Law & Ethics

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Dracca vs. BB
Ashlyn B. Smith
South University Online
August 8, 2012

BB General Partnership
Dracca is able to seek recover from Silva Gray individually on the judgment for BB partnership because the partnership has not been incorporated. In a general partnership each individual can be sued for the full amount of the business debt. The partners cannot have personal interest within the partnership (Bagley & Savage, 2009 p. 729). If one partner incurs all of the debt, they can then sue the other partners for their parts of the debt. Within a Limited Liability Partnership these three items would differ from the general partnership. 1. Limited partners do not play an active role in the business 2. Limited partners are not personally liable

3. Limited partners face slightly different tax rules (NOLO) BB is not a formalized company under the laws of corporation and taxation, so in turn each individual can be held liable for the debt legally. However, Dracca should not have gone after Ms. Grey solely on a tip of her wealth. Business Judgment Rule

The Business Judgment Rule states that as long as the board members have acted in good faith and meet the basic standards, there should not be a fear of prosecution when making decisions (Bagley & Savage, 2009 p. 801). To insure that the board of directors did not fault their duty of care and the Business Judgment Rule several items must be analyzed. 1. “Were the directors interested in the transaction?

2. Did the directors act in good faith?
3. Did the directors act in a manner that cannot be attributed to a rational purpose? 4. Did the directors reach the decision by a negligent process?” (Bagley & Savage, 2009 p.801). The board must also consider their duty of care and duty of loyalty. Duty of care requires people involved in the company to make informed and reasonable decisions for the business. Duty of loyalty requires employees to act in good faith and in good...
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