NAILING
THE BAR
TM
HOW TO WRITE ESSAYS FOR
BUSINESS
ORGANIZATION
Corporations, Agency, and Partnerships
LAW SCHOOL AND BAR EXAMS
WHAT to Say and HOW to Say It!
Tim Tyler Ph.D.
Attorney at Law
NAILING THE BAR – How to Write Business Organization Law School and Bar Exams
Table of Contents
CHAPTER 1: THE IRAC APPROACH ..................................................................................................................... 1
CHAPTER 2: SPOT AND OUTLINE THE ISSUES!................................................................................................ 2
CHAPTER 3: ISSUE SPOTTING ............................................................................................................................... 5
CHAPTER 4: AVOID NON-ISSUES, RED HERRINGS AND SPLITS.................................................................. 8
CHAPTER 5: ORGANIZING THE ANSWER .......................................................................................................... 9
CHAPTER 6: ISSUE STATEMENT STRUCTURE................................................................................................ 10
CHAPTER 7: BUDGETING TIME........................................................................................................................... 11
CHAPTER 8: PREFACE RULES WITH CITATION OF AUTHORITY ............................................................ 13
CHAPTER 9: NAILING THE ELEMENTS -- THE HEART OF THE ESSAY................................................... 14
CHAPTER 10: DON'T GIVE "CONCLUSIONARY" ANALYSIS....................................................................... 18
CHAPTER 11: DON'T "RESTATE FACTS".......................................................................................................... 19
CHAPTER 12: AVOID “PADDLING” ..................................................................................................................... 21
CHAPTER 13: TEST TAKING MECHANICS........................................................................................................ 22
CHAPTER 14: ESSAY ANSWER FORMATS - WHAT TO SAY AND HOW TO SAY IT .............................. 24
FOUR PLOYS TO SAVE YOU ON AN EXAM: .............................................................................................................. 25
CHAPTER 15: ANSWERING BUSINESS ORGANIZATION QUESTIONS ...................................................... 26
Practice Question 15-1 ......................................................................................................................................... 35
Practice Question 15-2 ......................................................................................................................................... 36
Practice Question 15-3 ......................................................................................................................................... 37
Practice Question 15-4 ......................................................................................................................................... 38
Practice Question 15-5 ......................................................................................................................................... 39
CHAPTER 16: CONCLUSION.................................................................................................................................. 40
APPENDIX A: RULES AND DEFINITIONS .......................................................................................................... 41
APPENDIX B: SAMPLE ANSWERS ....................................................................................................................... 47
Sample Answer 15-1: General Partnerships, Joint Venture ................................................................................. 47
Sample Answer 15-2: Limited Partnerships, Termination of Corporations, Agency........................................... 49
Sample Answer 15-3: Promoters, Ultra Vires, Business Judgment Rule, Breach of Loyalty, Piercing............... 51
Sample Answer 15-4: Securities Exchange Rules................................................................................................ 53
Sample Answer 15-5: Proxy Fights, Takeovers, Mergers.................................................................................... 55
INDEX .......................................................................................................................................................................... 58
iv
Chapter 3: Issue Spotting
Chapter 3: Issue Spotting
Since you lose points for every “required” issue you fail to discuss, it is CRITICAL TO SPOT all
of the “required” issues. BUT DON'T waste time discussing issues that do not really exist. This is
easier said than done and introduces a certain level of sadism peculiar to law school.
The Reader (the person who will grade your essay) always expects you to discuss certain required
issues. But Readers (and question writers) fall into two basic schools. The first, rational school,
simply states the issues to be discussed in certain terms. The second, less rational and often
sadistic school of Readers uses only hints about the intended issues. Sometimes the "hints" are
obvious. Other times they are so subtle the student has to be a psychic. At this extreme this
approach is called HIDING THE BALL, and it is the stuff of law school horror stories.
The HIDE THE BALL question utilizes words and fact patterns that only vaguely suggest issues.
This is like a code language known only to law school professors. The following is a list of "code"
words and facts that are often used to indicate intended issues.
Issue Spotting Hints
BUSINESS ORGANIZATION:
Issue Area and Coded Hint:
Intended Issue:
FORM
1. Tom, Dick and Harry…:
2. Filed Articles of Incorporation:
3. Did not file:
4. Filed incorrect Articles:
5. Tom told Dick to…:
6. Dick agreed to do something:
7. "President":
8. Limited purpose:
Partnership?
Corporation?
De facto corporation?
Corporation de jure?
Agency?
Scope of agency relationship?
Inherent agency?
Joint Venture/Joint Enterprise?
PARTNERSHIP LIABILITY
9. Intentional act by a partner:
10. Negligence by a partner:
11. General partner leaves/dies:
12. Limited partner manages business:
13. Limited partnership continues
PROMOTER LIABILITY
14. Agreement to form corporation:
15. Tom obtained a line of credit:
16. Dick filed the Articles:
17. Articles never filed:
18. Harry helped get business started:
19. Issued stock to promoters:
Within scope of business?
Within scope of business?
Termination? Does estoppel apply if public is
not informed of termination?
Loss of liability limitations? Necessary acts?
Termination? All partners now general partners?
business operations after the death
of a general partner:
Promoter liability?
Promoter liability?
Promoter liability?
Promoter liability?
Promoter liability?
Promoter liability? Breach of loyalty?
5
Chapter 8: Preface Rules with Citation of Authority
Chapter 8: Preface Rules with Citation of Authority
After clearly stating the ISSUE to be discussed start your essay answer by citing the
AUTHORITY upon which your answer will be based. Use the word "UNDER" as an introductory
phrase as you cite the authority and rule.
In the Bar Examination you must determine THE PROPER AREA OF LAW that applies to the
question and TELL THE GRADER because your proper determination of the applicable law is an
essential part of the examination.
By stating the applicable law upon which your answer is based, your answer will be more
professional and affirm to both yourself and the grader that you know what you are doing. Citing
the correct case law makes your answer sound good, even if you never read or understood the
case. Stating the legal authority helps you get your head straight so you don't use the wrong
terminology in your answer.
If you cannot think of any better authority to cite, simply say, "Under broadly adopted state
BUSINESS ORGANIZATION RULES."
All rules of law for BUSINESS ORGANIZATIONS are based on common law as reflected in
broadly adopted state business codes, corporation codes and the Securities Exchange Act. This is
NOT tested on the MBE.
Your answers should reference the authorities you are using as follows -Business Organization:
"Under state corporation laws… "
"Under Securities Exchange Rules 10b and 10b-5…"
"Under the DUTY OF LOYALTY… "
"Under the DUTY OF DUE CARE… "
13
NAILING THE BAR – How to Write Business Organization Law School and Bar Exams
Chapter 15: Answering Business Organization Questions
Applicable Law. The terms "Business Law", "Business Organization" and "Corporations Law"
are used in the issues and answers below to represent the common law concepts of partnership and
agency, generally accepted concepts of "corporation law", specific provisions of the Securities
Exchange Act, and the provisions of the Internal Revenue Code related to taxation of corporations.
Common law concepts have been broadly adopted into State business laws. The issues and
suggested answers presented below should be supplemented as appropriate by reference to statutes
specific to your particular state.
If a Business Organization question concerns an ATTORNEY who is representing the
organization, it ALWAYS raises PROFESSIONAL RESPONSIBILITY issues and is a “crossover” question.
BUSINESS ORGANIZATION ISSUES AND ANSWERS
FOLLOW THE CALL of the question. But if the call is general list the issues as follows:
1. What was the FORM of business relationship?
Under business law the relationship between two or more people engaged in a business for profit
can be a GENERAL or LIMITED PARTNERSHIP, a JOINT VENTURE, a CORPORATION, or a
simple AGENCY RELATIONSHIP.
The default form of business whenever two or more people join together for a business profit is the
GENERAL PARTNERSHIP. A JOINT VENTURE is a general partnership formed for an expressly
limited purpose.
LIMITED PARTNERSHIPS and CORPORATIONS require appropriate filings and approvals by
state government, and establishment of a corporation requires the filing of articles of
incorporation.
An AGENCY RELATIONSHIP exists where one party, the agent, is authorized to act and agrees to
act for another party, the principal. [Important!]
[This is always a good way to start a business organization essay unless the facts clearly
state the business form (e.g. a corporation). It immediately creates a focus on the rules of
law that apply. Abbreviate the rule statement as appropriate.
Sole Proprietorships are ignored here because law-school essays seldom involve them.
Note that not everything casually described as "partners" creates a partnership. If Tom and
Dick agree to be "partners" in forming a corporation, the form of the business relationship
is a corporation, not a partnership.
The only important distinction between a partnership and a joint venture is that the latter
has an expressly limited scope.]
Here…because…Therefore…
26
NAILING THE BAR – How to Write Business Organization Law School and Bar Exams
Index
Limited partnership, defined, 27, 43, 49
Limited partnership, termination, 28
Loyalty, breach, 31, 41, 46, 52
Loyalty, duty of, 13
A
Actual agency, defined, 29, 41, 50
Agency, defined, 26, 29, 41, 50
Appraisal rights, 33, 41, 43, 44, 56
M
Market manipulation, liability for, 32
B
Bond holders, rights of, 34
Breach of loyalty, 31, 41, 46, 52
Budgeting time on exams, v, 11
Business Judgment Rule, 31, 41, 46, 51
N
Nailing the elements, iii, 14
Non-issues, 8
C
P
CALL of the question, 2, 8, 9
Conclusionary analysis, 18
Controlling shareholders, right to sell, 34, 42, 55
Corporate takeovers, duties of directors, 34, 44, 45, 55, 56
Corporate veil, piercing, 30, 52
Corporations, de facto argument, 28
Corporations, de jure, 28
Corporations, termination, 29, 42, 50
Counting issues, 2, 11
Paddling, 21
Paramount Communications Rule, 34, 44, 55
Piercing the corporate veil, 30, 52
Promoters, defined, 15, 29, 45, 51
Promoters, duties, 15, 29, 51
Promoters, liability to third parties, 30, 51
Proxy statements and fights, 33, 39, 45, 55
R
Red herrings, 8
Restating facts, 19
Revlon Rule, 34, 45, 56
D
De jure corporations, defined, 28
Derivative shareholder actions, 30, 41, 46
Due care, duty of, 10, 13, 14
Duty of due care, 13
Duty of loyalty, 10, 13, 14
S
SEC Rule 10b-5, 32
SEC Rule 14e-3, 32, 53
SEC Rule 16b, 32, 46, 54
Securities, registration requirement, 31
Security, defined, 31, 46, 53
Shareholder rights, appraisal rights, 33, 41, 43, 44, 56
Shareholders, derivative actions, 30, 41, 46
Short-swing trading, liability for, 32, 46, 54
Significant shareholders, defined, 32, 33, 46, 54
Splits, discussion of, 8
F
Freeze out, defined, 33, 43, 56
G
General partnership, defined, 26, 43, 44, 47
General partnership, termination, 27, 48
T
I
Takeovers, corporation, 34, 45, 56
Tender offer information, trading on, 32, 53
Tender Offers, 7, 8, 32, 39, 46, 53
Implied agency, defined, 29, 41, 50
Indemnification of officers, directors, agents, 34, 56
Inherent agency, defined, 29, 41, 50
Inside information, trading on, 32
Intended issues, 5, 8
IRAC approach, 1
Issues, counting, 2, 11
Issues, spotting, 5
U
Ultra Vires Doctrine, 30, 46, 51
Underlining in essays, 14
J
Y
Joint venture, defined, 26, 43, 44
Yellow brick road exam approach, 20
L
Legal elements, 1
58
WHAT to Say and HOW to Say it on
BUSINESS ORGANIZATION Law School and Bar Exams —
* The MOST COMMONLY TESTED ISSUES and
RULES AND DEFINITIONS to Help Answer Them!
* How to SPOT ISSUES!
* How to BUDGET TIME on Exams!
* CONCLUSIONARY Answers and How to Avoid Them!
* 5 PRACTICE QUESTIONS with SAMPLE ANSWERS!
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