Expert answer:Evaluate and give at least five (5) reasons/justif
Expert answer:read all chapters I attach and there is question please write me discussion For this discussion, you are asked to reflect on the material covered: Evaluate and give at least five (5) reasons/justifications why Law and the Courts exist? cheeseman_blaw9e_inppt_29.ppt (11.18 MB) cheeseman_blaw9e_inppt_30.ppt (11.558 MB) cheeseman_blaw9e_inppt_34.ppt (7.19 MB) cheeseman_blaw9e_inppt_35.ppt (7.097 MB) cheeseman_blaw9e_inppt_36.ppt (7.291 MB)
cheeseman_blaw9e_inppt_34.ppt
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BUSINESS LAW
Chapter 34
Small Business,
Entrepreneurship, and
General Partnerships
Learning Objectives
Define entrepreneurship and describe the types of
businesses that an entrepreneur can use to
operate a business.
Define sole proprietorship and describe the
liability of a sole proprietor.
Define general partnership and describe how
general partnerships are formed and operated.
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34 – 2
Learning Objectives (cont.)
Explain the tort and contract liability of general
partners.
Describe how a general partnership is dissolved
and terminated.
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34 – 3
Entrepreneur
Person who forms and operates a new business
either by himself or herself or with others
Forms of Conducting Business
Sole Proprietorship
General Partnership
Limited Partnership
Limited Liability Partnership
Limited Liability Company
Corporation
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34 – 4
Sole Proprietorship
Owner is actually the business
No separate legal entity
Advantages
Easy to form and low cost
Owner makes management decisions
Owner receives all profits
Ownership can be easily transferred or sold
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34 – 5
Sole Proprietorship (cont.)
Disadvantages
Capital is limited to personal funds and loans
Owner is legally responsible for all activities
Creation
No formalities
No federal or state government approval
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34 – 6
Exhibit 34.1 – Sole Proprietorship
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34 – 7
Case 34.1: Sole Proprietorship
Case
Bank of America, N.A. v. Barr
9 A.3d 816 (2010)
Supreme Judicial Court of Maine
Issue
Is Barr, the sole owner of The Stone Scone,
personally liable for the unpaid debt?
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34 – 8
Taxation of Sole Proprietorship
No taxes at business level
Earnings and losses are reported on personal
income tax filing
File tax returns and pay taxes to state and federal
governments
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34 – 9
General Partnership
Voluntary association of two or more persons for
carrying on a business as co-owners for profit
Creates rights and duties among partners and with
third parties
Partners are personally liable for debts and
obligations
Uniform Partnership Act: Model act codifying
consistent partnership law
Formed with little or no formality
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34 – 10
Exhibit 34.2 – General Partnership
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34 – 11
Formation of a General Partnership
To qualify as a general partnership under the UPA,
a business must meet the following criteria:
Association of two or more persons
Carrying on a business
Should have co-owners
Aim should be profit
Right to participate in the management of a
business determines the existence of a general
partnership
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34 – 12
Name of the General Partnership
Can operate under name of any one or more of the
partners, or
May use fictitious name
Must file fictitious business name statement
Publish notice in newspaper
Cannot be similar to name used by another
business
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34 – 13
Partnership Agreement and Taxation
General partnership agreement
Written agreement signed by partners
No formalities are necessary
Taxation of general partnerships:
No federal income taxes
Income and losses reported on individual partners’
personal income tax returns, called flow-through
taxation
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34 – 14
Rights of General Partners
Right to participate in management
Right to share in profits
Right to compensation
Right to indemnification
Right to return of loans
Right to return of capital
Right to information
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34 – 15
Duties of General Partners
Duty of loyalty: Partner should not act adversely to
the interests of the partnership
Forms of breach of loyalty:
Self-dealing
Usurping a partnership opportunity
Competing with the partnership
Making secret profits
Breach of confidentiality
Misuse of partnership property
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34 – 16
Duties of General Partners (cont.)
Duty of care
Obligation to use same level of care and skill that a
reasonable person would use
Breach of duty of care is negligence
Duty to inform
Provide all information relevant to affairs of the
partnership
Other partners are imputed with knowledge of all
notices
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34 – 17
Duties of General Partners (cont.)
Duty of obedience
Adhere to provisions of partnership agreement and
decisions
Action for an accounting: Formal judicial
proceeding in which court is authorized to:
Review partnership and partners’ transactions
Award each partner his or her share of partnership
assets
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34 – 18
Liability of General Partners
Tort liability
Unlimited personal liability for debts and
obligations of partnership
Joint and several liability: For torts and breaches of
trust
Plaintiff can sue each partner separately
Plaintiff can recover entire amount from all liable
partners
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34 – 19
Liability of General Partners (cont.)
Contract liability
Unlimited personal liability for contracts of
partnership
Joint liability: For contracts and debts of
partnership
Plaintiff must name all partners as defendants in a
lawsuit
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34 – 20
Liability of General Partners (cont.)
Liability of incoming partners: Liable to debts and
obligations only to extent of capital contribution
Liability of outgoing partners
Liable for debts and obligations incurred at time of
dissolution
Not liable for new debts and obligations incurred
after dissolution
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34 – 21
Dissolution of General Partnership
Change in the relation of partners caused by any
partner ceasing to be associated with the business
Partnership for a term: Partnership created for a
fixed duration
Partnership at will: Partnership created with no
fixed duration
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34 – 22
Dissolution of General Partnership (cont.)
Winding up: Liquidation of partnership assets
Distributing the proceeds to satisfy claims against
the partnership
Wrongful dissolution: Partner withdraws from
partnership prior to the expiration of the term
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34 – 23
Dissolution of General Partnership (cont.)
Notice of dissolution: Third parties, who have:
Dealt with the partnership, must be given actual
notice of dissolution
Not dealt with the partnership but have knowledge
of it, must be given actual or constructive notice
No knowledge of the partnership, do not have to be
given notice
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34 – 24
Dissolution of General Partnership (cont.)
Distribution of assets:
After dissolution of partnership, debts are satisfied
in the following order:
Creditors (except creditor-partners)
Creditor-partners
Capital contributions
Profits
If partnership cannot satisfy claims, partners are
personally liable
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34 – 25
Continuation of Partnership After Dissolution
Partners enter a continuation agreement for
continuation of partnership
Right of survivorship: Upon the death of a general
partner
His right in specific partnership property rests in
remaining partners
Value of his interest in the partnership passes to his
beneficiaries
© 2016 by Pearson Education, Inc. All rights reserved
34 – 26
© 2016 by Pearson Education, Inc. All rights reserved
34 – 27
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