Business Associations (LAW-611-001)
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Business Associations- Professor Effross (Fall 2020) (Course 611-001)
Tuesday/Thursday, 1:00 – 2:50 p.m.
(See also www.9approachestoba.com)
In this course we will analyze the allocation of authority, responsibility, and liability between agents and their principals, and among the owners and managers of partnerships; of limited liability companies; and of corporations. The Multistate Essay Examination, and the state-specific components of some states’ bar examinations, include questions on these areas.
Our study begins with the basic principles of agency law, which not only connect the themes of several first-year courses but also underlie the laws of every form of business association.
Our next major topic is the evolution of, and differences among the management powers and liabilities of partners in, different forms of partnerships (general, limited, and limited liability partnerships).
After reviewing the structure and features of limited liability companies, we turn for the rest of the semester to the law of corporations. The practical elements of (and professional responsibility issues raised by) forming, operating, and dissolving corporations lead us to examine in detail the relative rights, roles, and responsibilities of corporate shareholders, directors, and officers, and their ongoing conflicts over their respective powers of “corporate governance.”
Of special concern are the ever-growing bodies of caselaw, and of corporate document provisions and drafting techniques, concerning:
• directors’ and officers’ duties of due care, loyalty, and good faith;
• the processes by which directors and officers should make and document decisions;
• the fundamental rule, and other protections (indemnification; exculpation; and insurance), that often (but not always) insulate them from personal liability, even if their decisions result in significant financial losses to the corporation;
• the procedures and arguments by which shareholders can nonetheless attempt to hold directors and officers personally liable for having made irrational, negligent, and/or disloyal decisions; and
• the extent to which corporate directors can and should take into account the interests of such non-shareholder “stakeholders” as employees; customers; trading partners; and neighbors of the company’s operations or facilities.
The practical drafting, operational, and policy issues that we analyze have direct practical applications to:
• employees of and partners in law and other partnerships;
• counsel to partners or partnerships;
• lawyers advising corporate shareholders, stakeholders, officers, individual directors, committees of directors, or entire boards of directors;
• residents of, and board members of, condominiums or co-ops;
• anyone counseling, serving as, or planning to serve as, an executive of a for-profit entity, of a non-profit (including a religious or educational) entity, or of a “social enterprise” such as a benefit corporation, flexible purpose corporation, low-profit limited liability company (L3C), or “B Corporation”; and
• anyone investing, or considering investing, in a business association of any size.
The required books, a casebook and statutory supplement, will be augmented throughout the semester by supplements posted on the Web page for the course.
The supplements will contain (often for “browsing only”): diagrams; newspaper and magazine articles; recently-issued opinions; model and actual corporate documents; checklists and other tools for drafting corporate documents; excerpts from law review articles; and other material to illustrate and illuminate the situations, statutes, caselaw, and documents with which we work.
Also included will be portions of the instructor’s own casebook on corporate governance, including elements of the forthcoming third edition.
**Special attention will be devoted throughout the semester to specific methods of identifying, and optimizing one’s approach towards, career opportunities in business associations law (whether representing the entities, their owners, their managers, or their stakeholders, or enhancing one’s own candidacy to be a corporate director); and to resources for monitoring emerging issues in corporate governance.
The examination for the course will be in essay format. In our final class session of the semester we will review in detail approaches and answers to the most recent examination.
This course does not require any previous knowledge of, or experience in, business or business law. There are no course prerequisites to this course.
Textbooks and Other Materials
The textbook information on this page was provided by the instructor. Students should use this information when considering purchases from the AU Campus Store or other vendors. Students may check to determine if books are currently available for purchase online.
Our two required coursebooks are:Macey & Moll, The Law of Business Organizations, 14th ed. (2020) (West) ISBN # 9781684677481 Cox & Eisenberg, eds.- Corporations and Other Business Organizations: Statutes, Rules, Materials, and Forms, 2020 edition (Foundation)** ISBN # 9781647080631 **It will be possible to use the Cox & Eisenberg statutory supplement from 2019 (ISBN # 9781642429312) or the 2018 edition (edited by Eisenberg & Cox; ISBN # 9781640208308), but some of the page numbers may differ, and there is no guarantee that all of the material will be exactly the same. Editions dated before 2018 will not contain the current versions of some of the model acts that we will be reviewing in detail.
First Class Readings
Not available at this time.