The nature of a corporation: corporation: Business: corporation is the dominant business entity & important in society. Characteristics of corporation vs. partnership: corporation. A corporation is liable for its own debts. Corporation has continuous existence and exists independently of its shareholders and directors. A corporation is a taxable entity and losses get trapped. Shareholders may sever all connections with the corporation by transferring their shares to other persons. A shareholder owes no duty of good faith to the corporation. Partnership not legal entity separate from its partners. Each partner in partnership is normally liable for payment of firm debts. Partners manage and carry on the business. Partners owe each other a duty of good faith/fiduciary duty. Partner cannot unilaterally release themselves from liabilities simply by retiring. Death or bankruptcy of partner dissolves partnership (absent special provisions in partnership agreement) Exceptions to limited liability: example of statute:
