Podcast
Questions and Answers
What is the primary purpose of the 'Articles of Association' for a company?
What is the primary purpose of the 'Articles of Association' for a company?
- To outline the company's operational procedures and management structure
- To establish the company's legal jurisdiction and regulatory compliance
- To specify the company's financial structure and capitalization
- To define the company's purpose, rights, and obligations of its members (correct)
What is the key principle behind the 'Duty of Loyalty' in a company?
What is the key principle behind the 'Duty of Loyalty' in a company?
- Shareholders have the right to act arbitrarily as long as their actions are profitable for the company
- Shareholders must abstain from any actions that could potentially diminish the company's value
- Shareholders must prioritize their own financial interests above the company's well-being
- Shareholders are obligated to uphold the company's interests even if it conflicts with their personal goals (correct)
What does the 'Business Judgement Rule' primarily protect corporate managers from?
What does the 'Business Judgement Rule' primarily protect corporate managers from?
- Legal liabilities arising from incorrect business decisions made in good faith (correct)
- External pressure from competitors to adopt specific business strategies
- Personal financial losses incurred due to poor management decisions
- Scrutiny from shareholders for decisions that harm the company's financial performance
Which of the following is NOT considered an immoral corporate behavior?
Which of the following is NOT considered an immoral corporate behavior?
What is the primary purpose of Corporate Governance Codes?
What is the primary purpose of Corporate Governance Codes?
What does the 'Comply or Explain' principle of Corporate Governance Codes necessitate?
What does the 'Comply or Explain' principle of Corporate Governance Codes necessitate?
Which of the following is NOT a key element of Corporate Social Responsibility (CSR)?
Which of the following is NOT a key element of Corporate Social Responsibility (CSR)?
What differentiates Corporate Social Responsibility (CSR) from Corporate Compliance?
What differentiates Corporate Social Responsibility (CSR) from Corporate Compliance?
Which of the following is a prominent actor in promoting Corporate Social Responsibility (CSR)?
Which of the following is a prominent actor in promoting Corporate Social Responsibility (CSR)?
What is the main characteristic of a General Partnership?
What is the main characteristic of a General Partnership?
Which of the following statements best describes the relationship between company law and contract law in regards to the Articles of Association?
Which of the following statements best describes the relationship between company law and contract law in regards to the Articles of Association?
Which of the following is NOT a specific duty of a shareholder under the 'Duty of Loyalty'?
Which of the following is NOT a specific duty of a shareholder under the 'Duty of Loyalty'?
What is a key distinction between 'self-interested membership rights' and 'altruistic rights' for shareholders?
What is a key distinction between 'self-interested membership rights' and 'altruistic rights' for shareholders?
What are the main functions of a Corporate Governance Code?
What are the main functions of a Corporate Governance Code?
Which of the following situations would NOT be considered an abusive use of voting rights?
Which of the following situations would NOT be considered an abusive use of voting rights?
What is the main characteristic of a 'One-Tier' system of corporate governance, as opposed to a 'Two-Tier' system?
What is the main characteristic of a 'One-Tier' system of corporate governance, as opposed to a 'Two-Tier' system?
What does normative ethics primarily examine?
What does normative ethics primarily examine?
Which of the following statements is true about business ethics?
Which of the following statements is true about business ethics?
What characterizes applied ethics?
What characterizes applied ethics?
What distinguishes law from ethics?
What distinguishes law from ethics?
What type of law is characterized by judges creating binding case law?
What type of law is characterized by judges creating binding case law?
What is true about the positivist view on legal norms?
What is true about the positivist view on legal norms?
Which of the following best describes customary law?
Which of the following best describes customary law?
What is the primary focus of public law?
What is the primary focus of public law?
What type of immoral contract involves limiting a party's economic autonomy for an extended period?
What type of immoral contract involves limiting a party's economic autonomy for an extended period?
In a tort where a party is liable for intentionally causing damage, which of the following must be proven?
In a tort where a party is liable for intentionally causing damage, which of the following must be proven?
Which category of immoral conduct includes intentionally sending false information?
Which category of immoral conduct includes intentionally sending false information?
What legal consequence can occur when engaging in usurious practices?
What legal consequence can occur when engaging in usurious practices?
How is 'Good Faith' characterized in a legal context?
How is 'Good Faith' characterized in a legal context?
Which of the following actions is an example of misuse of formal rights?
Which of the following actions is an example of misuse of formal rights?
What is crucial for proving a tortfeasor's immoral intention?
What is crucial for proving a tortfeasor's immoral intention?
When the tortfeasor acts recklessly, how can the level of necessary intent be adjusted?
When the tortfeasor acts recklessly, how can the level of necessary intent be adjusted?
What is one of the established types of immoral contracts noted in the content?
What is one of the established types of immoral contracts noted in the content?
What does the ‘Principle of Good Faith’ primarily aim to address?
What does the ‘Principle of Good Faith’ primarily aim to address?
What characterizes a purchase contract?
What characterizes a purchase contract?
What is a primary difference between a loan contract and a lease contract?
What is a primary difference between a loan contract and a lease contract?
How is a service contract defined in relation to an employment contract?
How is a service contract defined in relation to an employment contract?
What is a key element required for the formation of a contract?
What is a key element required for the formation of a contract?
What defines specific performance in a contract?
What defines specific performance in a contract?
What occurs if the obligor cannot perform a contractual obligation?
What occurs if the obligor cannot perform a contractual obligation?
What is a requirement for damages to be awarded for breach of contract?
What is a requirement for damages to be awarded for breach of contract?
What distinguishes a work contract from a service contract?
What distinguishes a work contract from a service contract?
What are immoral contracts classified as?
What are immoral contracts classified as?
What is a requirement for the validity of a resolution in a partnership?
What is a requirement for the validity of a resolution in a partnership?
What is the primary role of the lessor in a lease contract?
What is the primary role of the lessor in a lease contract?
Which of the following best describes the liability of a limited partner in a limited partnership?
Which of the following best describes the liability of a limited partner in a limited partnership?
What does 'breach of contract' entail?
What does 'breach of contract' entail?
In a limited liability company (LLC), what is primarily needed for decision-making?
In a limited liability company (LLC), what is primarily needed for decision-making?
In a loan contract, what typically defines the repayment terms?
In a loan contract, what typically defines the repayment terms?
What type of company allows for a flexible number of members with a minimum of one?
What type of company allows for a flexible number of members with a minimum of one?
What distinguishes obligations in an employment contract from those in a service contract?
What distinguishes obligations in an employment contract from those in a service contract?
Which characteristic is NOT applicable to the Articles of Association (AoA) for a General Partnership?
Which characteristic is NOT applicable to the Articles of Association (AoA) for a General Partnership?
What is a unique feature of the voting rights in a stock corporation?
What is a unique feature of the voting rights in a stock corporation?
What is the legal consequence of a delay in contract performance by the obligor?
What is the legal consequence of a delay in contract performance by the obligor?
What governs the decision-making process in a stock corporation?
What governs the decision-making process in a stock corporation?
What is one of the primary responsibilities of the supervisory board in a stock corporation?
What is one of the primary responsibilities of the supervisory board in a stock corporation?
Which of the following best describes the liability for shareholders in a stock corporation?
Which of the following best describes the liability for shareholders in a stock corporation?
How are shares categorized in a stock corporation?
How are shares categorized in a stock corporation?
What mechanism can a stock corporation use to handle obstructive motions from predatory shareholders?
What mechanism can a stock corporation use to handle obstructive motions from predatory shareholders?
What distinguishes the management of limited partners in a limited partnership?
What distinguishes the management of limited partners in a limited partnership?
What is a fundamental requirement for the Articles of Incorporation of a stock corporation?
What is a fundamental requirement for the Articles of Incorporation of a stock corporation?
What defines the power of representation for managing directors in an LLC?
What defines the power of representation for managing directors in an LLC?
Flashcards
Ethics
Ethics
Set of concepts and principles guiding behavior that helps or harms.
Normative Ethics
Normative Ethics
Examination of standards for right and wrong actions, distinct from descriptive ethics.
Applied Ethics
Applied Ethics
Philosophy discipline applying ethical theory to real-life situations.
Business Ethics
Business Ethics
Practices affecting organizations' core values, balancing profit and concerns.
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Law
Law
Set of enforceable rules created by institutions to regulate behavior.
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Customary Law
Customary Law
Rules accepted by a community as binding, based on traditions.
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Civil Law
Civil Law
Legal system formally codifying laws, seen in places like Germany and France.
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Natural Law
Natural Law
Legal view that laws must fulfill justice to be valid, not just enacted properly.
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Tortfeasor
Tortfeasor
A person who commits a tort or wrongful act against another.
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Immoral Contracts
Immoral Contracts
Contracts that violate ethical standards, often leading to legal consequences.
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Gagging Contract
Gagging Contract
A contract severely restricting another party’s economic autonomy.
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Bribery
Bribery
Paying money for unauthorized or unjustified benefits.
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Usury
Usury
Charging unfairly high interest rates in loans.
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Intentional Misrepresentation
Intentional Misrepresentation
Deliberately conveying false information to deceive others.
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Public Morals
Public Morals
Standards of behavior accepted by society.
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Good Faith
Good Faith
A legal principle ensuring parties act with honesty and integrity in contracts.
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Tort Law Damages
Tort Law Damages
Compensation awarded for wrongful acts causing injury or damage.
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Intent to Cause Damage
Intent to Cause Damage
A tortfeasor’s intention to inflict harm or injury on another.
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Law vs. Justice
Law vs. Justice
A contradiction between justice and positive law can arise, necessitating justice to prevail.
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Contract Definition
Contract Definition
An agreement to clarify rights and obligations in an exchange of goods or services.
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Freedom of Contract
Freedom of Contract
Contracts can include any legal terms not violating common ethics or morals.
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Purchase Contract
Purchase Contract
An agreement for permanent transfer of goods against payment.
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Loan Contract
Loan Contract
An agreement where one party gives a thing to another, with the expectation of return, often for interest.
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Lease Contract
Lease Contract
An agreement allowing temporary use of a property against payment.
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Service Contract
Service Contract
An agreement to perform a specific service for payment, involving ongoing relationships.
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Work Contract
Work Contract
An agreement to produce a specific work in exchange for remuneration.
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Contract Formation
Contract Formation
Closure requires matching declarations of intent: offer and acceptance.
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Breach of Contract
Breach of Contract
Failure of obligor to perform as promised, entitling obligee to compensation.
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Causality in Liability
Causality in Liability
Assigning liability for damages requires proving that the obligor's action caused the damage.
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Negligence & Intent
Negligence & Intent
Damages are awarded if the obligor is liable by negligence or intent.
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Malperformance
Malperformance
Failure to perform as promised, leading to liability for arising damages.
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Amendments to AoA
Amendments to AoA
Changes made to the Articles of Association (AoA) of a partnership.
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Voting Process
Voting Process
A method by which decisions are made among partners based on predefined rules in the AoA.
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Liability in Partnership
Liability in Partnership
Partners' responsibility for debts includes partnership and personal assets.
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Limited Partnership (LP)
Limited Partnership (LP)
A partnership with general partners managing and limited partners investing, having limited liability.
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General Partners (GP)
General Partners (GP)
Partners who manage the business and have unlimited liability for debts.
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Articles of Association (AoA)
Articles of Association (AoA)
A primary document outlining partnership structure and operational rules.
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Decision-Making in LP
Decision-Making in LP
Unanimous agreement required for decisions among limited partnerships.
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Managing Directors in LLC
Managing Directors in LLC
Appointed individuals responsible for managing the day-to-day operations of a Limited Liability Company.
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Voting Rights in LLC
Voting Rights in LLC
Shareholders vote based on the number of shares they hold.
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Shareholders Assembly
Shareholders Assembly
Main decision-making body in LLC where shareholders discuss matters and vote.
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Articles of Incorporation
Articles of Incorporation
Document needed to legally establish a corporation, including key information like business name.
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Predatory Shareholders
Predatory Shareholders
Shareholders who exploit small holdings to block resolutions for personal gain.
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Corporate Liability
Corporate Liability
Creditors can only claim against a corporation's assets, not personal assets of shareholders.
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Types of Shares
Types of Shares
Different categories of shares in a corporation that define rights and obligations of shareholders.
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Annual General Meeting
Annual General Meeting
Yearly meeting where shareholders review and decide on major corporate matters.
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Good Faith (GF)
Good Faith (GF)
General principle ensuring fair dealing in exercising rights and duties.
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Violation of Good Faith
Violation of Good Faith
Misuse of rights or behaviors damaging trust and agreements.
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Duty of Loyalty
Duty of Loyalty
Obligation of shareholders to act in the company's best interest.
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Altruistic Rights
Altruistic Rights
Rights that serve the company's interests above all.
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Self-Interested Membership Rights
Self-Interested Membership Rights
Rights focused on benefits for the shareholder, with some company consideration.
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Business Judgment Rule
Business Judgment Rule
Protection for managers making decisions under uncertainty, focusing on the company's benefit.
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Corporate Governance Code
Corporate Governance Code
Framework for directing and controlling businesses, promoting transparency and accountability.
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Comply or Explain
Comply or Explain
Corporate requirement to follow codes or explain deviations transparently.
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Corporate Social Responsibility (CSR)
Corporate Social Responsibility (CSR)
Companies integrating social and environmental concerns voluntarily into operations.
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Stakeholder Perspective
Stakeholder Perspective
View that considers all parties affected by a company's actions.
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General Partnership
General Partnership
Business arrangement with at least two partners, requiring unanimous decisions.
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Violation Consequences
Violation Consequences
Legal actions become invalid, damages may be sought for breaches.
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Management Authority in Partnerships
Management Authority in Partnerships
All partners can manage daily operations; others need consensus.
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Key Principles of Corporate Governance
Key Principles of Corporate Governance
Emphasis on shareholder engagement and managerial transparency.
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Ethics
- Defined: A set of concepts and principles used to evaluate behaviors as helpful or harmful.
- Normative Ethics: Examines the morality of actions, distinct from descriptive ethics (empirical study of moral beliefs). Traditionally provides overarching moral principles.
- Applied Ethics: Philosophic discipline applying ethical theory to real-life situations. Includes fields like business ethics.
- Business Ethics: Practices within an organization, influencing core values positively or negatively. Reflects the interplay of profit-seeking and non-economic considerations. Promoted via ethics codes and social responsibility charters.
Law
- Defined: Created rules enforceable by social or governmental institutions to regulate behavior, prevent and resolve conflict, and enable peaceful coexistence.
- Origins:
- Customary law: Rules accepted as binding by a community.
- Statutory law: Rules created by legislative bodies.
- Executive, judicial, or autonomous: Law shaped by authorities/judges/private individuals.
- Legal Systems:
- Civil law: Formally codified law (e.g., Germany, France, Japan).
- Common law: Judges create binding case law, potentially overturned by higher courts or legislatures (e.g., Great Britain, USA).
- Legal Domains:
- Public law: State's relationship with individuals (constitutional, administrative, criminal law).
- Private law: Relationships between individuals (contract, property, tort law).
- Ethics and Law: Separate normative systems; rules justified by moral philosophy or authorized institutions. Moral vs. legal bindingness; enforcement differences.
- Positivist view: A law's validity doesn’t depend on its moral content, as long as enacted correctly.
- Natural law view: A law must align with justice to be considered valid.
Contracts
- Defined: Used to clarify uncertainties in exchanges (honesty, details, remedies). Rights protected by law, enforceable by court order.
- Freedom of Contract: Contracts can contain anything legal, not against common ethics/morals. Defined by non-monetary performance.
- Purchase Contract: Most common, permanent transfer of ownership for payment.
- Seller Obligations: Delivery, enabling ownership, agreed quality.
- Buyer Obligations: Payment, acceptance.
- Loan Contract: Permanent transfer of a thing, usually money, with interest. Payback terms negotiated.
- Lease Contract: Temporary use of a thing for payment. Continuing obligations. Not ownership transfer.
- Lessor Obligations: Granting use, proper condition.
- Lessee Obligations: Paying rent, care, agreed use.
- Service Contract: Engaging someone for a service against payment. Distinct from employment (individual control).
- Obligor Obligations: Performing the agreed service in person (unless otherwise specified).
- Creditor Obligations: Paying remuneration.
- Work Contract: Engaging someone for producing work against payment. Distinct from purchase due to production.
- Producer Obligations: Completing work to agreed quality.
- Customer Obligations: Paying remuneration, acceptance.
- Rules of Contract Formation: Consent, key elements (parties, performance, consideration). Offer/acceptance required. Implied consent via behavior.
- Contract Performance: Heart of contracts. Type determines obligations. "In kind" vs. "specific". Due date.
- Breach of Contract: Entitles obligee to compensation.
- Impossibility: Obligor cannot perform.
- Malperformance: Obligor fails to perform as promised.
- Delay: Late performance.
- Material change in transaction basis: Enabling renegotiation or rescission.
- Liability & Damages: Causation, attribution, negligence, intent. Liability for third-party actions. Damage proven by obligee.
Immoral Contracts
- Contracts against public morals: Always void. Public morals defined by average standards, taking legal input into account.
- Violations: Based on transaction content and circumstances; tortfeasor's conduct assessment (purpose, means, disproportion).
- Established immoral contracts: Gagging contracts, excessive suretyship, bribery, usury (conspicuous disproportion).
- Legal Consequences: Reclaim of money paid; voiding interest or loan, or compensation for damages against perpetrator.
- Injury against public morals (tort): Immoral injury in exceptional cases. Intentional immoral conduct (tortfeasor’s intent to cause damage). Proving immorality.
- Categories of immoral conduct: Violating relationships, intentional misinformation, misuse of rights, endangering creditors. Legal consequences: Tort damages, possible contract remedy.
- Principle of good faith: An attitude of reliability, sincerity, and consideration; clarifies/adds/supplements/corrects rights and obligations.
- Violation of good faith: Abuse of rights, contradictory behavior.
- Good faith vs. public morals: Public morals are external constraints, good faith are restrictions on internal conduct.
Legal Forms of Companies
- General Partnership: Small number of members, unanimous decision-making, unlimited liability for all partners.
- Limited Partnership: Two or more partners, general partners with unlimited liability, limited partners with limited liability, decisions by unanimity (limited partners may have veto rights).
- Limited Liability Company: Single or multiple members, limited liability for members, decisions via majority shareholders' assembly, management by appointed directors.
- Stock Corporation: Multiple members, limited liability, decisions by shareholders, management by board of directors, also influenced by supervisory board.
- Duty of Loyalty: Shareholders/directors act in company's best interests, especially avoiding conflicts of interest.
- Business Judgement Rule: Managers are protected from liability when making potentially risky decisions in company's best interest (with limited information, scope for discretion).
- Immoral corporate behavior: Includes abuse of voting rights, actions for annulment, destructive asset deprivation. Possible legal consequences.
- Corporate Governance Code: System directing and controlling businesses. Voluntary principles for improved management, transparency, and accountability, typically for listed companies. Comply or explain principle.
- Corporate Social Responsibility: Companies integrating social and environmental considerations into operations. Stakeholders' needs prioritized.
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