Professional Documents
Culture Documents
Formation Partnership Agreements Authority of Partners Liability of Partners Partnership Interests and Property Fiduciary Duties of Partners Partnership Dissociation, Dissolution, and Winding Up
Dan Graves, Founder, Graves & Associates LLC, Birmingham, Alabama Previously, Partner, Balch & Bingham LLP, Birmingham, Alabama Previously, Associate General Counsel and Assistant Corporate Secretary, Compass Bancshares, Inc., Compass Bank, and their affiliated corporations Previously, Partner/Associate, Miller, Hamilton, Snider & Odom, Mobile, Alabama
Chairman and Planning Committee Member, ABICLE Southeastern Corporate Law Institute; ABICLE Corporate Governance and Banking Law Planning Committees Former Special Prosecutor for Alabama Securities Commission and Mobile District Attorney University of Alabama, J.D. and B.A. Alabama Law Review, Managing Board and Student Works Editor
Author of corporate/securities law related law review articles and other articles Frequent lecturer/teacher on corporate, securities, and banking law topics
Class Meetings
Law students must attend at least 2/3 of all class meetings Absence from more than 4 classes means that you will not have the pleasure of taking the final exam and you will receive no credit for the class
Your Grade
Final Exam 90% Writing Assignment 10% Class Participation + or one grade level for those who are on the brink. Volunteer... dont be a
Participation
Students learning is facilitated by participation backed by preparation.
The professor learns from students participation, questions, and feedback. There is no such thing as a stupid question. (I could, however, be proven wrong. Just kiddingsort of.) Be fearless!
Preparation
If you do not read and analyze the cases and the other assigned material, our class discussion will mean little to you. I will expect and assume that you have read the material. I will call on people. I also want volunteers.
If you are unprepared, you also run the risk of being the one who proves me wrong when I said that there is no such thing as a stupid question.
Presence
If you are not present for class, you will not learn as well and you cannot add your unique and interesting insights to any discussion we have in class.
If you are late and miss roll call, it is YOUR responsibility to see me after class for notation of your presence. You should not assume that I will remember your late/grand entrance.
Promptness
Students who enter the classroom late generally disrupt the class and distract the other students as well as the (very easily distracted) professor.
Please be on time.
PROFESSORS RESPONSIBILITIES
I owe you
Preparation for class.
I intend to put in the time required to be prepared for class.
I owe you
A concern for and devotion to your learning.
A willingness to listen to you and try to help you however I can. If you dont get it, raise your hand in class and ask me. If you are lost, you can be pretty sure that you arent alone.
I owe you
To strive to make the course a satisfying development experience that is as interesting and enjoyable as it can be under the circumstances.
I owe you
Honesty
I will try to do my best up here, but you should not be surprised when it becomes obvious that I dont know everything. If I do not know an answer to your question, I will say so and I will plan to get back to you.
Business
Even if you have no intention of practicing law, an understanding of corporate law will aid you in your business or in your general awareness of business principles. In other words, you might avoid plaintiffs lawyers and your Wall Street Journal subscription will be more worthwhile.
Course Overview
Text Corporations and Other Business Organizations: Cases and Materials Concise Ninth Edition by Melvin Aron Eisenberg (Who, I would note, still does not publish a teachers manual to tell me what to do. Thanks a lot, Melvin!)
Course Overview
Other Materials Statutes, statutes, and more statutes. While they are pretty dull reading, they are the source for most corporate law. (See Course Syllabus and TWEN postings for statutory reading assignments.) Other TWEN postings; relevant periodicals
Course Overview
Partnerships The Corporate Form of Doing Business Corporate Structure (Management, Authority, Formalities, etc.) Stockholder Informational Rights and Proxy Voting Special Close Corporation Problems Alternative Orgs: LPs, LLCs, and LLPs
Course Overview
The Fiduciary Duty of Care The duty of directors to inform themselves and act with requisite care in the discharge of their duties.
Course Overview
The Fiduciary Duty of Loyalty The duty of directors, officers, dominant shareholders, and their affiliates to make full and fair disclosure of conflicts of interest and to act in the best interest of the corporation. Entails disinterestedness, good faith, and fairness
Course Overview
Insider Trading Statutory and Common Law Liabilities
Course Overview
Corporate Combinations and Tender Offers Mergers, P&A Transactions, Stock Purchase Transactions, etc. Going Private Transactions Tender Offers
PARTNERSHIPS
A Quicky Overview
What were the particular terms of the agreement between KN&K and PP&F?
Martin v. Peyton (NY Ct. App. 1927) $2.5 MM Loan Peyton, Perkins & Freeman Knauth, Nachod & Kuhne (Bankers & Brokers)
(1) 40% of KN&K profits until loan repaid (2) Right to inspect KN&K books and receive information PP&F thought important (3) [T]hey (PP&F) may veto any business that they think highly speculative or injurious (4) An option to buy 50% or less of KN&K later (5) They may not bind the firm by any action of their own nor initiate any transaction
The question as presented reflects that this is a matter of contract law. Did their contract, taken as a whole, contemplate a partnership or just a loan?
PARTNERSHIP =
the association of two or more persons + to carry on as co-owners + a business + for profit
(2) Right to inspect books and receive information thought important Court said: [A] proper precaution to safeguard the loan.
(5) They may not bind the firm by any action of their own nor initiate any transaction: Court said: PP&F could not initiate a transaction nor bind KNK as could a partner.
PARTNERSHIP =
the association of two or more persons + to carry on as co-owners + a business + for profit
Partnership Agreement
It is logical and notable that partnerships are commonly formed and operated through inadvertencean intent to create a partnership, a written agreement, or a governmental filing are not conditions precedent to partnership existenceor as a result of oral agreements. It is always preferable to have written partnership agreement when there is an intent to form a partnership. The partners may ex ante determine their rights and obligations for foreseeable circumstances and, perhaps, avoid litigation.
10-8A-103, Code of Alabama (1975): Effect of partnership agreement; nonwaivable provisions. (a) Except as provided in subsection (b), relations among the partners and between the partners and the partnership are governed by the partnership agreement. To the extent the partnership agreement does not otherwise provide, this chapter governs relations among the partners and between the partners and the partnership.
NOTE: In 1927, this same presumption existed in Martin. If nothing else appears the receiptof a share of the profits of the business is enough. But a presumption may be rebutted by evidence to the contrary, as it was in Martin.
Summers and Dooley entered a partnership agreement for the operation of a garbage collection business, which they operated together. If one was unable to work, the non-working partner provided a replacement at his own cost.
Dooley became unable to work and he hired a replacement employee. Four years later, Summers approached Dooley about hiring an additional employee, but Dooley refused.
Nevertheless, Summers hired the employee anyway and paid him out of his own pocket.
Dooley objected to the hiring. He claimed additional help was not required and he refused to pay for him out of profits of the partnership. Summers ignored Dooley and continued to operate the business using the 3rd man.
Summers sued Dooley claiming that Summers had personally paid expenses relating to the 3rd man and Summers sought reimbursement out of profits of the partnership.
Summers claimed that the refusal of his partner to consent, coupled with his partners retention of profits from the 3rd mans work, should result in an estoppel of Dooleys denial of the need for the 3rd man. Summers claimed that Dooleys conduct ratified Summers action of hiring the 3rd man.
Question Presented: Does an equal partner in a 2 man partnership have the authority to hire an employee (or do anything else, for that matter) in disregard of the objection of his partner and then charge his partner with costs resulting from his unilateral decision?
A relevant Idaho statute provided that [A]ny difference arising as to ordinary matters connected with the partnership business may be decided by a majority of the partners This statute was derived from UPA section 18(8).
Was Dooley unclear about his objection to the hiring or that he did not consent to payments out of partnership profits?
No.
He continually objected and did not acquiesce. Therefore, he did not consent. There was no agreement of a majority of partners.
HELD:
Reimbursement of expenses out of partnership profits denied.
Ordinary partnership decisions require a majority decision of partners. In a 2-person partnership, both partners must, obviously, agree. A partner is not entitled to reimbursement of partnership expenses incurred over the other partners non-consent.