Business Associations
Business Associations tests agency, partnerships, corporations, LLCs, fiduciary duties, and veil piercing.
Core framework
Agency: actual authority (express or implied), apparent authority, ratification, and respondeat superior. Partnership: UPA default rules; equal profits, majority vote for ordinary matters, unanimity for extraordinary matters; fiduciary duties of loyalty and care. LLC: member-managed or manager-managed; charging order is exclusive remedy; fiduciary duties can be modified. Corporation: promoters, incorporation, bylaws, board, officers, shareholders. Board owes duty of care and loyalty; business judgment rule presumes informed good faith. Self-dealing requires fairness. Derivative suits require demand or futility. Veil piercing requires alter ego, undercapitalization, or fraud.
Worked example
A and B form a general partnership to run a bakery. A signs a contract with C for office supplies without B's consent. Office supplies are within the ordinary course of business, so A has actual authority. The partnership is bound. A and B are jointly and severally liable because general partners are personally liable for partnership obligations. If A had instead bought a delivery truck outside the ordinary course, B's consent might be required, but C could still enforce if A had apparent authority.
Traps
Apparent authority requires a manifestation by the principal, not the agent. Partnership by estoppel can bind a non-partner who holds out. LLC members are not personally liable absent veil piercing. The business judgment rule is rebuttable by conflict, lack of information, or bad faith. A shareholder cannot sue individually for harm to the corporation. Close corporation oppression may support dissolution or buyout.