NC BAR Agency, Partnership and Corps

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  1. How to terminate actual authority
    • After specified time/event or a reasonable time
    • change of circumstances
    • if agent acquires adverse interest
    • when agent says so
    • when principal says so
    • death/incapacity or bankruptcy
  2. When is agency power irrevocable
    when coupled with an interest
  3. Ratification (agency)
    P can ratify by expressly affirming contract, accepting benifit of it, or suing T on it
  4. Requirements of ratification
    • Knowledge: P must have knowledge of all material facts
    • All or nothing: P must accept entire trsx
    • Capacity: P must have capacity at time of ratification and time of original contract
    • Ratification is retroactive, adoption is not 
  5. Duties of agent as fiduciary
    Duty of loyalty, care and obedience
  6. Duty of principal to agent
    Principal must compensate, reimburse and indemnify Agent
  7. Only exception to third party being liable to principal
    when there is an undisclosed principal AND agent has special skills
  8. Liability in Tort
    When tort committed by the servant who was acting within the scope of employment

    master and servant are jointly and severally liable 
  9. Partnership Definition
    An association of two or more persons carrying on as co-owners a business for profit, regardless of intent
  10. Factors to look at for partnerships
    capital, control and profit
  11. partnership by estoppel
    if no partnership is formed,  parties may still be liable as if they are partners to protect reasonable reliance by third parties
  12. Factors for partnership property
    funds, use, upkeep, agreement and title of asset
  13. Partners duties to other partners
    A partner is a fiduciary who owes partnership a duty of care, loyalty and a duty to render full information about the partnership on demand
  14. Notice of dissolution requirements
    • prior creditors=personal notice
    • others knowing of partnership prior to dissolution=newspaper
    • all others=no notice requirement  
  15. Order for distribution of partnership assets after dissolution
    • 1. 3rd party creditors
    • 2. To partners other than for capital and profits (loans etc)
    • 3. to partners for capital
    • 4. to partners for profits   
  16. Articles of incorporation must have
    name and address of corporation, each incorporator and registered agent/office, number of authorized shares
  17. De facto corporation
    requires a good faith attempt to comply with the statute, and an act on the corporations behalf
  18. Corporation by estoppel
    one who deals with a business as if it were a corporation may be estopped from later arguing that it is not a corporation
  19. Corporation liability on pre-incorporation contracts
    corporation is not liable uness it adopts the contract as its own, either expressly or impliedly
  20. Transacting business
    engaging in intrastate transactions in NC on a regular basis
  21. Outstanding shares
    issued shares that the corporation has not reacquired
  22. Par value
    minimum issuance price
  23. Preemptive rights
    allow existing shareholder to maintain her percentage ownership by buying same percentage of new stock when it is issued for cash
  24. Quorum
    need at least a majority of all directors, unless greater number required by articles or bylaws, or a lesser number is permitted by articles or a SHAREHOLDER bylaw (cant be less than 1/3)
  25. Duties of Directors
    Duty of care, Loyalty
  26. Director duty of care
    director must do what an ordinarily prudent person would do in a like position, under similar circumstances
  27. Director duty of loyalty
    director must act in good faith and with a reasonable belief that what she does is in the corporations best interest
  28. Safe harbor for conflict of interest transactions
    fair to the corporation or it was ratified by a majority of all disinterested directors or shares after full disclosure

    If not, then COIT can be set aside  
  29. Corporate opportunity
    A director cannot usurp a corporate opportunity without making full disclosure and getting board approval
  30. Loans to directors permitted when
    approved by a majority of all outstanding shares or if board determines it is at the corporations benefit
  31. Raincoat Provision
    articles may shield directors from personal liability for breach of the duty of care if they acted in the corporations best interests and received no improper personal benefit
  32. Corporation may only make a distribution if it satisfies both the
    solvency test and balance sheet test
  33. solvency test
    after giving effect to distribution, it must be able to pay its debts as they become due in the ordinary course of business
  34. balance sheet test
    after giving effect to distribution the corporations assets must exceed its liabilities
  35. Appraisal rights
    a shareholder opposed to the change may have the right to compel the corporation to buy back his shares for their fair value
  36. In order to get appraisal rights
    must send written notice before vote, not vote for the change, and make a written demand for payment after vote
  37. When amendment of articales has an adverse effect on a class
    it must be separately approved by an absolute majority of that class, even when that class usually doesnt have voting rights
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NC BAR Agency, Partnership and Corps
agency partnerships and corps
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