BA
A Louisiana partnership has a debt of $500,000 to a single creditor and has assets valued at $25,000. The partnership has 4 partners. The creditor obtains a judgment against the partnership for the $500,000 debt. Assume that the assets are sold. How much of the debt is each partner bound to repay?
$118,750 each
What are the elements for partnership by estoppel from Gravois v. New England Insurance Co.?
(1) A person holds themselves out as a partner, (2) To the justified detrimental reliance of a third party, and (3) an intent to share profits and losses.
What is the three-prong test from Darden v. Cox?
(1) Mutual consent to form a partnership, (2) sharing in profits and losses, and (3) a community of goods in which each party has a proprietary interest.
What are the two elements of piercing the corporate veil in Sea-Land Services v. Pepper?
(1) Unity of interest and ownership and (2) failing to pierce the corporate veil would promote fraud or injustice.
A Louisiana corporation, Crawfish, Incorporated, has 250,000 authorized shares and 50,000 were issued. Crawfish, Inc. Is preparing to restructure its employee stock plans so it has reacquired 10,000 of its own shares. What is the breakdown of Crawfish's shares after it has reacquired the 10,000 shares?
250,000 authorized shares, 40,000 issued shares and; 210,000 unissued shares.
How many classes of stock is Peloton, Inc. authorized to issue?
3
Jorge is a majority shareholder of 2 corporations, Acme and Beta. Maya, a plaintiff, successfully reverse pierces the corporate veil of Acme. What impact does reverse piercing have on Beta?
: There is no impact on Beta.
If a party successfully establishes the doctrine of de facto corporation, what type of claims do the promoters and shareholders have limited liability against?
: Tort and contract claims.
Which of the following is consistent with the definition of a partnership in commendam or limited partnership?
A partnership in commendam consists of at least one general partner and at least one limited partner. The limited partner has less extensive powers, rights, and obligations.
Assume that Adam, Brian, and Claire effectively terminated their partnership and the running store closed, the partnership was liquidated. One year later, Claire is approached by a running shoe representative that used to sell to the running store. The representative wants to start a direct-sales operation with Claire, and she accepts. Adam and Brian find out about this and feel upset that they are not brought into this new operation. They each sue Claire for 1/3 of her profits. What is the outcome?
Adam and Brian are not successful because the partnership terminated, and Claire no longer owed Adam and Brian or the partnership any fiduciary obligations.
Adam, Brian, and Claire have decided to start a running shoe store in Louisiana. They have all signed a written partnership agreement providing Adam will contribute certain items (such as a cash register and shelving) and furnishings, Brian will contribute his services to the business (he will not be paid separately as an employee), and Claire will contribute $150,000 cash to the business. Under the agreement, they all will share in profits. Adam and Brian will manage the day-to-day operations of the business, but Claire will have veto power over major financial decisions. Which of the following statements is most accurate regarding each person's contribution to the business?
Adam, Brian, and Claire each have made valid contributions.
Which business forms have formal formation requirements?
All business forms except for general partnerships & sole proprietorships.
Each director of a corporation under the Model Business Corporations Act, adopted by Louisiana, must be:
An individual, meaning a natural person.
Andrew is Sylvia's full time assistant. Sylvia instructs Andrew to order three brand new computers from Dell. In January Andrew orders three refurbished computers in Sylvia's name from Dell for a total purchase price of $5,000. When he purchases them, he is told that all purchases of refurbished computers are nonrefundable, but Andrew is so excited to get them for half price he agrees to the deal without talking to Sylvia first. When Sylvia sees that the computers are refurbished, she is furious. She calls Dell and demands that she be allowed to return the refurbished computers, but Dell says, "A deal is a deal. We will not refund your money." Sylvia yells at Andrew and tells him to just unpack and set up the refurbished computers. When Andrew unpacks the refurbished computers, he is so mad that Sylvia has yelled at him that, instead of carefully unpacking the boxes, he negligently throws, what he believes to be, empty boxes across the office toward an empty corner. Andrew is so frustrated that he does not realize a window is open, and a few of the boxes, which unfortunately still have some equipment in them, sail across the office and out the 10th story window. One of those boxes lands on a man name Harry who is walking by the window. Harry needs seven stitches and misses a few days of work. Assuming that negligent behavior is prohibited under the terms of Andrew's employment and Andrew's actions (i.e. carelessly throwing the boxes toward the corner of the office) were not authorized by Sylvia, from whom can Harry likely recover in a suit for the tort?
Andrew directly and Sylvia vicariously through respondeat superior.
In Tedesco v. Gentry, what was the main reason in the Court's analysis that prevented Tedesco from succeeding on an agency by estoppel theory?
Tedesco had not paid money, expended labor, suffered loss, or had other legal liability.
When forming a corporation, which corporate document(s) must be filed with the Secretary of State's office in the state that the corporation wishes to form?
Articles (or Certificate) of Incorporation, only.
Steve Werks and Bill Fence formed a partnership on January 1, 2020 to develop home technology products. The partnership agreement included the following provisions: Steve was to contribute services through product development; Bill was to contribute money annually over the course of the partnership's 10-year term. Bill was the sole source of the partnership's funding as home technology products are expensive to produce and they had few customers. Bill found himself in a personal financial crisis and all of his assets were seized. Bill decides that he is too busy with his personal woes to be consumed with the partnership and he gives his resignation to Steve. Steve objects to Bill's resignation and continues the business of the partnership, even contracting with vendors for new materials. Which statement best reflects Bill's status as a partner?
Bill remains a partner because Bill does not have just cause as Steve has not failed to perform an obligation.
John Foley is the co-founder and the former CEO of Peloton Interactive, Inc. What type of business entity is Peloton?
Corporation
Damien, Edward, and Francisco are general partners in a moving company. Damien's capital contribution was $4,800, Edward's was $15,000, and Francisco's was $10,200 (so total capital contributions were $30,000 and there were no other contributions). The company has a debt to Wall Street Bank with $10,000 outstanding. Additionally, the company has an outstanding unsecured debt to Francisco in the amount of $10,000. Damien, Edward, and Francisco saw that the company was underperforming and the market for movers was declining. They made the decision to terminate the partnership and liquidate all assets. The moving company had $60,000 in assets. How much, if any, money will each partner receive in total (to the nearest dollar)?
Damien: $6,400. Edward: $20,000. Francisco: $23,600.
What are three instances, in addition to causes of termination of contracts, that cause the mandate and authority of the mandatary to terminate? Select the best answer.
Death of the principal or mandatary, interdiction of the mandatary, or the qualification of the curator after the interdiction of the principal.
The idea that profits in a corporation are taxed once at the corporate level and again if the corporation issues dividends is commonly known as:
Double Taxation
Patrick has a revocable mandate with Amelia. Patrick revokes the mandate by sending Amelia a text message on March 2 but Amelia forgot to pay her phone bill and her cell phone service shut off Amelia's phone on March 1. Amelia never received the text from Patrick. Amelia contracts with Duane on March 3. The contract is within the scope of Amelia's authority and she disclosed her status as a mandatary and disclosed Patrick's identity. Duane already knew all of that information because Duane is a long-time customer. In fact, Duane had even called Patrick on February 28 to ask that Amelia meet Duane to contract. Can Duane enforce the contract against Patrick?
Duane can enforce the contract against Patrick because Amelia did not know her authority terminated, Duane was in good faith when he contracted with Amelia, and Patrick had not notified Duane that he terminated Amelia's mandate.
Hector and Hans are co-promoters working together to form H&H Corp. Before H&H Corp. is formed, Hector and Hans sign a lease agreement with Linda Landlord. Hans and Hector sign the lease: "Hans and Hector, promoters for H&H Corp., a corporation to be formed." Once H&H is formed, it formally adopts the lease and begins making payments on the lease. Six months later, H&H suffers a financial reversal and cannot pay its lease obligations. From whom may Linda seek to recover under the lease?
Either from Hans and Hector or from H&H Corp.
What are the three main accounts represented on a balance sheet?
Equity, liabilities, and assets.
A corporation is taxed with "flow through taxation."
False
If a balance sheet shows $500,000 in Accounts Receivable under Assets, there will be $500,000 in Accounts Payable under Liabilities.
False
Paul and Tess executed and filed the partnership agreement with the Secretary of State. Additionally, they executed subsequent acts to transfer the office building to the partnership. Paul and Tess have not filed a certified copy of the partnership agreement and the certificate of registry with the recorder of mortgages of the parish in which the partnership's principal place of business is located. Therefore, the title to the office building is not effectively vested in the partnership. True or False.
False
S-corps have double taxation, a tax on profits and shareholder taxation on distributions and dividends.
False.
The Board of Directors for a Louisiana corporation must adopt corporate bylaws.
False.
The LLP structure protects individual partners from personal liability relating to contractual claims against other partners not arising from malpractice?
False.
The board of directors owes fiduciary duties to debtholders. True or false.
False.
Jared is on the Board of Directors for ABC Corporation. He has no other position or employment with ABC Corporation outside of being on the Board of Directors. Jared, as a Board member, has the authority to bind the corporation in contract.
False. Individual board members do not have authority to act on behalf of the corporation.
Oliver and Victoria will be general partners in a food truck that travels around Baton Rouge. They both are going out of town from November 2020 to January 2021 but they want to file their partnership with the Secretary of State. They file all the required documents with the proper filing fees on November 1, 2020 and specify the effective date to be January 1, 2021. What is the outcome?
The Secretary of State will not certify the partnership because the documents were filed more than 30 days in advance.
R & S have decided to sew and sell costumes and they immediately start doing business. Without additional information, what type of entity have they most likely formed?
General Partnership
Which business forms possess legal personality?
General Partnerships, Limited Partnerships, Corporations, and LLCs.
A corporation has a monthly subscription to Orange Music. Where would this bill appear on the corporation's balance sheet?
It is a liability and would be categorized under accounts payable.
Lorenzo and Margo form a partnership to operate a food truck, Great Food Truck. They have a partnership contract, but they did not file it with the Secretary of State. The partnership agreement states that Lorenzo and Margo share in profits and losses equally. One year later, Margo decides to step back from daily operations of Great Food Truck but still be involved in business decisions. Lorenzo and Margo decide to amend their partnership contract so that Lorenzo and Margo share in profits and losses in a 70/30 split respectively. They also decide it would be a good idea to file with the Secretary of State. What documents must Lorenzo and Margo file?
Lorenzo and Margo must file the original partnership contract and the amendment.
A Louisiana corporation, Toni Clayton's Glass, Inc., makes custom chandeliers and distributes other lighting fixtures to national construction stores. The corporation executed its articles of incorporation on April 1, filed the articles on April 2, and the articles were accepted for filing by the Secretary of State. The articles of incorporation state the articles become effective on May 1 and it has been using the name Toni Clayton's Glass d/b/a Glass Works. When did corporate existence begin?
May 1
Michael Jordan decided to invest in a basketball manufacturing company, Basketballs4Life. He is a limited partner. After he becomes a limited partner, he takes a European vacation to relax. The general partner, Greedy McGreederson, knows he can double profits for the upcoming quarter if he can let his customers know that Michael Jordan is a part of Basketballs4Life. Greedy decides to send out new marketing materials with an attached order sheet. The cover of the materials shows Michael Jordan playing with a Basketballs4Life ball and says, "Basketballs4life: A Michael Jordan Company." How is Michael's limited liability impacted?
Michael Jordan remains a limited partner because the use was non-consensual, and he did not know or have reason to know of its use.
Carol Baskin and Jose Exotic are certified public accountants (CPAs) by day but together, they formed a general partnership, Bold Fashion, to design animal print clothing for wildlife enthusiasts. They want to know if Bold Fashion can file an application to become an LLP. What is your response?
No, Bold Fashion is not an accounting firm or other type of professionally licensed group.
Sautter, Inc. intends to be a Louisiana corporation. Its promoters, Geoff and Riley, purchase land for the company's headquarters. Bob the Builder, a commercial contractor, contracts with Geoff and Riley on behalf of Sautter, Inc. to build an office building on the land. The contract provides that Bob must complete the project by May 1 and Sautter Inc. will pay the first half of the price before the project is started and the other half by May 1. Sautter, Inc. pays half of the contract price. May 1 comes around and Bob has not completed construction. Sautter, Inc. is now incorporated but is not profitable yet. It has brought a breach of contract claim against Bob. Bob counterclaims against Geoff and Riley because Sautter, Inc. was not incorporated at the time of contracting for breach for failing to pay the other half of the payment. Can Bob enforce the contract against Geoff and Riley?
No, Geoff and Riley will likely have limited liability due to corporation by estoppel
Gerald is Clare's mandatary for the purpose of acquiring gym equipment for Clare's personal training facility. Gerald reads a story in The Baton Rouge Gazette, a very reliable newspaper, that Clare's father has instituted a suit to interdict Clare and the proceedings are ongoing. Gerald remembered that Clare has been acting irrationally in recent weeks. Gerald fears the business will be negatively impacted so he tells Clare that he is resigning, and he no longer wishes to be her mandatary. Has Gerald effectively terminated the mandate?
No, Gerald believes Clare lacks capacity and has not taken other steps to terminate the mandate, so the mandate is still effective.
Selena owns a vintage record store, Records, Inc., in Baton Rouge, Louisiana. Selena is the owner and sole employee of Records. Leo is a frequent customer of Records and knows Selena very well. Leo has a lot of friends and connections who are interested in vintage records. Selena thinks he would be a great resource to grow her business so she tells him that she will give him 5% of any sale if Leo comes into Records with a potential customer who purchases a record during their visit. Leo can come in on his own time, he can bring in any potential customer, and his only payment is the 5% commission. Selena gives Leo express written authority to engage with potential customers but not to make sales or act as an employee in any other way. Leo signs a written contract, agreeing to Selena's terms and he begins bringing in potential customers. Leo brings Cindi into Records and she purchases a vintage Bob Marley record for $750. While Leo and Cindi are leaving, Leo backs into Cindi's brand new Rivian truck. Cindi sues Leo and Selena in a Baton Rouge district court under a negligent tort theory and claims that Selena is vicariously liable for Leo's tortious damage to Cindi's vehicle. Is Selena vicariously liable?
No, Selena is not vicariously liable because Selena does not control Leo's hours, manner of acquiring or engaging potential customers, and he is only paid with a sale's commission. Selena is not vicariously liable because she lacks control and a close economic relationship with Leo.
Jim, Pam, Dwight, and Angela are partners in a chain of paper supply stores. Dwight is the assistant to the regional manager, but the regional manager is not a partner. Jim, Pam, and Angela are in sales. Jim and Dwight vote to change the stores' operational hours so the stores are closed on the weekends, but Pam and Angela oppose the vote. Jim and Dwight change the store hours. Is the decision valid?
No, the vote did not pass by a majority.
On April 1, Crawfish, Inc. approached 150 people with a subscription agreement containing the following information: "Crawfish, Inc. is in the process of incorporation and plans to be incorporated by August 1. We are seeking initial shareholders. There are 20,000 shares of Class A stock available for $5/share." On April 2, Breaux agreed to purchase 100 shares for a total of $500. He is so excited that he runs straight to L'Auberge to gamble but he is not so lucky. Breaux loses a lot of money and is seeking to return his shares and get his $500 back to pay his gambling debt. Can Breaux get out of the subscription agreement?
No.
Tigers Clothing has 4 partners. Mike, Joe, Ed, and Tom. Mike agreed to contribute services to Tigers Clothing and Joe, Ed, and Tom contributed money. However, Mike has not shown up to work in two months, so Ed has to cover for him daily. Ed seeks to expel Mike. A vote is taken. Mike and Tom vote against expulsion, Ed and Joe vote in favor of expulsion. Is Mike expelled from the partnership?
No. A majority vote was not reached so Mike remains a partner.
What does "liquidity" refer to in the context of corporations?
The ability to quickly turn assets into cash.
Marcus, Noelle, and Odell have a valid partnership agreement. Marcus, Noelle, and Odell run into each other at a New Orleans Saints game and talk business. Specifically, the decision to use a new vendor. Marcus and Odell are in favor of a new vendor and Noelle is opposed to the new vendor. Marcus and Odell tell her, "The majority is in favor, so we are using the new vendor." Noelle argues that the decision is ineffective because the Saints game is not a business meeting. Is she correct?
No. Partnership decisions can be made outside general meetings. Each partner voted on the matter and the majority was in favor of the new vendor, so the decision is effective.
A Louisiana corporation, Acme, Incorporated, has a provision in its articles of incorporation stating that the shareholders have the powers relating to the issuance of shares. The Board of Directors passes a resolution that prohibits the issuance of shares in exchange for intangible property. Is the Board's resolution valid and why?
No. The articles of incorporation is the governing document so the Board's resolution is ineffective.
Blackacre Farms, L.P. is a Louisiana partnership in commendam. Gary is a partner in commendam. Five years ago, when business was booming and the partnership was profiting, Gary received a capital distribution. Today, the partnership is insolvent. Can the other partners or its creditors force Gary to return that distribution at a legal rate?
No. The capital distribution did not render the partnership insolvent, so it does not have to be returned.
Sayid is a general partner in an orange distributing limited partnership. Keisha is a limited partner. The partnership agreement grants Keisha agency powers. Keisha transacts to provide oranges for ten new grocery stores. Has Keisha engaged in too much management and control?
No. The partnership agreement grants her agency powers and it is not too much management and control to exercise those powers.
Jose and Sandra are partners in a registered limited liability partnership, J & S, L.L.P. Ryan, a former client of J & S, has a judgment against Sandra for malpractice. Ryan asks you if Jose's personal car can be used to satisfy the judgment. What is your response?
No. The personal assets of partners are shielded by the protections provided by the LLP statutes.
Partner A and Partner B form a partnership in commendam, Partnership, L.P. In their partnership agreement, Partner A is a general partner and Partner B is limited partner. The contract of partnership in commendam has all of its required contents but it was not registered. The partnership is sued for negligence and a judgment for $100,000 is obtained in favor of the plaintiff. How much is each partner liable for?
Partner A and Partner B are liable for their virile shares, $50,000 each.
Assume that a partnership agreement sets forth the following allocations for sharing in profits: Partner A: 5% Partner B: 15% Partner C: 80% However, the partnership agreement did not speak to losses. If the partnership loses money, how will the losses be shared?
Partner A would bear 5%, Partner B would bear 15%, and Partner C would bear 80%.
Annie is Paul's agent. Paul instructs Annie to enter into a contract with Toni on Paul's behalf. Annie identifies herself to Toni as Paul's agent and then enters into the contract requested by Paul, signing the contract as "Annie, agent for Paul." Who is bound to Toni?
Paul alone.
Paul and Tess want to form a business, but they do not have space in their home to conduct business. They purchase an office building on June 1 and sign the paperwork in the name of Partnership A. Later, Paul and Tess have a meeting with you, their corporate lawyer, and you draft a partnership contract. Paul and Tess then execute and file the agreement with the Secretary of State on August 1. Which choice best reflects the ownership of the building?
Paul and Tess own the office building because Partnership A did not have a written and filed partnership at the time of purchase.
Phylicia, a famous actress, saw a beautiful ring in the window of a jewelry store. Since she forgot to bring her credit card with her, though, she couldn't buy it. Later that day, she told a friend, Al, about the ring. When she said she wouldn't have time the next day to go buy it, he said he could do it for her. Delighted, Phylicia said, "When you go, make it clear you are buying it for me. Since I am famous, the store will probably give you a discount if they know I'm the buyer. Also, don't pay immediately. Just tell them they will be paid by the end of the week." Al agreed. The next day, though, Al decided that he would buy the ring more cheaply if he said nothing about Phylicia. So, he went to the store and bought the ring for $10,000 without mentioning that he was acting for Phylicia. He got the ring after promising the store that they would be paid by the end of the week. Which of the following statements is most accurate?
Phylicia is an undisclosed principal.
Jessie authorizes Luis to buy stereo equipment for Jessie's tech shop. Luis purchases computer parts from Rhonda with payment to be sent later from Jessie. Jessie told Luis, "I asked you to buy stereo parts, not computer parts." Jessie does not sell the computer parts in the store. Rhona comes to Luis seeking payment for the computer parts. What is the outcome?
Rhonda can obtain payment or damages from Luis because he exceeded his authority.
Which of the following statements is most accurate regarding an S corporation?
S corporation shareholders may not be corporations, partnerships, or LLCs. S corporations are corporations that elect to be taxed like a partnership
In Holzman v. de Escamilla, what was the strongest fact that led the court to find that the limited partners had engaged in too much management and control?
The bank accounts could be controlled by the Russell and Andrews without knowledge or consent of the general partner and checks required the signature of a limited partner.
Carole Baskin and Pasha Pashkov form a limited partnership, Tiger Dance Studio, L.P. The contract of partnership in commendam is filed and registered with the Secretary of State. The contract includes the name and taxpayer ID, the municipal address of its principal place of business, and Carole and Pasha's municipal address. What, if anything, else must be included in order for Carole to have limited liability status?
The contract must state Carole's contribution and value of the contribution.
What was the holding in Green v. Champion?
The court found a single business enterprise because the entities had the same directors, financed through intercompany debt, operated out of a single office, the corporations had all the same controlling shareholders, and transactions by one company were entered to benefit another company
Crawfish, Inc. was incorporated on August 1 by filing all the necessary documents and fees. The articles of incorporation did not name initial members of the Board of Directors. Who will call the first organizational meeting and for what purpose?
The incorporators call the first organizational meeting to elect a board of directors.
What information is required to be in a partnership contract to be filed in Louisiana?
The name and taxpayer identification number of the partnership, the municipal address of the partnership's principal place of business in Louisiana, and the name and address of each partner.
CHD, Inc. is a publicly traded company that is incorporated in Louisiana. CHD is a participant in the Direct Registration System of the Depository Trust & Clearing Corporation. CHD also issues stock certificates that only state, "This certificate represents the stock of CHD Incorporated, organized under the state law of Louisiana. The stock represented by this certificate are issued to (name)." What else, if anything, must be represented on the stock certificate?
The number and class of shares and the designation of the series that the certificate represents.
Acme, L.P. is a Louisiana limited partnership consisting of two general partners and two limited partners. The partnership agreement is silent as to continuation rights. One general partner passes away on March 1, leaving one general partner and two limited partners. On August 1, at the next partnership meeting, the remaining partners agree to continue the partnership. What is the status of the limited partnership?
The partnership was terminated.
Agency by estoppel requires conduct by the principal. According to Hoddeson v. Koos Bros., what is the scope of conduct that would satisfy the conduct element of agency by estoppel?
The principal's conduct may be an action or an intentional or negligent omission that gives rise to an appearance of authority.
Which of the following best characterizes privately held companies?
The shares of privately held companies are less-liquid than public companies and generally have fewer shareholders.
What is the judicial focus of single business enterprise?
The substance of the corporate structure, rather than its form.
Joe builds custom gazebos for residential & commercial customers. He does not have any associates and he has not filed any documentation with the Secretary of State. He uses his truck that Joe bought before he started building gazebos, his personal tools, and his workshop in his basement to construct pieces for the gazebos. While Joe was at his lake house a customer visits to see an example of Joe's gazebos. The customer was injured when a wood plank fell from the gazebo, hitting the customer's head, and Joe ultimately has a judgment entered against him. What, if any, of Joe's assets can be taken to satisfy the judgment?
The truck, the tools, the home with the workshop, his lake house, and any other assets Joe may own.
What is the purpose of piercing the corporate veil?
To hold an individual shareholder personally liable.
Jose and Sandra form a general partnership but later, they register their partnership as an L.L.P., J & S, L.L.P. Jose and Sandra are general partners.
True
Today is April 15, 2021. Sautter & Associates, L.L.P. filed to become a registered limited liability partnership on May 1, 2020 but a general partnership was formed on March 1, 2020. Sautter & Associates is protected by the limited liability shield.
True
Brian proposed admitting a fourth partner (a friend named Evan). Brian and Claire voted for his admission; Adam voted against it. Evan was not admitted.
True.
The general partner in a partnership, acting alone and in her capacity as a general partner, has the authority to enter into contracts on behalf of the partnership and thereby bind the partnership.
True.
Nadia is authorized by her boss, Jennifer, to enter into contracts on behalf of Jennifer. Nadia tells Ryan that Nadia is authorized to enter into contracts on behalf of her boss but Nadia does not tell Ryan who her boss is. Nadia is personally bound to perform the contract.
True. Nadia is personally bound because she disclosed her status as a mandatary but did not disclose her principal, Jennifer.
What is venture capital funding?
Venture capital funding comes from venture capital firms that use other people's money to invest in a business, usually a start-up, in exchange for equity or debt.
Under which circumstances may a corporation's original articles of incorporation retroactively become effective?
When the articles of incorporations are filed within 5 days, excluding legal holidays, after signing and the articles are accepted by the Secretary of State for filing.
What is the holding of Interstate Electric Co. v. Frank Adam Electric Co.?
When the principal manifests to a good faith third party that an agent has actual authority & the third party reasonably believes the principal's manifestation, the principal is bound to the contract. If there is a change in authority, those changes must be communicated to third parties.
Jerome Wood is the President of Blackacre Nursery, Inc. As President, all issued stock had certificates bearing his signature. Jerome has decided to resign and Marie Todd is taking over as President. Are the stock certificates invalid?
Yes, the certificates are valid.
Acme has 3 general partners and it was formed on January 1, 2010. The partnership agreement states that the partnership has a term of 10 years. On January 2, 2020, the 3 partners decided to continue the partnership and execute an act memorializing the continuation. Acme had an outstanding bank loan to First Bank of Baton Rouge. First Bank sends the monthly bill to Acme's principal place of business. The partners refuse to pay, arguing that the original partnership has terminated. Is First Bank entitled to payment?
Yes. A continued partnership is still obligated to its creditors.
A US Seltzer company (P) authorizes an employee (A) to purchase canning supplies from various suppliers. The employee (A) enters into contracts from an aluminum supplier (T) but the contracts are A's name without mention of P. Can P enforce the contract against T?
Yes. P can enforce the contract against T.
