Transcript Litigation - Mercer University

Jody Blanke, Professor
Computer Information Systems and Law
Mercer University, Atlanta
Sole
Proprietorship
Limited
Liability
No
General
Partnership
No
Limited
Partnership
Corporation
Limited Liability
Company
No - gen. part.
Yes - lim. part.
Yes
Yes
Yes
Flow-Through
Taxation
Yes
Yes
Yes
No
(double
taxation)
Management/
Control
Yes
Yes
Yes - gen. part.
No - lim. part.
No
Yes
Right to Share
In Profits
Yes
Yes
Yes
No
Yes
Sole Proprietorship
 easy to form
 no formalities
 unlimited personal liability
 no legal identity apart from owner
 e.g., Diversity Heating and Plumbing


James Schuster
Jerry Schuster
General Partnership
 easy to form
 two or more people run a business for profit
 no formalities
 unlimited personal liability
 joint liability on contracts and debts
 may continue after death of partner
 should have written partnership agreement
Limited Partnership
 statutory creation
 must have at least one general partner and one limited
partner
 limited partner has limited liability, but cannot
participate in management
Corporation
 statutory creation
 must satisfy legal formalities
 e.g., articles of incorporation, bylaws
 perpetual existence
 limited liability of shareholders
 free transferability of shares
S Corporation
 can avoid double taxation, but
 can have no more than 100 shareholders
 all of whom must be individuals, estates or trusts

cannot be corporations or partnerships
 can have only one class of stock
 cannot own more than 80% of another corporation
Limited Liability Company
 relatively new statutory creation (1977)
 “best of all worlds”
 members have limited liability
 members can participate in management
 can choose to be taxed like a corporation or like a
partnership
Limited Liability Partnership
 generally available only for professionals
 no general partner
 partners are not personally liable for the debts of the
LLP or of other partners
 partners are liable for his/her own negligence,
malpractice, etc.
Piercing the Corporate Veil
 Alter ego theory
 commingling of funds
 ignoring formalities
 Undercapitalization
 e.g., Walkovsky v. Carlton