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Midterm

LAW 122 Study Guide - Midterm Guide: Legal Tests


Department
Law and Business
Course Code
LAW 122
Professor
Clara Chapdelaine- Feliciati
Study Guide
Midterm

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!
ALVIRA
!
SHAIKH!
Business'Organizations:'Chapter'21''
!
Business'
Organization'
Definition'/'Characteristics''
Legal'Test'
Exceptions'
'
Sole'
Proprietorship'
Exists!when!a!person!carries!on!a!business!on!their!
own.!!
(Entitled!to!all!income,!Liable!for!all!Obligations)!!
Advantage:!Simple!&!Easy!to!setup!and!dissolve!
Disadvantage:!Unlimited!Personal!Liability!&!
Limited!Financing!Options!!
1.!No!Legal!registration!as!a!“Sole!Proprietorship”!is!
required!
2.!Must!comply!with!the!general!requirements!imposed!
on!all!business!!
3.!Name!must!be!registered!if!other!than!personal!name.!!
4.!Registration!must!be!completed!&!Business!license!is!
necessary!for!some!activities.!
!!!!!!!
Partnership'
!Three!Main!Types:!!
1. General!Partnership!!
2. Limited!Liability!Partnership!!
3. Limited!Partnership!!
-!No!Separation!between!partner!and!partnership!!
-!Partner!cannot!be!an!employee!
-!Partners!have!unlimited!personal!liabilities!!
-!Personal!assets!may!be!sized!to!satisfy!
partnership!debt!
!
!
1.!!Sharing!profits!(not!just!revenues)!or!losses!
2.!Jointly!owning!property!or!jointly!contributing!capital!
3.!Involvement!in!business-especially!management!!
4.!Joint!authority!for!contracts!and!bank!accounts!
5.!Equal!access!to!business!information!(all!documents!
and!financial!statements)!!
6.!Holding!each!other!out!as!partners!or!acquiescing!
(telling!the!world!–!letter!head,!signoff,!board)!!
7.!Engaging!in!ongoing!activity!rather!than!one!project!
8.!Consider!the!risks!on!unintended!partnership!(!if!both!
people!are!responsible)!!
!
General'
Partnership'
Exits!when!2!or!more!persons!carry!on!a!business!
together!with!a!view!to!a!profit!!
(All!benefits!accrue!directly!to!partners,!All!
partners!are!liable!for!all!business!obligations)!!!
*As!soon!as!a!project!is!talked!about!or!worked!on!
with!view!to!make!profit,!partnership!exists.!Don’t!
need!to!register!yet.!!
Advantage:!Easy!to!setup!&!few!formalities!!
Disadvantage:!Unlimited!Personal!Liability!!
1.!Two!or!more!people!
2.!Carry!on!a!business!together!!
3.!With!a!view!to!profit!!
!
!
!
Unless!the!partners!agree!otherwise,!the!default!
termination!rules!are:!ENDING!THE!PARTNERSHIP!!
1.Any!partner!may!terminate!partnership!on!notice!
2.!Termination!on!death!or!insolvency!(!no!money!left)!of!
partner!
People!may!share!profits!without!
profits!of!the!borrower’s!business.!'
wage!varies!with!the!employer’s!
3.!A!purchaser!of!a!business!
business!profits!to!the!seller!as!
Limited'Liability'
Partnership'
(LLP)'
&'
Limited'
Partnership'
-!Individual!partners!are!not!personally!liable!for!
the!professional!negligence!of!their!partners!and!
some!other!obligations!if!certain!requirements!are!
met.!!
-!Partnership!remains!liable!for!all!obligations,!but!
once!firm’s!assets!are!exhausted,!a!claim!can!only!
be!made!against!the!partner!who!is!responsible.!!
1.!Liability!of!at!least!one!partner!is!limited!to!that!
partner’s!investment!!
2.!Must!have!at!least!one!general!partner!whose!liability!
is!not!limited!
3.!Limited!partners!have!very!limited!rights!to!manage!
the!partnership!!
!
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