Professional Documents
Culture Documents
1. Ratification:
1. Definition:
Even if an agent acts without authority, a principal will be liable to a third party if (1) the agent
purports to act (or, under the Third Restatement, acts) on the principal’s behalf, and (2a) the
principal affirmatively treats the agent’s act as authorized (express ratification), or (2b) the
principal engages in conduct that is justifiable only if the principal is treating the agent’s act as
authorized (implied ratification).
(1) Express ratification most commonly occurs through oral or 48 written statements (e.g., a
company resolution).
(2) Implied ratification most commonly occurs when the principal has knowledge of an
unauthorized transaction entered into purportedly on his behalf, but the principal nevertheless
accepts the benefits of the transaction.
2. Establishment of Ratification:
Ratification occurs as soon as the principal objectively manifests his acceptance of the
transaction, even if the fact of ratification is not communicated to the third party, the agent, or
any other person.
The effect is to validate the contract as if it were originally authorized by the principal.
3. Restriction on Ratification:
First, it is ineffective unless the principal, at the time of the ratification, was fully aware of all of
the material facts involved in the original transaction.
Second, ratification must occur before the third party has withdrawn from the transaction. This
rule reduces the risk that the principal will use ratification to speculate at the expense of the
third party. We do not want the principal waiting to see if the deal works out to his
advantage—ratifying the transaction if it does, and repudiating the transaction if it does not.
Third, ratification is ineffective if it would be unfair to the third party as a result of changed
circumstances.
Finally, ratification cannot operate to prejudice the rights of intervening persons—i.e., persons
who are not parties to the transaction, but who acquired rights or other interests in the subject
matter of the transaction before the ratification occurred.
4. Undisclosed Principle
Under the Second Restatement, there is no ratification in an undisclosed principle situation.
However, the Third Restatement allows ratification by an undisclosed principal by stating that a
person may ratify an act “if the actor acted or purported to act as an agent on the principal’s
behalf.” Because an agent for an undisclosed principal acts on the principal’s behalf (even though
he does not purport to do so), ratification by an undisclosed principal is permissible under the
Third Restatement.
Summary
a principal will be liable on a contract between an agent and a third party when the agent acts
with actual authority, apparent authority, or inherent authority. Even when the agent lacks one of
these three types of authority, the principal may be liable under the doctrines of estoppel or
ratification.
Partnership 合伙
1. General Introduction
(1) We mainly discuss about general partnership in this chapter. It is the basic partnership form.
Other partnership structures, such as the limited partnership and the limited liability partnership,
are discussed in later Chapters.
(2) The law governing general partnerships is largely derived from statute. The National
Conference of Commissioners on Uniform State Laws (“NCCUSL”) promulgated the Uniform
Partnership Act (“UPA”) in 1914. In 1992, NCCUSL promulgated a revision of UPA. This revised act
was itself amended in 1993, 1994, 1996, and 1997, and the final 1997 act has become known as
the Revised Uniform Partnership Act (“RUPA”).
(3) We discuss both UPA and RUPA. First, UPA is still the law; Second, UPA and RUPA share many
common principles; Thirdly, it is easier to understand many of the significant changes in RUPA.
2. Formation
1. Definition
(1) Under UPA, a general partnership is formed whenever there is an “association of two or more
persons to carry on as co-owners a business for profit.”
The most important of these rules is that a person who receives a share of the profits of a
business is presumed to be a partner in the business, unless the profits were received in payment
of a debt, as wages, or for other listed exceptions.
(2) The formation of partnership sticks strictly to the statutory, therefore, a general partnership
can be created even if the partners do not realize that they are forming such an enterprise.
(3) Consequence: partners have unlimited personal liability for the obligations of the partnership.
·Martin v. Peyton
Facts: point. Knauth, Nachod & Kuhne (“K.N. & K.”) was a banking and brokerage firm. The
business had financial difficulties and borrowed $2.5 million in liquid securities from Peyton,
Perkins, and Freeman. K.N. & K. was ultimately placed in bankruptcy, and Martin, apparently on
behalf of a group of creditors, sought to hold Peyton, Perkins, and Freeman liable as partners in
the firm. Other key facts included the following: (1) An offer was made to Peyton, Perkins, and
Freeman to become partners, but they refused. (2) Peyton, Perkins, and Freeman were to receive
40% of the firm’s profits until the loan was repaid. Those payments had to be at least $100,000,
and they could not exceed $500,000. (3) Peyton and Freeman were designated as “trustees” who
had to be kept advised as to the conduct of the business and consulted on important matters.
They could inspect the firm books and were entitled to any information. Finally, they were able to
veto any business that they regarded as “highly speculative or injurious.” (4) The firm was to
retain Hall as the managing partner until the loaned securities were returned. (5) Each member
of the firm was to place his resignation in the hands of the managing partner (Hall). If at any time
Hall and the trustees agreed that such resignation should be accepted, that member would then
be forced to retire.
Issue: Did the relationship between the firm and Peyton, Perkins, and Freeman meet the
legal definition of a partnership?
Reasoning:
(1) Sharing of profits: Under UPA § 7(4), the receipt by a person of a share of the profits of the
business is prima facie evidence that he is a partner in the business. Similarly, under RUPA §
202(c)(3), sharing profits creates a presumption of partner status. That prima facie inference or
presumption can be rebutted, however, if the share of profits is received in payment of a debt, or
of interest or other charge on a loan.
(2) Express intent not to become partners:
Whether persons think of themselves as partners should be irrelevant. The last clause of RUPA §
202(a), “whether or not the persons intend to form a partnership,” makes this point. The only
intent that matters is the intent to do the things that meet the legal definition of partnership
—i.e., the “intent to carry on as co-owners a business for profit, regardless of [the parties’]
subjective intention to be ‘partners.’ ” (intent to do some relevant work)
(3) Aspects of “co-ownership”: UPA defines partnership as “association of two or more persons to
carry on as co-owners a business for profit.”
a. Sharing of losses: Owners are obligated to bear the losses of the business. Creditors are not.
There is no evidence that PPF were responsible for firm losses.
b. Ability to inspect books and records of the business:
The right to inspect the firm’s books and records is a right typically associated with ownership.
The trustees were given the right to inspect firm books and were entitled to any information
about the business. This is suggestive of partner status.
c. Control over the partnership’s affairs: Perhaps the most important aspect of co-ownership is a
partner’s right to control the business. The comment to RUPA § 202 states that “[o]wnership
involves the power of ultimate control,” and “[t]o state that partners are co-owners of a business
is to state that they each have the power of ultimate control.”
However, “control” is a spectrum, which includes “direct and active” control (the power to
affirmatively make things happen, such as the power to initiate transactions), as well as “indirect
and passive” control (the power to stop things from happening, like the power to veto decisions).
While an ordinary lending arrangement often provides the creditor with passive or indirect
control, such an arrangement does not usually provide the lender with the power to affirmatively
initiate transactions for the borrower’s business. (generally, partners will get a more active
control)
3. Partner by Estoppel
PP 之间:Among partners or purported partners, a partnership is only formed if the legal
definition of partnership is met.
PT 之间:As to third parties, however, a partnership can be formed by estoppel—i.e., by
representing that a person is a partner to third parties, and by inducing reliance on such a
representation.
“[i]f a person, by words or conduct, purports to be a partner, or consents to being represented by
another as a partner, in a partnership or with one or more persons not partners, the purported
partner is liable to a person to whom the representation is made, if that person, relying on the
representation, enters into a transaction with the actual or purported partnership.” If a person is
not a partner in fact (a partner by virtue of meeting the legal definition of a partnership), then
this estoppel theory is the only basis for holding the person liable as a partner to a third party.
Sandvick v. LaCrosse
1. definition of partnership and joint venture:
2. Hypo: if there is a vacant land, A and B each paid half of the money, and owned the land
together. They decided to own the land for 50 years, and the left the land to their children. Do A
and B form a joint venture?
Probably not. Both joint venture and partnership form on the base of business, simply owning a
vacant land is not a business.
RUPA 404:
a. 404(a) states that the “only” fiduciary duties owed by a partner to the partnership and the
other partners are the duties of loyalty and care.
b. 404(b) defines the duty of loyalty as “limited to” the following obligations: (1) to account to
(pay for) the partnership for any benefit derived by the partner in conducting the partnership
business, using the partnership’s property, or appropriating a partnership opportunity; (2) to
refrain from dealing with the partnership in the conduct of its business as (or on behalf of) a
party having an interest adverse to the partnership; and (3) to refrain from competing with the
partnership in the conduct of its business.
Think about self-dealing with a fair market value: it complies with (b)(1), because there is no
benefit or profit that the defendants were deriving from their use of partnership property; which
it violates (b)(2), because the defendants have an interest adverse to the partnership as they are
the lessees generally seeking a lower rent, while the partnership as the lessor is generally seeking
a higher rent.
c. 404(c) defines the duty of care as “limited to refraining from engaging in grossly negligent or
reckless conduct, intentional misconduct, or a knowing violation of law.”
General concept is that courts do not evaluate the substantive merits of a business decision so
long as the decision is not tainted by fraud, conflicts of interest, grossly unreasonable
decision-making processes, or bad faith. This means to shield the managers when they take some
common risks in operating the corporation. Only negligence is not enough, it must be gross.
d. 404(d) imposes an “obligation of good faith and fair dealing” upon partners when discharging
duties and exercising rights. (good faith is a subjective element; fair dealing is an objective
element)
e. 404(e) indicates that a partner does not violate a duty or obligation “merely because the
partner’s conduct furthers the partner’s own interest.” According to the comment, “[a] partner as
such is not a trustee and is not held to the same standards as a trustee,” and subsection (e)
“makes clear that a partner’s conduct is not deemed to be improper merely because it serves the
partner’s own individual interest.” (only excused partners from accounting for incidental benefits
obtained in the course of partnership activities without detriment to the partnership.)
f. Section 404(f) states that “[a] partner may lend money to and transact other business with the
partnership, and as to each loan or transaction the rights and obligations of the partner are the
same as those of a person who is not a partner, subject to other applicable law.” (for example, a
partner can purchase a partnership’s assets)
But the broad language of (f) is complex. Someone will interpret it in a more narrow way as
simply removing restrictions on partner-creditors that previously existed.
6. Expulsion
(1) The guillotine method (a no cause expulsion clause): A two-thirds (2/3) majority of the Senior
Partners, at any time, may expel any partner from the partnership upon such terms and
conditions as set by said Senior Partners.
Pro: it is more efficient; co-owners of a business, they are not employees, and you cannot force a
person to stay in the business.
Con: it is unfair and maybe cruel
Bohatch v. Butler & Binion Hypo:
Can a partnership expel a whistle-blowing (告密的) partner merely for reporting in good faith the
alleged misconduct of another partner?
There was no whistle-blowing exception to the at-will nature of partnerships. Therefore, the
partners were free to expel Bohatch and were not to liable for damages for doing so.
(1) Lawlis v. Kightlinger & Gray
7. Partnership Property
(1) The partnership, rather than the partners, is effectively treated as the owner of partnership
property.
RUPA § 201 recognizes the partnership as an entity, and § 203 provides, in a conceptually
consistent manner, that “[p]roperty acquired by a partnership is property of the partnership and
not of the partners individually.” Similarly, § 501 provides that “[a] partner is not a co-owner of
partnership property and has no interest in partnership property which can be transferred, either
voluntarily or involuntarily.”
9. Partnership Dissolution
9.1 Dissolution under UPA
(1) Dissolution vs. winding up vs. termination
·Dissolution:
“the change in the relation of the partners caused by any partner ceasing to be associated in
the carrying on … of the business.”
It refers to a change in personal relationships among partners within the partnership and has
nothing to do with the disposition of assets or the closing down and selling of the business.
指的是合伙企业中,合伙人关系的变化,与合伙财产、合伙事务无关。
·winding up (liquidation):
the process of ending the partnership’s business. 结束合伙企业过程(类似破产清算)
involves the sale of the partnership’s assets, the repayment of partnership creditors, and the
distribution of any remaining proceeds to the partners based on a settling up of profits and losses.
整个过程包括变卖合伙财产、清偿合伙债物、债权债务清算
*注意:dissolution 与 winding up 是两个不同的概念,有时候 dissolution 会导致 winding up,
有时候不会。
·termination
Termination is simply the moment in time when the winding up of the partnership’s affairs is
completed. 指的是 winding up 的结果:合伙企业终止。
(2)§29 提到的“dissolution is caused any partner cease to be associated”讲的是一旦有合伙
成员退出, 原先的 partnership 都将不复存在, 随之重新组成一个新的合伙企业。 (有点哲学。。 )
(3) Some issues associated with partnership dissolution
a. at-will partnership vs. term partnership: An at-will partnership is one where the partners have
not agreed to remain partners until the expiration of a definite term or the completion of a
particular undertaking.(未事先约定合伙事务终止时间) It is the default form of partnership. A
term partnership is the converse—it is a partnership where the partners have agreed, explicitly or
implicitly, to remain partners for a definite term or until the completion of a particular
undertaking.(事先约定/默示合伙事务完成/期限截止时,合伙关系终止)
*It determines whether dissolution by a partner’s express will/desire is rightful or wrongful.
A. 一些自愿退伙(rightful dissolution): (1) the termination of the definite term or particular
undertaking in a term partnership(约定合伙期限的合伙,期限届满时解散); (2) the express will
of any partner in an at-will partnership(未约定期限的合伙,随时可以退出); (3) the express will
of all of the partners who have not assigned their interests or had them subject to a charging
order; and (4) the expulsion of any partner from the business bona fide in accordance with a
power conferred by the partnership agreement.
B. 一些除名退伙(wrongful dissolution): when dissolution is caused by the express will of any
partner at any time where the circumstances do not permit dissolution under any other provision
of § 31.
C. 一些不置可否的 dissolution: (1) any event which makes it unlawful for the business of the
partnership to be carried on, or for the members to carry it on, in partnership; (2) the death of
any partner; (3) the bankruptcy of any partner or the partnership; and (4) a decree of court under
§ 32.
自愿退伙的结果:the partner will have the power to compel the winding up of the partnership
business (which typically means that the partner will receive his share of the sale of the
partnership assets). Alternatively, the partner can use his right to wind up as leverage to motivate
a buyout of his interest by agreement of the remaining partners who prefer to continue the
business.
除名退伙带来的后果:§38(2): (1) the wrongfully dissolving partner is liable for damages for
breach of the agreement; (2) the remaining partners can decide to wind up the business of the
partnership, or they can forego winding up in favor of continuing the business without the
wrongfully dissolving partner;(其他合伙人可以选择解散合伙,或不解散,继续合伙,但清
退被除名退伙的合伙人)and (3) if the remaining partners decide to forego winding up in favor
of continuing the business, the wrongfully dissolving partner has the right to be bought out, but
only at a price that does not include the value of the firm’s goodwill(如果合伙继续,被除名退
伙的合伙人可以要求“买断” ,但这个价值不能超过合伙的商誉).对于某些企业来说,这种
“商誉”的价值是巨大的:比如对一个空调维修公司而言,真正的资产是很少的,A larger
component of the value of that business is its reputation for timely and high-quality service.
总结:partnership 和其他一些 business structure 的不同之处在于,合伙人拥有随时 exit rights.
比如一个 at-will partnership,合伙人可以随时自愿退伙,之后要求解散合伙,或以此要挟剩余
的合伙人购买其合伙份额;一个 term partnership,合伙人可以要求除名退伙,虽然可能会
带来一些不利后果。
(4) Page is often cited for the proposition that a partner’s bad faith dissolution will be considered
wrongful, even if the cause of dissolution otherwise falls within the literal language of UPA §
31(1).即使满足了上述“自愿退伙”的要求,如果该合伙人的退伙是带有恶意的,也会导致
和“除名退伙”一样的结果。Rightful dissolution within 31(1) + good faith = rightful dissolution
Collins v. Lewis
·Facts: Lewis and Collins entered into a partnership to construct and operate a cafeteria on
leased premises. Lewis was to provide management services and supervise construction, while
Collins was to provide the capital. The cafeteria’s construction greatly exceeded both cost and
time estimates. As a result, Collins had spent over $600,000 by the time the cafeteria opened for
business. After further expenses arose, Collins threatened to cease advancing monies unless
Lewis operated the cafeteria on a profitable basis. Collins ultimately sued and sought, among
other requests, a judicial dissolution of the partnership. The jury found that Lewis was competent
to manage the cafeteria, that Collins had acted negligently, and that but for the conduct of Collins,
there would be a reasonable expectation of profit under the continued management of Lewis.
The trial court entered judgment denying all relief sought by Collins, and the Texas Court of Civil
Appeals affirmed.
D. 一些法定退伙的情形(judicial dissolution) :UPA § 31(6) and § 32. These sections allow a
court to order dissolution if certain circumstances are present: (a) a partner has been declared a
lunatic in any judicial proceeding or is shown to be of unsound mind(合伙人精神错乱); (b) a
partner becomes in any other way incapable of performing his part of the partnership contract
(合伙人不能正常履行合伙事务); (c) a partner has been guilty of such conduct as tends to
affect prejudicially the carrying on of the business(某些错误行为影响到合伙事务的正常开展);
(d) a partner willfully or persistently commits a breach of the partnership agreement, or
otherwise so conducts himself in matters relating to the partnership business that it is not
reasonably practicable to carry on the business in partnership with him; (e) the business of the
partnership can only be carried on at a loss(合伙继续进行只可能导致损失); or (f) other
circumstances render a dissolution equitable.
(5) UPA § 40 indicates that if the partnership were dissolved and wound up, loans by partners and
partner capital contributions would have to be repaid before any remaining monies could be split
between the partners. 合伙解散后,财产要先支付合伙外的债物,之后才能在合伙成员之间
分配。
(6) Expel partner 的方法:
A. 在合伙协议中 include a right to expel partners: When such a right is present, § 38(1) provides
by default for continuation of the business with a cash payment to the expelled partner.
B. 寻求 judicial dissolution: the wrongdoing partner may be deemed to have wrongfully
dissolved such that a buyout and continuation of the firm under § 38(2) would be triggered.
C. Dissolve the firm and form a new partnership without the expelled partner: 但这个方法比较
有危险 be viewed as bad faith or a breach of fiduciary duty
Formation of Corporation
1. Under the “internal affairs doctrine,” the law of the state of incorporation applies to matters
relating to the governance of the corporation (its “internal affairs.”) This concept clearly includes
the relationship, rights, and duties of the various players in the corporation—specifically, the
shareholders, directors, and officers.
The internal affairs doctrine is a choice of law rule, which functions to avoid law confliction (only
one state law can govern). Importantly, the internal affairs rule applies only to laws governing the
relations of those who own and run a corporation.只用于公司内部的关系。It does not apply to
general laws concerning the relationship of the corporation (or its owners and operators) with
the community at large. 并不适用于外部公司与其他公司或第三人之间的关系(由公司交易
产生地法院管辖)
2. articles of incorporation: 四要素
(1) The corporate name (the name not be misleading about what business the corporation will
engage in; the corporate name should contain one of the recognized or an abbreviation)
(2) The articles must state the number of shares of stock the corporation will be authorized to
issue.
(3) The articles must give the street address of the registered office and the name of the initial
registered agent.
(4) The articles must set forth the name and address of each incorporator.
基本每个州都会要求这四个要素,除此之外还有别一些额外的要求。