OK.  No more complaining about grading–at least for another few months.  Whew!  I think I am getting too old for this crazy few weeks in December that involve holiday preparations and reading for the purpose of assessment.

This week, as I promised last week, I do want to say a bit more about the exams themselves, however.  I noticed certain patterns of wrong answers this year (some of them common to ones noted in prior years that I have tried in various ways–unsuccessfully–to address in my teaching).  I sent a message to my students that captured those common mistakes.  An edited list of the observations I shared with them about those errors is included below.

• Management/Control vs. Agency.  Management and control as an entity attribute is not the same as agency. The former involves internal governance–who among the internal constituents of the firm has the power to exercise the firm's rights and keep it operating, from a legal (and practical) point of view. The latter relates to the firm's liability to third parties. These two matters are set forth in different rules in each statute we covered in our course last semester. In the corporation, for example–the most complicated firm we studied, the board has the highest level of management and control rights. The officers have management and control power delegated by the corporation's organizational/organic documents (charter and bylaws, and maybe a shareholder agreement) and by the board. The shareholders have more limited management and control powers (through electing directors and approving charter and bylaw amendments, mergers and acquisitions, sales of all/substantially all the corporation's assets, and voluntary dissolutions). Of those three internal constituents, only the officers are agents of the firm who can bind the corporation to contracts and transactions with third parties. [I continued by offering other examples from partnership and LLC law.]  . . .  The main point is that one should not conflate management/control and agency. They are separate considerations.
• Compensation vs. Distributions.  Rights to compensation and distribution are both financial benefits to the recipient, but they are different from each other in almost all respects. Compensation (salary and benefits) is paid in exchange for services. . . .  Distributions represent returns (including current returns, like dividends, as well as amounts paid in dissolution–at the end of wind-up) to owners/equity investors. The MBCA also defines distributions to include amounts received in exchange for shares when the corporation buys them back from its shareholders.
• Limited Liability – Owners vs. Managers.  Both shareholders, as corporate owners, and directors/officers, as corporate managers, may enjoy some form of limited liability. Separate those concepts out, however. Shareholders are afforded limited liability under the statutes in a different way than directors/officers. This is largely because the former do not typically have fiduciary duties to the firm, while the latter do. So, the latter must be accountable for the interests of the firm in taking action for or on its behalf.
• The Judicial Process.  When asked to convey information about how a court addresses cases in an area, the best approach is to identify the court's standard of review or methodology/process as evidenced in the applicable body of cases–not to summarize each case individually . . . . Although the case summary approach may ultimately respond to the inquiry, it is not a sure way to do that and it is not efficient in any case. Imagine a client sitting through a series of case summaries after asking how a court handles a particular issue . . . . Ask yourself: would the client know that her question was answered in the end, and if so, would she be able to understand the answer?
• Using IRAC.  IRAC is a legal reasoning approach used to apply law to facts to resolve a legal question involving a legally cognizable action. If you are asked a question on an exam about a rule of law that does not engage a fact pattern, then you do not need IRAC. Part B of the exam did not involve the application of law to dispute resolution or other activities. Yet, some of you tried to set out an answer in IRAC form for that part of the exam. It wasn't ultimately very successful (since there could not be an "A").
• Avoiding Redundancy/Inconsistency.  In using IRAC or another legal reasoning technique, state the legal rule once in all of its relevant detail; then, use it. A number of you repeated the rule several times (sometimes with differing levels of detail) in answering a single exam query. This redundancy cost you time that could have been better spent on other parts of the exam, in many cases, and the approach sometimes led to inconsistent applications of the rule (because it was stated differently). For example, many of you stated (correctly) that the current RULPA allows limited partners to enjoy limited personal liability for the obligations of the limited partnership even if the limited partners exercise control. But later in the same response, some of you took that back by noting (incorrectly) that certain types of control would subject limited partners to personal liability for the obligations of the firm. Both cannot be true . . . .
• Using "Held" and Other Variants of "Holding".  . . . [S]tatutes do not have holdings. Lawyers do not say that statutes "hold" particular rules. Rather, statutes "provide" or "state" or "set forth" matters or rules. Also, many of you misuse the word "hold" when referring to information from cases. A holding in a case is the response to a legal issue raised in the case. So, you should not say that a case "held" something unless that something represents the response to a legal issue raised in the case. For example, it's inaccurate to say that a case "held" something that represents a policy consideration or dicta.

That's it.  (Although I cannot resist, especially in light of Josh Fershee's post yesterday, adding that one student did refer to LLC owners as shareholders–a bad cut-and-paste job from an earlier answer, imv.)  I suspect that many who teach Business Associations see some of these same things with their students.  Some of these mistakes are generic errors that also may be observed in other courses.  No doubt, as I observed last week, some of these errors would not be made in situations that do not involve the stress and time pressure that an in-class examination entails.  To me, however, all of these issues were important enough to bring to the attention to the entire class.  I also invited–encouraged–all students to come back and review their exams, whether they "did better, as well as, or less well than . . . expected, hoped, or wanted."  I hope that many of my students do take me up on that offer/suggestion.  But I am not holding my breath.