requires filing certain oducments with the state, and running a corporation generally requires more formalilty than is required to run most other types

1. Limited Liability for Owners, Directors, and Officers

2. Centralized management

3. Free Transferability of Ownership

4. Continuity of Life

5. Taxation

Articles of Incorporation

1. Written

2. Signed by Each Incorporator

3. Contents (name, corporate purposre, maximum # of shares, the full name & address of each incorporator)

1. name of P/N

2. P/N's address

3. each partner's name & address

4. each limited

1. consent and intent

2. Partners must make a contribution that has economic value--> each partner owes the p/n what he has agreed to contribute

3. Risks & Profits--> Partners must share risks & profits as joint obligors

Exceptions to Partnership Being Governed By Law of Contracts

1. ALL partners must have access to the books of the P/N

2. Rules between partners and 3rd parties

3. Rules governing ownership of immovables AND/OR rules about elements of P/N

1. Profits

2. Losses

3. Distribution of Assets--> EXCEPT capital contributions

-->restored to each partner in the ratio of unrestored contributions

(what you put in is what you get bk!!!)

How Do You Form a Corporation

1. Articles of Incorporation & Initia Report Must Filed w/Sec of State

2. The Sec of State will issue Certificate of Incorporation (when the corp's legal existence begins-->existence will be effective retroactively to the date the articles were filed)

*3 ways*

1. Unanimity(amend, admit, terminate, withdraw, merge0

2. Majority-->unless otherwise agreed (decisions affecting the management

3. Single Partner Act (ordinary course of business)

1. must be writing AND filed to affect 3rd parties

2. if not agreement at time acquistion-->belongs to the partners indivision

3. If agreement form filed AFTER acquisitions, DOES NOT affect 3rd parties although it retroactively belongs to the P/N

the primary investors/people who will have control over the corporation once it comes into existence.

1.making contracts and arrangements for the corp before it even comes into existence

*has a fidicuary duty to the future corporation to disclose and deal fairly w/respect to all matters related to the corp*

1. statute for valid incorporation available

2. GF attempt to comply with the law

3. Exercise of corporate privileges

1. corporate formalities are ignored

2. corporation is inadequately capitalized at the outset

3. to prevent fraud

Who is liable when the corporate veil is pierced?

persons who were active in the management or operation of the business will be held personally liable.

Passive investors who acted in GF will not be held for corporate obligations.

Creditors-->most liekly to to pierce the veil

SHs--> courts rarely pierce veil at SHs request

1. death

2. interdiction

3. bankruptcy

4. seizure of his interest (not released in 30days)

5. expulsion

6. withdrawal

1. w/term- must have just cause(failure of another partner to fulfill a material obligation) OR unanimous consent of the remaining partners

2. w/o term- anytime as long as a GF notice is given and not at an unfavorable time for the partnership

Upon PROPERLY ceasing to be a member of the partnership, the former partner, his successor, or the seizing creditor, is entitled to be paid, in money, the FMV of his interest in the partnership.

1. unanimous consent of the partners

2. judgment of termination

3. bankruptcy

4. reduction of membership to one person

5. expiration of its term

6. attaining of or the impossibility of attaining the object of the partnership, OR

7. in accordance w/ P/N agreement

corporation acted in a way that exceeded its powers in the articles

*if a Board entered into an ultra vires transaction, then that does not void the transaction-->3rd party still has a binding contract against the corporation (SH can't set it aside)

1. seeking an injuction BEFORE corporation commits the ultra vires act

2. derivative suit against the directors/officers who exceeded their authority to recover damages the corporation suffered

3. by the state in a suit to dissolve the corporation

*normal agency rules apply*

1. actual authority (express or implied)- person in fact has the lawful power to act wither bc of express grant by the articles/by laws Or Bc its a natural part of that person's office

2. Apparent authority- person doesn't have actual authority to do the act but the 3rd party reasonably believes that person did

*although corporation is bound by the act, it will have the right to recover any damages it suffers from the person who acted in excess of his authority*

Generally, what is the BJR rule?

presumption that the Bd of Directors have:

1. acted in GF

2. have not violated duty of loyalty &

3. exercised reasonable care

*ALL 4 elements must be met*

1. Directors exercised appropriate OVERSIGHT & JUDGMENT was made. (Francis)

2. Directors exercised ADEQUATE PROCESS (Van Gorkum)--used all reasonably available info to make informed decision

3.Majority of Bd was in GF

4. Didn't breach duty of loyalty--most of Bd was NOT INTERESTED in decision

- prove BJR does not apply

-decision was NOT grossly negligent

1.unanimous consent of the partners

2. judgment of termination

3. bankruptcy of partnership

4. reduction of membership to 1 person

5. expiration of its term (when constituted for a term)

6. attaining of or the impossibility of attaining the object of the partnership OR

7. in accordnace with provisions of the partnership agreement

*only he he PROPERLY ceases*

be paid--in $$$ the fair market value of his interest in the partnership.

1. permits her name to be used in the business dealings of the partnership

2. participates in the management or adminstration of the partnership

3. conducts business with 3rd parties on behalf of the partnership