1. III. Corporations
1.1. Reading Outline for Unit III
1.1.1. (1) What is a Corporation?
1.1.1.1. (A) Frank H. Easterbrook and Daniel R. Fischel, "Limited Liability and the Corporation"
1.1.1.1.1. a)
1.1.1.2. (B) Rule of Limited Liability (E&E2 5th Ed. Pp 495-499)
1.1.1.2.1. a) General Rule of Limited Liability
1.1.1.2.2. b) History of U.S. Limited Liability
1.1.1.3. (C) Liability Exposure (Casebook pp 84-86)
1.1.2. (2) Veil Piercing (E&E2 pp 553-570)
1.1.2.1. (A) Traditional piercing factors
1.1.2.2. (B) Distilling a Principle - Solving the Piercing Conundrum
1.1.3. (3) Corporate Finance
1.1.3.1. (A) Corporate Finance (Casebook pp 257-330)
1.1.3.1.1. a) Debt
1.1.3.1.2. b) Equity
1.1.3.1.3. c) Internally Generated Funds
1.1.3.1.4. d) Capital Structure
1.1.3.2. (B) Financial Rights in Corporation (E&E2 pp 57-75)
1.1.3.2.1. a) Financial Rights of Equity Shares
1.1.3.2.2. b) Issuance of Equity Securities
1.1.3.2.3. c) Debt Financing
1.1.3.2.4. d) Choosing a Debt-Equity Mix
1.1.3.3. (C) Malkiel Random Walk Excerpt
1.1.3.3.1. a) https://youtu.be/Ff3P-9g-1oY
1.1.3.3.2. b) https://youtu.be/YRwegRxo-Ow
1.1.3.3.3. c) https://youtu.be/n1Oypo4DtDk
1.1.3.3.4. d) https://youtu.be/K_VaG-qYy2w
1.1.3.3.5. e) https://youtu.be/ed2FWNWwE3I
1.1.4. (4) The Incorporation Process
1.1.4.1. (A) Incorporation - How, Where, and What ?(E&E2 pp 39-102 or 57)?
1.1.4.1.1. a) Process of Incorporation
1.1.4.1.2. b) Choosing Where to Incorporate
1.1.4.1.3. c) Corporate Powers and the Ultra Vires Doctrine
1.1.4.2. (B) The Incorporation Process (Casebook pp 221-255)
1.1.4.2.1. a) Pre-Incorporation Activities
1.1.4.2.2. b) Jurisdiction of Incorporation
1.1.4.2.3. c) Defective Incorporation
1.1.4.2.4. d) Ethical Issues
1.1.4.3. (C) Handout on Forms
1.1.5. (5) Corporate Governance
1.1.5.1. (A) Corporate Governance (Casebook pp 345-391)
1.1.5.1.1. a) Shareholders
1.1.5.1.2. b) Directors
1.1.5.1.3. c) Officers
1.1.5.1.4. d) Bylaws
1.1.5.1.5. e) Charter Amendment Process
1.1.5.2. (B) Peter Thiel Handout
1.1.6. (6) Shareholder's Role
1.1.6.1. (A) Shareholders' Role in Corporate Governance (E&E2 pp 105-113)
1.1.6.1.1. a) Purposes of Shareholder Voting
1.1.6.1.2. b) Shareholder Voting in Public Corporations
1.1.6.1.3. c) Shareholder Voting in Close Corporations
1.1.6.2. (B) Voting Structure (E&E2 pp 113-135)
1.1.6.2.1. a) Shareholders' Governance Role
1.1.6.2.2. b) Mechanics of Shareholders' Meetings
1.1.6.2.3. c) Election of Directors
1.1.6.3. (C) Judicial Protection of Voting Rights (E&E2 pp 135-140)
1.1.6.3.1. a) Limits on Insurgent Opportunism
1.1.6.3.2. b) Review of Management Actions Affecting Voting Rights
1.1.7. (7) Introduction to Directors' Fiduciary Duties
1.1.7.1. (A) Fiduciary Duties - An Introduction (E&E2 pp 187-200)
1.1.7.1.1. a) The Corporate Fiduciary - A Unique Relationship
1.1.7.1.2. b) Fiduciary Duties of Care and Loyalty
1.1.7.2. (B) Fiduciary Duties of Directors (Casebook pp 393-398)
1.1.7.2.1. a) The Business Judgment Rule: No liability for Bad Decisions
1.1.7.2.2. b) Gagliardi v. Trifoods International, Inc.
1.1.8. (8) Duty of Care
1.1.8.1. (A) Duty of Care (E&E2 pp 201-230 missing, taken from 8th edition pp 251-273)
1.1.8.1.1. a) Standards of Care - Aspirational Guidance
1.1.8.1.2. b) Business Judgment Rule
1.1.8.1.3. c) Overcoming Business Judgment Presumption
1.1.8.1.4. d) Remedies for Breaching the Duty of Care
1.1.8.1.5. e) Exculpation of Directors' Care Failures
1.1.8.2. (B) The Duty of Care (Casebook pp 398-414)
1.1.8.2.1. a) Smith v. Van Gorkom
1.1.8.2.2. b) Exculpation Provisions
1.1.9. (9) Duty of Loyalty
1.1.9.1. (A) Duty of Loyalty (E&E2 pp 231-260, missing 8th edition pp 285-300)
1.1.9.1.1. a) Nature of Self-Dealing
1.1.9.1.2. b) Judicial Suspicion of Self-Dealing Transaction
1.1.9.1.3. c) Judicial Fairness Test
1.1.9.1.4. d) Statutory Safe Harbors
1.1.9.1.5. e) Remedies for Self-Dealing
1.1.9.2. (B) Corporate Opportunities and Unfair Competition (E&E2 pp 275-288)
1.1.9.2.1. a) Corporate Opportunity Doctrine
1.1.9.2.2. b) Definition of Corporate Opportunity
1.1.9.2.3. c) Corporate Rejection and Incapacity
1.1.9.2.4. d) Competition with the Corporation
1.1.10. (10) Executive Compensation
1.1.10.1. (A) Executive Compensation (E&E2 pp 309-341, missing 8th ed. Pp 309-327)
1.1.10.1.1. a) Forms of Executive Compensation
1.1.10.1.2. b) Judicial Review
1.1.10.1.3. c) Director's Compensation
1.1.10.1.4. d) Regulatory and Market Pressures
1.1.10.2. (B) Kevin J. Murphy, "Executive Compensation" (Romano Textbook pp 427-432)
1.1.11. (11) Derivative Actions
1.1.11.1. (A) Shareholder Litigation (E&E2 pp 309-341)
1.1.11.1.1. a) Nature of Derivative Litigation
1.1.11.1.2. b) Distinguishing between Derivative, Direct, and Class Action Suits
1.1.11.1.3. c) Procedural Restrictions on Derivative Litigation
1.1.11.1.4. d) Derivative Litigation in Federal Courts
1.1.11.1.5. e) Dismissal of Derivative Litigation - Finding a Corporate Voice
1.1.11.2. (B) Fiduciary Duty Litigation (Casebook pp 440-478)
1.1.11.2.1. a) The Demand Requirement
1.1.11.2.2. b) Direct vs. Derivative
1.1.12. (12) Insurance and Indemnity
1.1.12.1. (A) Indemnification and Insurance (E&E2 pp 261-274, 8th ed. 327-334)
1.1.12.1.1. a) Indemnification - Corporate Reimbursement
1.1.12.1.2. b) Insurance
1.1.12.2. (B) Indemnification and Insurance (Casebook pp 495-500)
1.1.12.2.1. a) Indemnification
1.1.12.2.2. b) Directors and Officers Liability Insurance
1.1.13. (13) Fiduciary Duties of Controlling Shareholders
1.1.13.1. (A) Duties of Controlling Shareholders (Corporate Groups) (E&E2 pp 289-307, 8th pp 359-381)
1.1.13.1.1. a) Who are controlling shareholders?
1.1.13.1.2. b) Parent-Subsidiary Dealings
1.1.13.1.3. c) Squeeze-Out Transactions
1.1.13.2. (B) Fiduciary Duties of Controlling Shareholders (Casebook pp 483-495)
1.1.13.2.1. a) Superior Vision Services, Inc. v. ReliaStar Life Insurance Company
1.1.13.2.2. b) Americas Mining Corporation v. Theriault
1.1.14. (14) Closely Held Corporations
1.1.14.1. (A) Closely Held Corporation (E&E2 pp 439-492)
1.1.14.1.1. a) Control Dilemma in Close Corporation
1.1.14.1.2. b) Control Devices in Close Corporation
1.1.14.1.3. c) Dispute Resolution in Close Corporations
1.1.15. (15) Minority Shareholder Rights
1.1.15.1. (A) Minority Shareholder Protections (Casebook pp 533-569)
1.1.15.1.1. a) Negotiated Protections
1.1.15.1.2. b) Immutable Statutory Protections
1.1.15.1.3. c) Heightened Fiduciary Duties
1.1.15.1.4. d) Buy-Sell Agreements
1.2. Fundamental Corporate Changes
2. IV. Limited Liability Companies
2.1. (1) LLCs
2.1.1. (A) Limited Partnerships (E&E1 pp 455-469)
2.1.1.1. a) Overview of Limited Partnerships
2.1.1.2. b) RULPA
2.1.2. (B) Limited Liability Companies (Casebook 179-206)
2.1.2.1. a) Formation
2.1.2.2. b) Governing Law
2.1.2.3. c) Operating Management
2.1.2.4. d) Management
2.1.2.5. e) Fiduciary Duties
2.1.2.5.1. i) William Penn Partnership v. Saliba
2.1.2.6. f) Obligation of Good Faith and Fair Dealing
2.1.2.7. g) Liability Shield
2.1.2.7.1. i) Pepsi-Cola Bottling Co. of Salisbury, Md v. Handy
2.1.2.8. h) Transfer of LLC Interests
2.1.2.9. i) Allocation of Profits and Losses; Distributions
2.1.2.10. j) Dissolution
2.2. (2) Federal Regulations
2.2.1. (A) Disclosure
2.2.1.1. a) Disclosure in Securities Trading Markets (E&E2 pp 361-366)
2.2.1.1.1. i) State Disclosure Duties
2.2.1.1.2. ii) Federal Disclosure Requirements
2.2.1.2. b) Public Company Regulation - Disclosure Requirements (Casebook pp 571-589)
2.2.1.2.1. i) Annual Reports
2.2.1.2.2. ii) Quarterly Reports
2.2.1.2.3. iii) Current Reports
2.2.1.2.4. iv) Sarbanes-Oxley Act of 2002
2.2.1.2.5. v) Section 10(b) and Rule 10b-5
2.2.2. (B) Proxy Voting Requirements (Casebook 589-616)
2.2.2.1. a) Proxy Statement and Card
2.2.2.2. b) Proxy Solicitation and Voting Process
2.2.2.2.1. i) Concept Release on the U.S. Proxy System
2.2.2.3. c) Shareholder Proposals
2.2.2.3.1. i) Apache Corporation v. New York City Employee's Retirement System
2.2.2.4. d) Say-on-Pay
2.2.2.5. e) Public Company Director Elections
2.2.3. (C) Insider Trading
2.2.3.1. a) Insider Trading (Casebook pp 620-623)
2.2.3.1.1. i) Classical Theory
2.2.3.1.2. ii) Misappropriation Theory
2.2.3.1.3. iii) Rule 14e-3
2.2.3.1.4. iv) Tipper/Tippee Liability
2.2.3.2. b) Dennis W. Carlton and Daniel R. Fishchel, "The Regulation of Insider Trading" (Blackboard download)
3. I. Unit One - Agency
3.1. (1) Business Forms Overview
3.1.1. (A) Types of Business Forms
3.1.1.1. a) Sole Proprietorship
3.1.1.2. b) Partnership
3.1.1.3. c) Limited Liability Partnership
3.1.1.4. d) Limited Partnership
3.1.1.5. e) Corporation
3.1.1.6. f) Limited Liability Company
3.1.2. (B) Business Form Statistics
3.1.3. (C) Why Are There So Many Different Forms
3.1.4. (D) Other Forms
3.1.4.1. a) Limited Liability Limited Partnership
3.1.4.2. b) Professional Corporation
3.1.4.3. c) Professional Limited Liability Company
3.1.4.4. d) Close Corporation
3.1.4.5. e) Series Limited Liability Company
3.1.4.6. f) Nonprofit Corporation
3.1.4.7. g) Low-Profit Limited Liability Company
3.1.4.8. h) Benefit Corporation
3.1.4.9. i) Business Trust
3.1.4.10. j) Joint Venture
3.1.5. (E) Some Key Concepts
3.1.6. (F) Theory of the Firm
3.1.6.1. a)
3.2. (2) What is Agency
3.2.1. (A) Introductory concepts in the law of agency (E&E1 pp 1-18)
3.2.1.1. a) The agency relationship defined and exemplified; its players identified
3.2.1.2. b) Categories and consequences: Why do the labels matter
3.2.1.3. c) The two role of Agency law: Auxiliary and Choate
3.2.1.4. d) Creation of the agency relationship
3.2.1.5. e) The relationship between agency and contract
3.2.1.6. f) Interaction between statutes and the common law of agency
3.2.1.7. g) Major issues in the law of agency
3.2.2. (B) Creation of Agency Relationship (Case pp 29-33)
3.2.2.1. a) Frawley v. Nickolich
3.3. (3) Types of Agency
3.3.1. (A) Binding Principals to Third Parties in Contract and Through Information ( E&E1 pp 19-84)
3.3.1.1. a) Binding the Principal
3.3.1.2. b) Actual Authority
3.3.1.3. c) Apparent Authority
3.3.1.4. d) Attribution of Information
3.3.1.5. e) Estoppel
3.3.1.6. f) Inherent Agency Power
3.3.1.7. g) Ratification
3.3.1.8. h) Chains of Authority
3.3.2. (B) When is a principal bound to a contract (Case pp 34-61)
3.3.2.1. a) Actual authority
3.3.2.2. b) Apparent authority
3.3.2.2.1. i) H.H. Taylor, C.A. v. Ramsay-Gerding Construction Co.
3.3.2.3. c) Estoppel
3.3.2.4. d) Inherent Agency Power
3.3.2.4.1. i) Menard, Inc. v. Dage-MTI, Inc.
3.3.2.5. e) Ratification
3.3.2.6. f) Entity-Specific Rules
3.3.2.7. g) Ensuring authority
3.4. (4) Binding the Agent in Torts
3.4.1. (A) Binding the Principal in Tort (E&E1 pp 89-125)
3.4.1.1. a) Respondent Superior
3.4.1.2. b) Liability for Physical Harm Beyond Respondent Superior
3.4.1.3. c) Torts Not Involving Physical Harm
3.4.1.4. d) Attributing Torts in Complex or Multilevel Relationships
3.4.2. (B) Liability of a Principal for Agent Torts (Case pp 61-63)
3.4.3. (C) The Principal-Agent Problem and Fiduciary Duties of the Agent (Case pp 63-71)
3.4.3.1. a) The Principal-Agent problem
3.4.3.2. b) Fiduciary duties of the agent
3.4.3.2.1. i) Foodcomm International v. Barry
3.5. (5) Fiduciary Duties Care and Loyalty for Agents
3.5.1. (A) Duties and Obligations of Agents and Principals to Each Other and to Third Parties (E&E1 pp 137-164)
3.5.1.1. a) Duties and Obligations of the Agent to the Principal
3.5.1.2. b) Duties and Obligations of the Agent to Third Parties
3.5.1.3. c) Duties and Obligations of the Principal to the Agent
3.5.1.4. d) Duties and Obligations of the Principal to Third Parties
3.6. (6) Termination of Agent Relationship
3.6.1. (A) Termination of the Agency Relationship (Case pp 177-189)
3.6.1.1. a) Ending the Agency Relationship
3.6.1.2. b) Power versus Right in Termination
3.6.1.3. c) Effects of Termination
4. II. Unit Two - Partnership's and LLC's
4.1. (1) What is a Partnership
4.1.1. (A) Introductory Concepts in the Law of General Partnerships (E&E1 pp 215-243)
4.1.1.1. a) The Role, Structure, and Relationship of the Uniform Partnership and Revised Uniform Partnership Act
4.1.1.2. b) Partnership Described
4.1.1.3. c) The Hallmark Consequence of an Ordinary General Partnership: Partners' Personal Liability for the Partnership's Debts
4.1.1.4. d) Contesting and Establishing the Existence of a Partnership
4.1.1.5. e) Partnership by Estoppel; Liability of a Purported Partner
4.1.2. (B) Partnerships and Limited Liability Partnerships (Case 117-130)
4.1.2.1. a) Partnerships
4.1.2.1.1. i) Governing Law
4.1.2.1.2. ii) Formation and Holmes v. Lerner
4.1.2.1.3. iii) Management
4.1.2.1.4. iv) Partnership Agreement
4.2. (2) Partner Fiduciary Duties of Care and Loyalty
4.2.1. (A) Management Issues and Fiduciary Duties (E&E1 pp 269-309)
4.2.1.1. a) The Panoply of Management Rights
4.2.1.2. b) The Right to Know
4.2.1.3. c) The Right to be Involved in the Business
4.2.1.4. d) The Right to Bind the Partnership
4.2.1.5. e) The Right to Participate in Decision Making and to Veto Some Decisions
4.2.1.6. f) Agreements that Change Management Rights
4.2.1.7. g) Management Duties
4.2.1.8. h) Partner's Fiduciary Duty of Loyalty
4.2.1.9. i) The Impact of Agreements on Partner Fiduciary Duty
4.2.1.10. j) Enforcing Inter Se Obligations
4.2.2. (B) The Partner's Power to Bind the Partnership (E&E1 pp 310-346)
4.2.2.1. a) The Foundational Construct: Partner as Agent
4.2.2.2. b) UPA and RUPA Compared
4.2.2.3. c) Binding the Partnership in Contract - UPA § 9
4.2.2.4. d) Binding the Partnership in Contract - RUPA § 301
4.2.2.5. e) Binding the Partnership Through a Partner's Wrongful Acts (UPA § 13; RUPA § 305(a))
4.2.2.6. f) Binding the Partnership Through a Partner's Breach of Trust (UPA §14; RUPA §§305(a) and (b))
4.2.2.7. g) Binding the Partnership Through Information Known or Received by a Partner (UPA §12; RUPA §102(f))
4.2.3. (C) Partnerships ad Limited Liability Partnerships (Case 120-139)
4.2.3.1. a) Fiduciary Duties
4.2.3.1.1. i) Meinhard v. Salmon
4.2.3.2. b) Obligations of Good Faith and Fair Dealing
4.3. (3) Partnership Termination
4.3.1. (A) Partner Dissociation and Partnership Dissolution (E&E1 pp 347-407)
4.3.1.1. a) The UPA and RUPA
4.3.1.2. b) UPA - Foundational Notions
4.3.1.3. c) Management Issues During Winding Up
4.3.1.4. d) The Fate of the Partnership Business
4.3.1.5. e) The Impact of Dissolution on the Partners
4.3.1.6. f) Avoiding UPA Dissolution by Agreement
4.3.1.7. g) Wrongful Dissolution Without Breach of Agreement
4.3.1.8. h) Judicial Dissolution
4.3.1.9. i) RUPA - Foundational Notions
4.3.1.10. j) Dissociation That Does Not Cause Dissolution
4.3.1.11. k) Dissociation That Causes Dissolution
4.3.1.12. l) Other Causes of Dissolution
4.3.1.13. m) Dissociation and Dissolution - UPA and RUPA Compared
4.3.1.14. n) Merger and Conversion
4.3.2. (B) Partnerships and Limited Liability Partnerships (Case pp 139-145)
4.3.2.1. a) Liability Exposure
4.3.2.2. b) Transfer of Partnership Interests
4.3.2.3. c) Allocation of Profits and Losses
4.3.2.4. d) Dissociation
4.3.2.5. e) Dissolution
4.4. (4) Limited Partnerships and Limited Liability Partnerships
4.4.1. (A) Limited Partnerships (E&E1 pp 425-451)
4.4.1.1. a) RULPA
4.4.1.2. b) ULPA (2001)
4.4.2. (B) Limited Liability Partnerships (Case pp 145-152)
4.4.2.1. a) Formation
4.4.2.2. b) Liability Exposure