Business Law Final Chapter 16, 17, 18, 6, 23, 11
Duties and Liabilities of Partners
- A partner's duty of care is limited to refraining from "grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law" - Partner is not liable for simple negligence or honest errors in judgment in conducting partnership business.
Notice of the Proposed Rule
- Agency publishes a notice of proposed rule making proceedings in the Federal Register - Federal Register is a daily publication of the Executive branch that prints government orders, rules, and regulation.
Small Business Regulatory Enforcement FairnessAct
- Allows Congress to review new federal regulations for at least sixty-days before they can take effect. - Federal agencies must prepare guides that explain in plain English how small businesses can comply with federal regulations. - Allows Congress to enforce the RegulatoryFlexibility Act
Contract Clauses
- Choice of Forum - Choice of Law - Force Majeure Clause
Investigation includes power to:
- Conduct Inspections and Tests. - Issue Subpoenas. - Searches During Site Inspections
Winding Up and Distribution of Assets
- Each partner must exercise good faith when dissolving a partnership. - Partners cannot create new obligations on behalf of the partnership, only complete transactions begun at the time of dissolution and to wind up the business of the partnership
The Final Rule
- Final Rule is published in the Federal Register. - Can alter the rule based on comments, but cannot radically change-otherwise new notice and comment period required
Partnership Buy-Sell Agreements
- How assets will be valued and divided in the event that the partnership dissolves. - one or more partners to buy out the other or other should the situation warrant.
Comment Period
- Interested parties express their views on the proposed rule. - Lobbyists/Advocacy Groups Agency responds.
World Trade Organization
- Most of world's leading trading nations are members of the WTO. - To minimize trade barriers among member nations, each member country is required to grant normal trade relations status to other member countries. - This means that each member must treat other members at least as well as it treats the country that receives it most favorable treatment with regard to exports and imports
The United States-Mexic—CanadaAgreement (USMCA: formerly NAFTA)
- NAFTA was designed to eliminate tariffs among the three nations on substantially all goods by reducing tariffs incrementally over a period of time. - NAFTA gave member countries an advantage because each country retained tariffs on goods imported from countries outside the NAFTA agreement. - There were weaknesses in NAFTA including a trade deficit between the US and Mexico that benefitted Mexico.
Dissociation and Termination of partnerships
- Occurs when one partner ceases to be associated in the partnership business. - Requires partner to have her interest purchased by the partnership. - Contract that determines how remaining partners will buy out partners' interest in advance of an "event." - Terminates her voting interest in the partnership. - Partnership can continue to do business without the dissociated partner.
Winding Up and Distribution of Assets pt2
- Payment of debts, including those owed to partner and non partner creditors. - Return of capital contributions and distribution of profits to partners.• If liabilities are greater than assets, partners bear losses in proportion in which they shared profits, unless agreed otherwise
Arbitrary and Capricious Test
- The APA gives courts power to hold agencies' actions "arbitrary and capricious" if they are not in compliance with constitutional due process. - Failure to provide a rational explanation for a decision Change in prior policy w/o explanation
The European Union (EU)
- The EU is a single integrated trading unit made up of a number of European nations - EU has essentially created a new body of law that governs all member nations. - The EU's governing authority issues regulations that define EU law in various areas such as environmental law ,product liability and corporations. - Directives are generally binding on all member countries. - Creating uniform laws is what led to England leaving theEU (Brexit)
Liability of Incoming Partners
- a new partner's liability to existing creditors of the partnership is limited to his or her capital contribution to the firm.
Effects of Dissociation of a partner
-A partner's dissociation terminates the right to participate in the management and conduct of the partnership business (UPA 603). - Partner's duty of loyalty also ends, but the duty of care continues only with respect to events that occurred before dissociation or the winding up process.
Adjudication
-Negotiated Settlements. - Formal Complaints. Role of the ALJ (Administrative Law Judge).• "Chinese Wall Procedure" - Hearing Procedures. Agency Orders. - Appeals (federal appellate court) - IRS Handout
Notice and Comment Rule making
-Notice of the Proposed Rule making. - Comment Period. - The Final Rule.
Joint and Severe Liability of Partnerships
-Third party has the option of suing all of the partners together(jointly) or one or more of the partners separately (severally) - All partners in the partnership can be held liable even if a particular partner did not participate in, know about, or ratify the conduct that gave rise to the lawsuit. (disadvantage) - Because of liability issues, difficult to attract investors(disadvantage)
Distribution Agreement
A U.S. firm may wish to appoint a distributor located in a foreign country when it represents a substantial market
Assumption of Risk
A plaintiff that knows the risk and voluntarily engages in the act anyway may not recover from the alleged tortfeasor
Taxes of a Sole Proprietorship
A sole proprietor pays only personal income taxes on the business's profits
Subsidiaries
A wholly owned subsidiary firm is used to expand into a foreign market and the parent company remains in the United States
Accounting of Partnership Assets or Profits
An accounting of partnership assets or profits is required to determine the value of each partner's share. An accounting can be voluntary, or compelled by court order.
Superseding Cause
An unforeseeable, intervening act that breaks the causal link between defendant's act and plaintiff's injury, relieving defendant of liability.
Comparative Negligence
Comparative negligence computes liability of plaintiff and defendant and apportions damages
Export Controls
Congress cannot impose any export taxes, but it can use other devices to restrict or encourage exports, including the following: - Export quotas. - Restrictions on technology exports.
Breach
Defendant breached that duty
Duty
Defendant owed plaintiff a duty of care.
Causation
Defendant's breach caused the injury
Causation in Fact
Did the injury occur because of the defendant's act, or would the injury have occurred anyway?
Inspection of the books of partners
Each partner has the right to receive full and complete information concerning the conduct of all aspects of partnership business (UPA 403)
Interest in the Partnership
Each partner is entitled to the proportion of business profits and losses that is specified in the partnership agreement
Compensation of Partners
Each partner's income comes from distribution of profits according to the partner's share in the business
Minimizing Trade Barriers
Elimination of trade barriers(restrictions on imports) is sometimes seen as essential to the global economic well-being Regional trade agreements and associations help to minimize trade barriers between nations: WTO European Union (EU). USMCA (replaced Nafta)
Management Rights of Partners
Equal among all partners; each gets one vote, and the majority wins. Unanimous consent is needed for some actions
Antidumping Duties
Extra tariff that may be assessed to deter dumping (the sale of imported goods at "less than fair value")
Tax Treatment of Partnerships
Federal (and most state) tax laws treat a partnership as a "pass through" entity, with profits, losses, and taxes attributed on a pro-rata basis to the partners. The partnership itself pays no taxes (advantage)
General Damages
For non monetary aspects, such as pain, suffering, and reputation
Special Damages
For quantifiable losses, such as medical expenses, lost wages, and benefits
Agency
Foreign firm then acts as the U.S. firm's agent and can enter contracts in the foreign location on behalf of the principal
Licensing
Foreign firm uses an established name brand for a fee
Wrongful Dissociation of partnerships
If the partner lacks the right to dissociate, then the dissociation is considered wrongful under the law.
Apparent Authority of Partners/Agency
In an ordinary partnership, partners can exercise all implied powers reasonably necessary and customary to carryon that particular business.
Executive Controls
Issues warrants/fines
Duty of Land Owners
Landowners must exercise reasonable care to protect persons on their property from harm—even trespassers. - Business owners must warn invitees of potential harm on their premises. - Obvious risks require no warning
Dram Shop Acts
Liability for injuries may be imposed upon bartender and bar owner
Contract Negotiations
Need to keep customs and practices of country where doing business in mind.
Prohibitions
No goods may be imported from nations that are designated enemies of the United States
Fiduciary Duties of partners
Partners are fiduciaries and general agents of one another and the partnership
Liability of Partners
Partners are personally liable for the debts of the partnership.
Duration of a partnership
Partnership for a term (fixed duration). Partnership at will (indefinite duration).
51 Percent Rule
Plaintiff recovers nothing if liability is greater than 50 percent
50 Percent Rule
Plaintiff recovers only if liability is less than 50 percent
Damages
Plaintiff suffered legal injury
Reality
President's authority to exert control over all agencies is significant.
Independent Admin Agencies
President's influence less pronounced. (Federal Reserve) - Officers serve for fixed terms - Cannot be removed without just cause
Duty of Professionals
Professionals may owe higher duty of care based on special education, skill, or intelligence. - Breach of duty is called professional malpractice
Property rights of partners
Property acquired by the partnership remains partnership property and not of the partners individually (UPA 203). An individual partner has no right to sell, mortgage, or transfer the partnership property (UPA 501)
Advantages of the Sole Proprietorship
Proprietor owns the entire business and receives all the profits. There are fewer legal formalities with the setup of the business.
Good Samaritan Statutes
Protects someone who renders aid to an injured person from being sued for negligence
Punitive Damages
Punish the wrongdoer and deter similar conduct in the future
Compensatory Damages
Reimburse plaintiff for actual losses
Regulatory Flexibility Act
Requires an analysis of the cost a regulation will impose on small business and must consider less burdensome alternatives. - Analysis is required if significant impact upon a substantial number of small entities Also requires alerting small businesses of coming regulations
Freedom of Information Act
Requires federal government to disclose records on request, but denial can be challenged in court
Government in the Sunshine Act
Requires that "every portion" of every meeting be open to "public observation." - Adequate notice of meetings. - Closed meetings authorized only in a limited number of instances. (someone accused of crime, open meeting would frustrate agency's purpose, or subject involves rule making or future litigation
Essential Elements of a Partnership
Sharing of profit and losses, joint ownership of the business-intent is key, equal right to be involved in the management of the business
Legislative Caps on Damages
State laws limit the amount of damages—both punitive and general—that can be awarded to the plaintiff. -More than half the states cap general damages (pain and suffering) to: $250,000-$750,000 - More than thirty states have limited punitive damages with some imposing outright bans.
International Law
The body of law—formed as a result of international customs, treaties, and organizations—that governs relations among or between nations - Created to allow nations to have relationships while maintain power over their own affairs
Exporting
The simplest way for U.S. firms to engage in international business is to export their goods and services to foreign markets
Flexibility
The sole proprietor is free to make any decision she or he wishes concerning the business.
National Law
The system of laws within a particular nation
Partnership Termination
The termination of a partnership occurs in two stages: - Dissolution (the legal "death" of the partnership). - Winding Up and Distribution of Assets(collecting and distributing partnership assets).
Negligence
Tortfeasor does not intend the consequences of the act or believes they will occur. - Actor's conduct merely creates a foreseeable risk of injury.
Joint Ventures
U.S. company owns only part of the operation, with the rest owned either by local owners in the foreign country or by another foreign entity
Contributory Negligence
Under common law doctrine of contributory negligence, if the plaintiff caused his injury in any way, he was barred from recovery
Proximate Cause
When the causal connection between the act and injury is strong enough to impose liability
Legislative Rules
act as legally binding as laws passed byCongress. - Agencies also pass interpretive rules. (not binding and generally done to give idea of where agency is headed with rule making
Consent
agree to harmful contact
Tariffs
are taxes upon imports
Partnership
co-owners of the business who have joint control over its operation and the right to share in its profits.
Informal Agency Action/Interpretive Rules
exempt from APA-does not establish legal rights.
Sole Proprietorship
is the simplest form of business
Quotas
limit the amount of goods that can be imported
Formation and Operation of a Partnership
oral, written, or implied by conduct. They can include almost any terms that the parties wish
Exhaustion Doctrine
party seeking court review must first exhaust all administrative remedies before suing
Duty of Loyalty for partners
requires a partner to account to the partnership for "any property, profit, or benefit: derived by the partner in the conduct of the partnership's business or from the use of its property
Executive Agencies
subject to the authority of the president. (Health and Human Services) - Can appoint officers/directors - Can fire officers/directors
Self-Defense Defense of Others Defense of Property
whatever force reasonably necessary to prevent harmful contact.