August 16, 1999

• recommends Wall Street Journal
• attendance will not be taken

What does a business lawyer do?

1. has to have trust of clients
2. be able to translate regulations for clients
3. do not like to say no - will work with client to come up with a solution

Sole proprietorship - work by oneself

Partnership -

Limited partnership

Limited Liability Partnership

General Corporations

Close Corporations

Limited Liability Company

• getting money; need a business plan
• management structure
• system for distribution of profits and losses
• personal liability of owners of business
• exit strategy
• knowing who the other owners are - want to restrict other owners from selling, leaving, etc.

Stuff not to be covered in this course:

• no financial aspects of a business

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August 23, 1999

1. Sole Proprietorship

1. one person running a business

1. thousands of these
2. limitless liability - many should think of organizing themselves differently in order to escape limitless liability

1. Agency

1. problems involved with agency

1. a corporation is a concept we have developed; the corporation has to function through people
2. people are agents for the business - they are doing something on behalf of the business
3. establishing a principle/agent relationship

1. principle must give the agent authority to act as an agent (actual express authority)
2. actual implied authority - every time there is express authority, there is almost always implied authority which is authorized
3. agent must agree that the agent will represent the principle and the principle gives agent authority to represent the principle
4. a consensual relationship
5. actual authority (see above)

1. express
2. implied

1. apparent authority (Fennell v. TLB Kent Co.) - in order to create apparent authority the principle has to positively, objectively do something in order to cloth the person with the look of an agent

1. the principle must manifest, do something, in order to make it clear the agent has the authority
2. this is necessary to protect others in their reasonable dealings with companies
3. third party must know agent is working for principle; principle must be known

1. agency power - by the mere creation of agent/principle the third party can make a collection to sue against the principle

1. three parties involved with agents

1. principle
2. agent
3. third party

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August 27, 1999

At what point is a partnership formed?

• if you can show there was a voluntary association that showed people joined together to make a profit.
• Two or more people associating as co-owners to operate a business for profit.

16202. (a) Except as otherwise provided in subdivision (b), the association of two or more persons to carry on as co-owners a business for profit forms a partnership, whether or not the persons intend to form a partnership.

Should always look to beginning of the statute to see if words are defined. This will make it easier to understand what the statute is talking about.

1. terms
2. security
3. cannot be more than ___ $ OR time to be paid back
4. limitation on dividends or distribution
5. limitation on salaries - won't make increases in salaries over and above a certain amount
6. limitation on how you can change primary business

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August 30, 1999

How do we know if a partnership is formed?

• first thing to look at is to see if there is agreed to profit sharing.
• Profit sharing is the biggest indicator of a partnership
• If person tries to show themselves as something else, the courts will look to the amount of control needed to sustain relationship (person is trying to show; ie landlord/tenant lender/borrower, etc); the courts will then look to common business practices; what degree the other people are in business decisions
• The fact that you have profit sharing does not guarantee a partnership however; depends on the facts and how the court interprets those facts

Partner's service to the partnership is not to get any credit to the capital accounts. Service does not count for money in profits/losses. This is the default position.

The default position can be changed, but under default, if you only contribute services yo are only entitled to share in profits (§ 16401)

Default : if you have not decided how to allocate losses, you will allocate them in the same manner as you would profits.