Module 6 Flashcards
(20 cards)
What are the three main types of business structures?
[Sole proprietorship], [partnership], and [corporation], each with different rules, risks, and liabilities.
What are the risks of a sole proprietorship?
[Unlimited personal liability], limited [insurance protection], and [higher taxes] through personal income.
What defines a partnership and its risks?
[Shared profits and liabilities], including liability for actions of partners. Can form [general], [limited], or [LLP].
What is fiduciary duty in a partnership?
A [duty of loyalty], fairness, and avoiding conflicts of interest among partners.
What are limited liability partnerships (LLPs)?
Partners are [only liable] for their own negligence, not their partners’. Common in [law and accounting].
What defines a corporation?
A [separate legal entity] from its shareholders, offering [limited liability] and better access to [capital].
What are the governance roles in a corporation?
[Directors], [Officers], and [Shareholders], each with duties such as fiduciary and care.
What is the business judgment rule (BJR)?
Courts defer to directors’ decisions made in [good faith] and with [due diligence].
When can the corporate veil be lifted?
If [directors or officers] breach fiduciary duty, fail statutory duties, or are [negligent].
What remedies do shareholders have?
[Oppression remedies], [dissent actions], and [derivative actions] when rights are violated.
What happened during the 2008 financial crisis (corporate liability)?
No personal liability found; reliance on [BJR], showing limits in enforcement.
What are directors’ environmental liabilities?
If they fail [due diligence], they may be held [personally liable] for corporate environmental harm.
What is the ClientEarth v. Shell case about?
[Shareholders] sued directors for failing to manage [climate risk], arguing breach of [duty of care].
What is the purpose of bankruptcy law?
To fairly resolve [corporate and consumer debts] through asset liquidation and priority payouts.
What is an agent in business law?
Someone (e.g. employee) acting on behalf of the [principal] in dealings with third parties.
What are types of agent authority?
[Actual], [implied], or [apparent]; if authority is unclear, principal may still be liable.
What are agents’ duties?
[Fiduciary duties] and acting in the [best interests] of the principal.
What is vicarious liability?
The [employer] (principal) is liable for actions of their [agent] if within the scope of authority.
What risks do online businesses face?
[Jurisdiction], online [contracts], [privacy], [security breaches], and unclear [applicable laws].
What must online businesses consider?
Issues like [Terms of Use], [exclusion clauses], [online payments], and [data protection] laws.
