Business Associations
Amitai Aviram
Fall 2024
Syllabus
Overview: This course provides an introduction to the laws governing business entities (firms). To conduct business, resources possessed by various people (e.g., capital, managerial skills, labor, etc.) must be pooled together. Firms enable people to pool their resources to advance a common goal, allowing efficient utilization of these resources while preventing one person or group from exploiting others. Business association law is about facilitating cooperation – and resolving conflict.
Pooling resources requires that one person act on behalf of another. For example, pooling the labor resources of Jane (the owner of a store) and John (a store employee) requires that when John sells something at the store, that action would legally be seen as Jane’s. Furthermore, all but the simplest businesses operate more efficiently if they are structured as an artificial entity (e.g., a corporation or a limited liability company), and since such entity is not a living person, all of its business must be transacted by others (living persons) acting on its behalf. Therefore, if corporate law were to be summarized in one phrase, it would be “acting through others”. We will focus in this course on three main parties: the actor (who acts on behalf of another), the beneficiary (the person to whom we attribute the actor’s actions), and the third party, with whom the actor interacts on the beneficiary’s behalf.
We are so used to this modern way of conducting business – operating through others – that we hardly even notice it. You may think, after studying a course in contracts or torts, that you know the rules to hold counterparties liable. Yet the material you learned in those courses only enables you to hold liable the person entering into the contract or committing the tort. In most cases, that person is a low-level employee of a firm, and that employee has modest financial resources. It would be hard to collect significant damages from a low-level employee, much less to force a low-level employee to comply with the contract they entered, e.g., to build you a house or replace a defective car they sold you. To make the material you studied in torts, contracts or property relevant to the way business is actually conducted, we need to find a way to hold the beneficiary accountable to third parties for their actors’ behavior. This will be the “corporate compliance” aspect of the course.
Acting through others requires more than just a means to hold the beneficiary accountable. Actors may act in ways that are undesirable to their beneficiaries (e.g., act negligently, shirk, or even steal from the beneficiary). If actors cannot be held accountable by the beneficiary, the latter would not risk using actors. The rules that hold the actor accountable to the beneficiary are the “corporate governance” aspect of the course.
Business Associations is the first course in the Corporate Law curriculum and has no prerequisites. It is a prerequisite for some more advanced business law courses.
How this course it taught: This course is based on a "flipped classroom" approach that involves listening to a lecture (typically about 30-45 minutes) on YouTube before class, and using class time to apply the theoretical material taught in the lecture to specific fact patterns, mostly based on real cases. This means that typically you will not be assigned cases or other material before class (the exception being that occasionally I will ask you to read a (fictitious) "case" (a fact pattern) before class, to review material we have already studied). However, it is crucial that you listen to the assigned lecture before class, as otherwise you will likely not understand the in-class analysis of exercises.
To keep the video lectures relatively short I took out almost all cases and examples (leaving this for class time). Unfortunately, this means that the video lectures are rather dull. Please bear with it, and expect that the material will not be 100% clear until we apply the abstract tests in the lecture to actual cases – which we will in class (the alternative was to make pre-class assigned lectures 60-120 minutes long, which I thought would be too demanding on your time and cause some students to skip listening to the lectures). When listening to the lectures, focus on two issues: what new legal framework is being introduced (e.g., a legal test), and when does this framework apply. In most lectures, if you understand those two things at the end of the lecture, you have what you need to use in the class application of the material.
I use PowerPoint slides in nearly all classes. The slides serve primarily to assist you in reviewing the material after class, and for the exam. During class time, if something I say is unclear, note which slide I am on, and remember to read that slide after class to resolve the confusion (the slides serve during class like bookmarks, to which you can return later). My former students tell me that they liked this system, because it significantly reduced the amount of notes they had to take, freeing them to focus on listening and thinking. They also tell me that the slides were a convenient resource for them to review the material after class.
The slides that I use in class will be e-mailed to enrolled students at the end of each week (they include model answers to the fact patterns we analyzed in class).
Grading: Grades are based on a 6-hour take-home
exam that will take place on the day specified in the law school exam schedule. If you
are unable to take the exam on that date, you need to contact my assistant
(Kelly Downs, kdwns@illinois.edu) as
soon as possible to request rescheduling your exam on an alternative
date. Specifically, any requests based on a conflict with another exam
must be made by October 15. The only reasons that justify rescheduling an
exam are a direct conflict with another exam, or an exceptional medical or
personal emergency. A direct conflict
with another exam means that you have another exam on the same day (having
other exams on consecutive days does not justify rescheduling the BA
exam).
The exam
will be an issue spotter (traditional essay-type law school exam
question), and your answer will have a word limit of
1,000 words.
You will receive
the exam question by e-mail from my assistant (Kelly Downs) at 9am (Champaign
time) on the exam day. You should then answer the exam question on your
computer, saving it as a .doc/.docx (Microsoft Word) file, with the file name
being your 4-digit exam number. You must e-mail that file as an
attachment back to my assistant, so that she receives it before 3pm (Champaign
time) on the same day. She will confirm receipt of your exam by 4pm
(so please don't resend your exam or request a confirmation unless you didn't get a confirmation by 4pm).
To get a sense of what the exam will look like, you can browse my Business Associations exams from past years here: https://pages.law.illinois.edu/aviram/Exams.htm. At the end of the course there will be a class dedicated to exam preparation, and I will provide more information about the exam in that class. The deadline for answering any student questions is midnight of the day the last class is taught. The above information about the exam is subject to change if circumstances require.
A student may request to submit a project (e.g., case study, research paper or teaching module) in lieu of an exam, but this may only be done with my advance permission, and I will only give such permission as an exception, when I believe circumstances justify it. Students should not assume they would get such permission (rather, the assumption should be that students must take the exam), so if doing a project rather than an exam is an important factor in your choice of taking this course, you should talk to me before the course begins to see if your circumstances justify permission to submit a project in lieu of an exam.
Course texts: The only text you are required to have for this course is a course materials packet (in PDF format) that will be available free of charge on the law school’s course webpage to students enrolled in the course. Since pre-class assignments typically involve listening to lectures rather than reading cases, the "textbook" used in this course is mostly optional. The packet does contain review cases that I occasionally assign ahead of a class, in which case you need to read and attempt to answer the cases before class.
Everything else in the packet, however, is optional supplemental reading that you may choose to read if the material is not clear after class (or if you like to do extra preparation ahead of class). This includes my notes, relevant legislation and case law. It also includes the official comments to relevant Restatement sections, which are in my view the best study aid for students who want more detail and examples.
Reaching me: The best way to contact me is by e-mail, at: Aviram@illinois.edu. You are also welcome to meet with me at my office. Simply send me an e-mail suggesting days/times that are more convenient to you and we will find a mutually convenient time to meet.
Do not be shy about scheduling a meeting to clarify something that you did not understand in class. If, despite having read the assigned material and attending class, you are puzzled about some issue that was discussed in class, it is perfectly appropriate for you to schedule a meeting so that I can (hopefully) make things clearer. Out-of-class discussion affords me the luxury of focusing on your individual questions or concerns.
Attendance & participation: The American Bar Association requires accredited schools to ensure the “regular and punctual class attendance” of students. The rule applies to this course. You are expected to be present and prepared for class, and I reserve the right to reduce grades for poor attendance or participation. Being prepared includes two components: familiarity with the assigned reading/video lecture, and making an effort to think about the issues that come up in the assigned reading and in the questions that I ask you in class. Being prepared does not require you to know the correct answers to my questions; just to make your best effort based on the material you were assigned to read. This is not “The Paper Chase” and nobody aces every question they are asked (not even the professor).
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