Business Law FINAL Part 4

Dissociation

When a partner leaves a partnership, ending their association with the business.

Dissolution

The legal termination of a business entity or partnership.

Member

An owner of a limited liability company (LLC).

Alien corporation

A corporation formed in another country but doing business in the U.S.

Foreign corporation

A corporation doing business in a state other than where it was incorporated.

Ultra vires

Acts performed beyond the scope of a corporation's stated purpose or powers.

Piercing the corporate veil

Holding shareholders personally liable when a corporation is misused or undercapitalized.

Crowdfunding

Raising small amounts of money from a large number of people, typically via the internet.

Business judgment rule

Protects corporate directors from liability if decisions are made in good faith and with reasonable care.

Quorum

The minimum number of members or shareholders needed to conduct business.

Advantages and disadvantages of a sole proprietorship

Full control and simple taxes vs. unlimited personal liability and limited capital.

Differences between general and limited partners

General partners manage and have full liability; limited partners have limited liability and no management role.

Creditor vs. partner priority in partnership winding up

Creditors get paid before partners.

Franchisee vs. franchisor

Franchisee operates the business; franchisor owns the brand and provides support.

Common terms in a franchise agreement

Royalties, territory rights, duration, training, and use of trademarks.

Essential elements of a general partnership

Sharing profits/losses, joint ownership, and equal right to manage the business.

Supervisor liability in an LLP

Supervisors are not liable for associates' misconduct unless directly involved.

Family Limited Liability Partnership (FLLP)

A type of LLP where family members manage assets and limit liability.

Default tax method for an LLC

Pass-through taxation, where profits/losses go to members' personal tax returns.

Advantages of an LLC

Limited liability, tax flexibility, fewer formalities, and management flexibility.

Double taxation and S corporations

S corporations can avoid double taxation by passing income directly to shareholders.

A corporation is owned by ________________

Shareholders.

Effect of losing a stock certificate

Ownership remains; a replacement certificate can be issued.

Inside vs. outside directors

Inside directors are company employees; outside directors are not part of management.

Shareholder's derivative suit

A lawsuit brought by shareholders on behalf of the corporation against insiders.

Powers of a shareholder

Voting on directors, major corporate decisions, and approving mergers or dissolutions.