1. The Legal Environment of Business A Critical Thinking Approach 6 th Edition Nancy K. Kubasek Bartley A. Brennan M. Neil Browne Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 17-1

2. CHAPTER 17 Law and Business Associations - I Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 17-2

3. Objectives 1.Factors Influencing a Business Manager’s Choice of Organizational Form 2. Some Common Forms of Business Organization in the United States 3. Specialized Forms of Business Associations 4. Global Dimensions of Business Associations Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 17-3

4. Forms of Business Organization Sole Proprietorship Partnership Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 17-4

5.  Few legal formalities  Minimal government regulation  Owner-proprietor has complete control, profits, and  Full liability Sole Proprietorship Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 17-5

6.  A voluntary association of two or more persons to carry on business for a profit Partnership   Limited Partnerships  General Partnerships Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 17-6

7. General Partnerships Unless otherwise specified in partnership agreement:  All partners equally liable  Equal management power  Equal division of profits/losses  Partnership is not taxed; partners are taxed Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 17-7

8. Limited Liability Partnerships A partnership that has one general partner, who is responsible for managing the business, and one or more limited partners, who invest in the partnership but do not participate in its management and whose liability is limited to the amount of capital they contribute. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 17-8

9. Limited Liability  LP  LLP  LLLP  distinguished from a limited partnership in that liability is the same for a general partner(s) as for a limited partner(s). Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 17-9

10. Limited Partnerships  Must say the word “Limited”  One general partner  One or more limited partners  Limited partners are liable only up to the amount invested  General partner manages day-to-day business  Governing law: RULPA Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 17-10

11. Creating Partnerships  If not written agreement: RULPA controls  In partnership agreements, partners control:  capital contribution  profit distribution  management responsibility  duty of loyalty, good faith, and fair dealings Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 17-11

12. Termination of Partnership  Death of partner  Merger  Bankruptcy  Expiration of partnership agreement  Winding-up  Dissolution Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 17-12

13. Specialized Forms of Partnership A joint stock company is a partnership agreement in which members agree to stock ownership in exchange for partnership liability. Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 17-13

14. Specialized Forms of Partnership  Syndicate  investment group that makes a private agreement  to come together for the purpose of financing a large commercial project  that the individual members (partnerships or corporations) could not finance alone Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 17-14

15. Specialized Forms of Partnership  Joint Venture  relationship between two or more persons or corporations  set up for a specific business undertaking or a limited time period Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 17-15

16. Specialized Forms of Partnership  Franchising  relationship is based on a private commercial agreement between  the franchisor, who owns a trade name or trademark, and the franchisee,  who sells or distributes goods using the trade name or trademark Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 17-16

17. Global Dimensions of Business Associations  worldwide trend toward market- oriented economies  raise the demand for investment capital  manufactured goods and services of the industrialized world Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 17-17

18. Covered Objectives 1.Factors Influencing a Business Manager’s Choice of Organizational Form 2.Some Common Forms of Business Organization in the United States 3.Specialized Forms of Business Associations 4.Global Dimensions of Business Associations Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 17-18

19. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2012 Pearson Education, Inc. Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall 17-19