WEEK 2 ARTICLE

Question 1

Nexus OF contracts

Answer 1

corporations are nothing more than a collection of contracts between different parties

Question 1

nexus FOR contracts

Answer 1

corporation is permitted to serve as the common counterparty in many contracts, distancing the individuals who own or manage the firm from the firm as a single counterparty

Question 2

authority delegated management

Answer 2

who has the authority in the corporation to buy and sell assets in the name of the firm

Question 2

separate patrimony

Answer 2

assets of the owners (shareholders) of the firm are separate from the assets of the firm, so creditors can not take the shareholders personal assets if the company goes bankrupt.

Question 2

entity shielding: priority rule and liquidation protection

Answer 2

priority rule: company’s creditors get paid first, not the owners creditors

liquidation protection: owners cannot just grab their share of the company when they need money and they also cant force the company to sell of the owners share.

Question 3

procedures

Answer 3

corporations are subject to lawsuits, not the individual owners

Question 4

corporation charter

Answer 4

basic terms of rela among the shareholders and between the shareholders and the firms directors and other managers

Question 5

statutory provision

Answer 5

laws governing in case the parties do not explicitly provide an alternative

the default laws that apply if the people involved didn’t make their own rules.

Question 6

regulatory competition

Answer 6

choice of different jurisdiction laws based on present mandatory laws, law systems drive based on market forces and competition

Companies can choose which country’s/company law they want to follow when they set up (as long as they legally establish there).