Business Associations
Business Associations tests Oregon's corporation, LLC, and partnership statutes: ORS chapters 60, 63, and 67. Expect formation, governance, fiduciary duties, shareholder rights, veil piercing, and dissolution.
Core rules
- A corporation is managed by its board under ORS chapter 60; directors owe duties of care and loyalty and are protected by the business-judgment rule.
- An Oregon LLC may be member-managed or manager-managed; the operating agreement governs internal affairs. Members and managers owe statutory fiduciary duties.
- Veil piercing requires abuse of the corporate form, such as commingling, undercapitalization, or fraud, causing injustice.
- A partner owes loyalty and care under ORS chapter 67; partnership property is not individual property.
Worked example
Two members form an Oregon LLC to run a restaurant. The operating agreement is silent. One member learns of a nearby lease that would benefit the restaurant, but takes it for himself. Because the LLC is member-managed, he owes loyalty and may not usurp a business opportunity that belongs to the LLC. The other member may seek an accounting or damages, and may pursue a derivative claim. Reasoning: identify governance, duty, and remedy.
Traps
Do not apply corporate formalities to an LLC automatically; do not assume limited liability protects personal torts; do not confuse a charging order with a writ of execution; do not ignore the operating agreement.