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Definition
| R2d 1: agents act on behalf of principals |
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more control = more risk
i. Creditor becomes a principal at that point at which it assumes de facto control over the conduct of the debtor |
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- Cheapest Cost Avoider- is Ms. Doty bc they want owners of cars to be responsible
- against owner bc they have control |
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| Actual (Express) Authority |
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Definition
| explicit granted orally or in writing authority 2.02/2.02 R3d |
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Term
| Actual (implied) Authority |
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Definition
| 1. p.16- incidental acts, necessary to complete the tasks - implied authority page 20 in text book |
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Definition
An agent has apparent authority sufficient to bind the principal when the principal acts in such a manner as would lead a reasonably prudent person to supposed that the agent had the authority he purports to exercise
page 20 of text book
If third party KNOWS agents are acting beyond scope there is no contract |
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| inherent Authority 8A r2d |
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Definition
3) The principle did not convey authority to the third party!!!! So cant use apparent authority
(Watteau)
An undisclosed principal can be held liable for the actions of an agent who is acting with an authority that is reasonable for a person in the agent’s position regardless of whether the agent has the actual authority to do so.
(must be undisclosed principle) |
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| 370 leasing case Kays/Joyce |
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Definition
is an all or nothing: i. Either you affirm or deny/cant change terms
i. Express affirmation by the principal
ii. Implied affirmance thru acceptance of benefits
1) Can only occur at a time where it is possible to accept some benefits
iii. Implied thru silence or inaction
1) Some sensitivity to timing to repudiate the transaction
2) More dictated by notions of fairness
Must accept when it is still possible to decline benefits |
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Definition
| a. Principal is estopped from objecting that P is not liable on the basis that the P could have intervened to prevent the confusion regarding the agent's authority |
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2. He was an agent of an undisclosed principal and the principal did not exist
agent is liable |
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Definition
Agency by estoppel
she changed her position in reliance on the imposter and paid the money! |
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Term
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| Ratification case: Ratification of an agency relationship by the principal requires full knowledge of the material circumstances, regardless of the principal receiving the proceeds or benefits of the agent’s work. |
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Term
Section 7 Authority (Page 2):
i. |
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Definition
| Power of the agent to affect the legal relations of the principal |
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Term
| e. Section 26 creation of authority |
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Definition
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Term
found where the agent may or may not have actual authority to act for the principal but bc of the behavior of principal the third party in good faith believes that the agent acts with authority
e. Section 159 restatement
f. Distinction: An agent cannot create his or her own apparent authority like they can create implied authority |
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Term
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Definition
| grocery store clerk (no say in executing this task) |
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Definition
(landscaper- homeowner hires landscaper and is not in control of how they do the job)
-still employees |
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Term
| Independent contractors/ Agent |
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Definition
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Term
| Independent Contractor:Non-agent: |
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Definition
Have your people call my people (arms length transaction)
make me a porch |
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Term
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Definition
i. Independent contractor is not subject to principles control but agrees to do a task
Page 50/51: evaluate factors more specifically- how detail is the operating manual, was there a right of inspection, are there limitations on selling their interest, raising capital |
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Definition
| mcdonalds is liable bc of the amount of control |
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Term
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Definition
a. Directors - delegate certain responsibilities to officers
b. Officers execute policies and provide management for the day to day operations
c. Shareholders-can elect directors |
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Term
| three theories of liability |
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Definition
1) Piercing the corporate veil:
a) To hold shareholders liable for the actions of the corporation
b) Where the separation has been observed courts don’t want to pierce the corporation veil
2) Enterprise:
a) Assets of sister companies should be accessible to satisfy judgment against any of the companies
3) Agency:
a) Shareholder using the corporate form to satisfy their own personal finances (not within allowable context of a corporation though) |
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Definition
1) Board will not be able to effectively/objectively review shareholders request
2) Remaining members of the board may be compromised |
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Term
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Definition
1) Brought by the shareholder in his or her own name
2) Cause of action belonging to the shareholder in his or her individual capacity
3) Arises from an injury directly to the shareholder |
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Term
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Definition
1) Brought by a shareholder on corporation's behalf
2) Cause of action belongs to the corporation as an entity
3) Arises out of an injury done to the corporation as an entity
4) Directors have breached their fiduciary duties to the corporation
5) Allow shareholder to hold directors liable
SC called it a remedy born of stock holder helplessness |
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Term
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Definition
1. Typically a letter from a shareholder to the board of directors
1) Must request that the board brings suit on the alleged cause of action
a) Must be sufficiently specific as to apprise the board of the nature of the alleged cause of action and to evaluate its merits
b) At a minimum a demand must identify the alleged wrongdoers, descrbie the factual basis of the wrongful acts and the harm caused to the corporation and the request remedial relief allison v. Gen motors corp |
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Term
| delaware standard for demand futility |
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Definition
i) Plaintiff must allege particularized facts (pre-discovery using the tools at hand) creating a R. doubt that the board is capable of making a good faith decision on suit
1. Majority of board has material financial or familial interest
2. Majority of the board lacks independence
3. Challenged transaction not product of valid exercise of business judgment |
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Term
| universal standard for demand futility |
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Definition
i) Where there a universal demand requirement there is not presumption that demand is ever excused in any case
ii) Demand requirement is required for EVERY derivative suit
iii) The shareholder can proceed directly to the court if there is irreparable damage to shareholder |
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Term
| NY standard for demand futility |
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Definition
c) New York standard page 234 of text
i) A demand would be futile if
1. A majority of the directors are interested in the transaction
2. The directors failed to inform failed to inform themselves to a degree reasonably necessary about the transaction or
The directors failed to exercise their business judgment in approving the transaction |
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Term
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Definition
c) New York standard page 234 of text
i) A demand would be futile if
1. A majority of the directors are interested in the transaction
2. The directors failed to inform failed to inform themselves to a degree reasonably necessary about the transaction or
The directors failed to exercise their business judgment in approving the transaction |
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Term
1) Automatic presumption that the decisions will be protected under business judgment rule:
Certain types of activities that unshield the directors: |
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Definition
i) Bad faith
ii) Fraud
iii) Oppressive conduct
iv) Neglect of duties
v) Self dealing
Illegality or wrongful conduct |
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Term
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Definition
b. Elements:
i. Jurisdictional nexus (hook) for federal rules to apply
ii. Transactional nexus: purchase or sale of security (only purchasers or sellers have standing to sue ) (i.e.- company fraudulently dissuaded the market from buying: NO STANDING TO SUE)
1) Rule 10 b- 5 is language SEC uses to implement the statute
iii. Material misrepresentation or omission
iv. Reliance
v. Causation |
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Term
| fraud on the market theory |
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Definition
| i. Presumption that investor relied on the integrity of market price- so investor need not have seen misrepresentation |
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Term
| Transformation causation: |
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Definition
| but for the defendant's fraud the plaintiff wouldn’t have entered into the transaction or would have entered under different terms |
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Term
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Definition
| the fraud produced the claimed losses to the plaintiff (proximate cause) |
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Term
| Corporate Opportunity Doctrine |
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Definition
i) Corporation is financially able to take it
ii) the opportunity (the corporation has the burden of proof to say they want to acquire the opportunity)
iii) Does the opportunity fall within the line of business (nature) of the corporation
i) Essence of the company
ii) Beanie babies v. computer parts
iv) Whether the corporation have an interest or expectancy to acquire that opportunity
v) Is the self interest of the director be brought into conflict with that opportunity (the law will not permit him to seize the opportunity for himself)
i) Embracing the opportunity would create a conflict btwn directors self interest and that of the corporation
ii) Interest: something to which the firm has a better right with respect to that opportunity than not
1. CIS board members said to Broz they could not take advantage of the opportunities
iii) Expectancy: takes something which, in the ordinary course of things, would come to the corporation |
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Term
| 11 factors for parent subsidiary and cargill |
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Definition
1. Common employees among business
2. Common record keeping
3. Centralize accounting
4. Payment of wages by one corp to another corp employees
5. A common business name
6. Services rendered by EE of one corp on behalf of another
7. Un documented transfers btwn companies (goods/money)
8. Unclear allocation of losses btwn corps
9. Same officers
10. Same shareholders
11. Same phone number, email, registered office |
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Definition
| treat individual companies as one entity |
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Definition
14(a)(8)(i)(5): proposal must relate to AT LEAST 5% of the companies assets OR be substantially related to the operation of the business or ELSE THE STATEMENT CANNOT COME IN
14(a)(8)(b)(i): for a SH to be eligible to submit a proposal, they must hold at least 2k in market value or 1% of the companies securities for AT LEAST ONE YEAR |
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Term
| SEC Proxy rule 5 Requirements |
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Definition
1) requiring disclosure to shareholders and filing with the SEC docs that are part of the solci process before they are sent to SH
2) forbidding material statement or omissions
3) must mail SH communications or hand them over
4) must include proper proxy solicitations
5)requirement of proxy contest |
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