Business Association
BUSINESS ASSOCIATIONS OUTLINE
I. Overview A. Major Course Themes i. Authority – what is corporation legally empowered to do and at what point is a corporation overstepping its bounds? ii. Responsibility – once authority has been established, what are the limitations of that authority – what is the duty of care? iii. Liability – what actions should directors take to insulate themselves and when can they be held liable for breaching duty of care? II. Agency Law - Definitions A. Agency Generally - Restatement (3d) of Agency § 1.01 – Fiduciary relationship that arises when one person (a “principal”) manifests asset to another person (an “agent”) that the agent shall act on the principal’s behalf and subject to the principal’s control, and the agent manifests assent or otherwise consents to the act. i. Can have agency by default arise once the consent has been manifested. Agency relationship is there even if parties don’t know what agency is. Principal must manifest its consent to the agency, and agent must consent as well. ii. Does not need to be made public that one is another’s agent. No filing is necessary. iii. Compensation is not required. iv. Agency is not a reciprocal relationship. Duty only flows one way. v. Agents could be principals of other agents themselves. B. Master, Servant, Independent Contractor - Restatement (2d) § 2 i. Master - principal who employs an agent to perform service in his affairs and who controls or has the right to control the physical conduct of the other in the performance of the service. ii. Servant – agent employed by a master to perform service in his affairs whose physical conduct in the performance of the service is controlled or is subject to the right to control by the master. iii. Independent Contractor – person who contracts w/
I. Overview A. Major Course Themes i. Authority – what is corporation legally empowered to do and at what point is a corporation overstepping its bounds? ii. Responsibility – once authority has been established, what are the limitations of that authority – what is the duty of care? iii. Liability – what actions should directors take to insulate themselves and when can they be held liable for breaching duty of care? II. Agency Law - Definitions A. Agency Generally - Restatement (3d) of Agency § 1.01 – Fiduciary relationship that arises when one person (a “principal”) manifests asset to another person (an “agent”) that the agent shall act on the principal’s behalf and subject to the principal’s control, and the agent manifests assent or otherwise consents to the act. i. Can have agency by default arise once the consent has been manifested. Agency relationship is there even if parties don’t know what agency is. Principal must manifest its consent to the agency, and agent must consent as well. ii. Does not need to be made public that one is another’s agent. No filing is necessary. iii. Compensation is not required. iv. Agency is not a reciprocal relationship. Duty only flows one way. v. Agents could be principals of other agents themselves. B. Master, Servant, Independent Contractor - Restatement (2d) § 2 i. Master - principal who employs an agent to perform service in his affairs and who controls or has the right to control the physical conduct of the other in the performance of the service. ii. Servant – agent employed by a master to perform service in his affairs whose physical conduct in the performance of the service is controlled or is subject to the right to control by the master. iii. Independent Contractor – person who contracts w/