Terms in this set (34)
A relationship between two parties in which one party (the agent) agrees to represent or act for the other (the principal).
a person who holds assets in trust for a beneficiary
A person or organization that pays people to work for them.
a person employed by another usually for wages or salary and in a position below the executive level
A self-employed salesperson paid on jobs completed rather than hours worked and responsible for setting their own hours and paying their own taxes.
Agency by Agreement
Formed through express consent (oral or written) or implied by conduct.
Agency by Ratification
An agency that results when a principal approves an unauthorized act performed by an agent or approves an act done in the principal's name by an unauthorized person.
Agency by Estoppel
Principal causes a third party to think an agency exists that affects the third person negatively who had reasonable reliance on the belief
Agency by Operation of Law
relationship is based on social or legal duty or emergency situations
Obedience, Loyalty, Disclosure, Confidentiality, Accounting, Reasonable Care *Trust is not a duty
Compensation, Reimbursement, Indemnification (compensate for harm or loss) , Cooperation & Safe Conditions
The authority granted to an agent by means of the agent's written contract.
Equal Dignity Rule
A rule requiring that an agent's authority be in writing if the contract to be made on behalf of the principal must be in writing.
Power of Attorney
grants power to a representative of your choosing to legally act and make decisions on your behalf.
Authority that is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance for the principal.
The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.
no double taxation, only taxed on what you personally make.
Membership units reflect own age by number of members. Business is run by the members
Corporations that do not pay corporate taxes on profits; instead, profits are distributed to shareholders, who pay individual income taxes (has a lot of restrictions)
Organized by doctors and lawyers, dentists and accountants or other professionals specified in state statutes
Purpose: positive impact on society and the environment
and voluntarily meets high standard of purpose, accountability and transparency
How to create ______
fill out articles of incorporation,
file articles of incorporation with state
Articles of the Incorporation
application to a state for a corporate charter.. includes
name, # of shares, registered office & agent, name and address of each incorporator, duration, & Purpose
De Facto Corporations
had a defect in filing...
It will be treated as such if organizers make a good faith effort to comply with the incorporation process and have no actual knowledge of a defect in the corporate status
(varies by state law)
Piercing the Corporate Veil
An action in which a court disregards the corporate entity and holds the shareholders personally liable for corporate debts and obligations.
courts will ignore the corporate structure when it is abused for personal benefit or treated so carelessly that it is indistinguishable from the individual.
A court may apply the ___ when a shareholder commingles personal and corporate funds or fails to observe required corporate formalities.
when a shareholder fails to treat the corporate organization as a separate legal entity. Personal assets are at stake through Corporate Liability because of this.
Rights of Directors
To compensate for loss or damage; to provide financial reimbursement to an individual in case of specified loss
Duty of Care
The duty of all persons, as established by tort law, to exercise a reasonable amount of care in their dealings with others. Failure to exercise due care, which is normally determined by the reasonable person standard, constitutes the tort of negligence.
Duty to make informed decisions
Directors and officers are expected to be informed on corporate matters and to conduct a reasonable investigation of the relevant situation before making a decision.
A statement written by a justice who disagrees with the majority opinion, presenting his or her opinion
Business Judgement Rule
A rule that immunizes corporate management from liability for actions that result in corporate losses or damages if the actions are undertaken in good faith and are within both the power of the corporation and the authority of management to make.
so to show you aren't guilty you must have...
reasonable steps to become informed
rational basis for decision
no conflict of interest
Duty of Loyalty
Requires the director to act in a manner that the director believes is in the best interest of the corporation
Can be breached by, competing with your corporation etc
Conflict of Interest
A situation in which a person in a position of responsibility or trust has competing professional or personal interests that make it difficult to fulfill his or her duties impartially.
Investors who purchase shares of stock in a corporation.