account for the value of the good-will of which the firm name is part. Notes: 1. Surviving or liquidating partners have no power to bind the firm to new contracts or to undertake new business. Ordinarily they are not entitled to compensation for their services in settling the firm's affairs, unless the business is to be carried on for some time. 2. The good-will of a business is often a most valuable asset. To secure compensation both for the goodwill and the firm name, it is usually necessary to sell the business as a going concern. REVIEW QUESTIONS 1. In the absence of an express agreement, what is the rule for determining the duration of a partnership? 2. How could a partnership be terminated by one of the partners before the time fixed in the articles? 3. What happenings will terminate the partnership relation? 4. Can a partner sell his interest in a firm, and if so, would the purchaser be a member of the firm? 5. A, who is in partnership with B, desires to withdraw from the firm because of B's business methods. A offers to sell his share to B. The latter refuses to purchase. A then assigns his interest in the business to C, but B refuses to accept C as a partner. What are C's rights? 6. What notice should a retiring partner give? Why? 7. If a retiring partner agreed with those remaining that they should assume all debts, would that protect him as against existing creditors? 8. Would the admission of a new member terminate the old partnership and create a new one in law? Need it have that effect in practice? 9. When may a receiver be appointed? IO. Why should an enforced dissolution be avoided? Suggest some better methods of winding up a partnership. II. In winding up the affairs of a partnership: (1) What is the rule as to investments? (2) What is the rule as to profits? (3) What is the rule as to losses? 12. 13. Is the capital of each partner necessarily the amount due him from the firm? In your state has a special partner prior right over the other partners in the distribution of the capital surplus? In case of death of a partner, to whom does legal title to firm assets pass? Can a sole surviving partner sell property and give good title? Can a sole surviving partner make a general assignment without consent of representatives of deceased? CHAPTER XLVIII NATURE OF CORPORATIONS1 § 304. Corporate Entity A corporation is an artificial person, created or authorized by the law for some particular purpose or purposes. It has, therefore, only those rights and powers which are given it by the law. These vary in the different states but are in all cases sufficient for the demands of ordinary business. A corporation is usually composed of a number of persons associated together, though it may, and sometimes does, consist of but one or two members. These members, or stockholders, are not, however, the corporation. They compose it, but the corporation has a name, an entity, and an existence of its own, entirely apart and distinct from that of these members. Under its corporate name it may conduct business, make contracts, and bring suit. So absolutely different is the corporation's existence from that of its stockholders that it may enter into contracts with these latter, may sue them, or be sued by them. A logical classification is that which separates all corporations into: (1) public and (2) private corporations. Public corporations are those formed by the community for its own governmental purposes, as in cities, villages, and towns. These are also called municipal corporations. All other corporations are private corporations. Corporations formed to conduct public utilities, such as 1 See Chapters CVI to CVIII, corporate forms. |