Exam 3
A and B form partnership, contribute 900k and 100k. They agree to split profits 90%/100%. A commits fraud, they are sued for 1M. Partnership has no assets. A files for bankruptcy, automatic stay, discharged. In that situation, how much is B liable for?
1M
Most states require at least ___ board members for publicly traded companies
3
Mark was a partner at his law firm, got a K-1 (showing individual shares). He noted on box 1 (how much he had in income), it was far more than he received (300k vs. 200k). Mark asked and they told him it was the undistributed income. How much did he pay taxes on?
300k
If there is no formal written partnership agreement (rare), courts will determine whether a partnership exists by looking for the following three essential elements:
A joint ownership of the business A sharing of profits or losses An equal right to be involved in the management of the business
difference between partnerships and agency relationships
A partner in a partnership has an ownership interest in the firm
Factors that may cause the courts to pierce the corporate veil include which 5 things?
A party is tricked or misled into dealing with the corporation rather than the individual. The corporation is set up never to make a profit or always to be insolvent. The corporation is formed to evade an existing legal obligation. Statutory corporate formalities are not followed. Personal and corporate interests are commingled.
When would LLC want to be taxed as a corporation?
All members are high-wealth individuals. We think LLC will generate a profit, but initially, we want to reinvest the profit into the organization. Recently, corporate tax rates have been lower than individual tax rates.
Except in rare circumstances, partnership property includes which 2 things
All property that was originally contributed to the partnership and any property later purchased by the partnership or in the partnership's name
Shareholder approval normally is required to do which 3 things?
Amend the articles of incorporation or bylaws Conduct a merger or dissolve the corporation Sell all or substantially all of the corporation's assets
Where must partnership books be kept?
At the firm's principal business office (unless partners agree otherwise)
The boards of all publicly-traded companies are required to have which 3 companies
Audit Committee Compensation Committee Nomination and Governance Committee
A corporation's _____ __ _____ acts as the owners' (i.e., the shareholders) agent in charge of running the company.
Board of Directors
A corporation has the implied power to perform all acts reasonably necessary to accomplish its corporate purposes, such as the implied power to do which 2 things?
Borrow and lend funds within certain limits Extend credit to parties with whom it has contracts
How are taxes paid in a partnership?
By each partner based on their individual profit.
Typical corporate executives include:
CEO, CFO, VPs, corporate secretary
The board of directors conducts business by holding formal meetings with recorded minutes. These meetings are presided over by the ______ of the Board who sets the agenda and coordinates actions of the committees.
Chairman
_______ terminates the partner's actual authority to act for the partnership and to participate in running its business.
Dissociation
The termination of a partnership occurs in two stages:
Dissolution Winding Up
For a gift to be effective, the following three elements are required:
Donative intent on the part of the donor Delivery Acceptance by the donee
__________ personal property; rights with no physical existence (stocks/bonds, proof of rights on paper), copyrights, patents, etc.
Intangible
by far the most popular type of entity
LLC
Organizers of LLCs and LPs are given flexibility in how they define the rights and responsibilities of the entity's members or partners, as well as how the entity is structured. These issues are defined via the Operating Agreement (_____s) or Limited Partnership Agreement (_____s).
LLC, LP
A hybrid form of business organization that is used mainly by professionals who normally do business in a partnership.
LLP
what form of business do lawyers, accountants, and physicians typically use
LLP
There are various reasons why companies form joint ventures, including, but not limited to which 3 things?
Leverage Resources Cost Savings Enter Foreign Markets
If a corporation enters into a contract or engages in a transaction in which an officer or director has a personal interest, the director or officer must do which 3 things
Make a full disclosure of the nature of the conflicting interest Disclose all facts pertinent to the transaction Abstain from voting on the proposed transaction
A & B have joint tenancy. If B dies, go to A. If before B dies, he transfers to C, C now is a tenant in common with Abel. does Abel get it automatically?
No
A (R/E agent) is a friend of P's who offers to sell his house for free. If A does not try to sell P's house, can P sue A?
No
A and P, A preparing P's tax return. A asks TIMELY for information from client, P. P doesn't comply. A says we can't file on time if you don't supply. P owes duty to cooperate. If P doesn't comply, can he sue A?
No
Abel with Cain, Inc. Cain has a 9 member board. Cain is going to expand. 1 of the possible ways to expand is to acquire a competitor. Cathy, member, can't just stay silent. She doesn't have to resign. She just has to say, "Hey guys, my husband and parents own this many shares of the acquisition company. If we acquire this company, I will probably make X amount of money." Is she disqualified? Can the company still make this purchase?
No, Yes
When a corporation earns profits, it can do one of two things:
Pass them on to shareholders in the form of dividends or retain them as profits
Generally, the agent owes the principal five duties:
Performance Notification Loyalty Obedience Accounting
______ property can be acquired by: Purchase A will or inheritance Possession Production A gift Accession Confusion
Personal
Go to work for Pixar. Create copyrighted work. Who owns this?
Pixar
For property to be held adversely, four elements must be satisfied:
Possession must be actual and exclusive. Possession must be open, visible, and notorious, not secret or clandestine. Possession must be continuous and peaceable for the required period of time. Possession must be hostile and adverse.
____ corporations are created either wholly or in part for private benefit—that is, for profit.
Private
separate property in a marriage includes which 2 things
Property acquired prior to the marriage Property acquired by gift or inheritance as separate property during the marriage
Although each state has its own set of incorporation procedures, all incorporators generally follow 4 basic steps:
Select the state of incorporation. Secure an appropriate corporate name. Prepare the articles of incorporation. File the articles of incorporation with the state.
_______ exercise ownership control through the power of their votes, voting in directors' elections and management and/or shareholder proposals. Each common shareholder is normally entitled to one vote per share.
Shareholders
________ have the power to vote on the election of directors to the board and approve fundamental changes affecting the corporation.
Shareholders
The main disadvantage of the L L C:
State L L C statutes are not uniform. Businesses that operate in more than one state may not receive consistent treatment in these states.
There are four types of concurrent ownership:
Tenancy in common Joint tenancy Tenancy by the entirety Community property
the ultimate authority in every corporation
The board of directors
Among the numerous requirements for Subchapter S corporation status, the following 3 are the most important: Also, corps must have only 1 class of stock, but shareholders can have different voting rights
The corporation must be a domestic corporation. The corporation must not be a member of an affiliated group of corporations. The corporation must have no more than 100 shareholders.
The articles of organization contain basic information about the business including:
The name of the business The business's principal address The name and address of a registered agent The members' names How the L L C will be managed
When the intent of that party is in dispute, the courts usually will deem that the item is a fixture if either or both of the following are true:
The property attached cannot be removed without causing substantial damage to the remaining realty. The property attached is so adapted to the rest of the realty as to have become a part of it.
difference between joint tenancy and tenancy in common
The right of a surviving joint tenant to inherit a deceased joint tenant's ownership interest—referred to as a right of survivorship
Generally, courts will only pierce the corporate veil in which 2 scenarios?
When the corporate privilege is abused for personal benefit When the corporate business is treated so carelessly that it is indistinguishable from that of a controlling shareholder
A & B car. Gives B car keys because the car isn't there. Or gives title and signs it to B. Does this constitute delivery for a gift?
Yes
Normally, a partner does not earn a salary from the partnership. What does the partner's income take thee form of?
a distribution of profits according to the partner's share in the business
A partner can be dissociated from a partnership in several ways. The most common way is when
a partner voluntarily gives notice of an "express will to withdraw"
An LLC can either be taxed as one of which 4 things?
a sole proprietorship, a partnership, a C corporation or an S corporation
property that has been discarded by the owner, who has no intention of reclaiming it.
abandoned property
A person who wrongfully possesses the real property of another (by occupying or using the property) may eventually acquire title to it through ______ possession.
adverse
The acquisition of title to real property through open occupation, without the consent of the owner, for a period of time specified by a state statute. The statutory period varies from three to thirty years, depending on the state, with ten years being most common.
adverse possession
In addition to carrying out the duties articulated in the bylaws, corporate and managerial officers act as ______ of the corporation.
agents
A corporation formed in another country (e.g., France), but doing business in the United States.
alien corporation
Serves as primary source of authority. Includes the name, shares authorized, the procedures which the corp must follow if they want to increase authorized shares, the name and street address of original registered agent and office (receive lawsuit, main corporate office), and the name of each incorporator
articles of incorporation
The primary document needed to incorporate a business is
articles of incorporation
This document is filed with the appropriate state official, usually the secretary of state, where a business is incorporated and contains basic information about the corporation.
articles of incorporation
To form an L L C, what must be filed with a central state agency—usually the secretary of state's office?
articles of organization
In a corporation, the responsibility for the overall management of the firm is entrusted to a _______ _____ ______, whose members are elected by the shareholders.
board of directors
The _____ __ ______ in a corporation: Makes the strategic policy decisions; Hires corporate officers to run the company's daily business operations.
board of directors
The __________________: Selects and removes the corporate officers Determines the capital structure of the corporation Declares dividends, if any
board of directors
debt securities, which represent the borrowing of funds.
bonds
The "_______ ______ rule" protects boards and executives from lawsuits for simply making bad decisions. This rule requires that the courts defer to the board of directors or executives in business matters
business judgment
The amount payable to a partner on his or her dissociation from a partnership is normally based on the amount that would have been distributed to that partner if the firm had been terminated on that date. This is referred to as the _______ price.
buyout
Subject to statutory limitations, the number of directors is set forth in the corporation's articles of incorporation or ______
bylaws
The duty of ______ requires a director or officer to: Act in good faith (honestly) Exercise the care that an ordinarily prudent (careful) person would exercise in similar circumstances Do what she or he believes is in the best interests of the corporation.
care
a partner's duty of _____ is limited to refraining from "grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of the law."
care
A _____ corporation is one whose shareholders are limited to a small group of persons, often family members. Because the number of shareholders is so small, there is generally no trading market for the shares.
close
In a _____ corporation, the separate status of the corporate entity and the shareholders (often family members) must be carefully preserved.
close
While we are all familiar with various publicly-traded corporations, most corporate enterprises in the United States fall into the category of ______ corporations (a/k/a a closely-held corporation).
close
A corporation is not obligated to pay a holder of ______ stock a dividend.
common
A share of _____ stock gives the owner a proportionate interest in the corporation with regard to its control, earnings and net assets (upon dissolution).
common
Traditionally, At ______ law, a partnership was treated only as an aggregate of individuals and never as a separate legal entity. A lawsuit could never be brought by or against the firm in its own name. Each individual partner had to sue or be sued.
common
a form of concurrent property ownership in which each spouse owns an undivided one-half interest in property acquired during the marriage.
community property
All tenants, buy apartments, set up co-op. Run things a certain way, all have a right to vote. Services of that building are only for its members/owners. This is a _______ form of business
cooperative
Mark wants to form grocery co-op with people in class. Comes up with plan for cost. Can pitch in money or supply food. Form co-op. Then say only us and our immediate family can shop here. This is a _____ form of business
cooperative
The _______ form of business generally is adopted by groups of individuals who wish to pool their resources to gain some advantage in the marketplace.
cooperative
an association, which may or may not be incorporated, that is organized to provide an economic service to its members.
cooperative
Usually, the most important function of the first meeting of a corporation is the adoption of what?
corporate bylaws
internal rules of management adopted by a corporation
corporate bylaws
In certain very limited situations, however, a court may pierce the ________ ______ and impose liability on shareholders for the corporation's obligations.
corporate veil
A joint stock company has many characteristics of a _______ in that: Its ownership is represented by transferable shares of stock. It is managed by directors and officers of the company or association. It can have a perpetual existence.
corporation
In a ______, shareholders own the company, but they can't run the company. They elect a group to represent their interests (the BoD).
corporation
a legal entity created and recognized by the law of a particular state.
corporation
allows a shareholder to concentrate votes on a single board candidate instead of requiring one vote per share for each candidate
cumulative voting
State and federal laws almost universally require that the shareholder show that he or she attempted to first bring the problem to the attention of company's directors, but they chose not to pursue the lawsuit for a ________ lawsuit
derivative
If company wasn't managed by crooks, they would sue them. They don't, however, because the managers are in charge. Essentially, you come in and file the lawsuit for the company. This is a:
derivative lawsuit
different in that a shareholder of the corporation would bring suit "on behalf of" the corporation, rather than as an individual person.
derivative lawsuits
In a ______ lawsuit, a shareholder is appointed to represent a class of plaintiffs, namely, the other shareholders of the corporation, who have been harmed by the actions of the defendant board or executives. The designated shareholder-plaintiff seeks to prove a degree of personal harm committed by the corporation. These types of cases often include thousands of shareholders. Any recovery goes to the class of shareholders.
direct
If there is a belief that the board or the executives have engaged in one of those wrongful practices (fraud, illegal activities, gross negligence), there are two options for types of shareholder lawsuits:
direct lawsuit (shareholder class action lawsuit) or derivative lawsuit
the severance of the relationship between a partner and a partnership
dissociation
A court may order _______ of a partnership when it becomes impractical for the firm to continue.
dissolution
After ______, the partnership continues for the limited purpose of winding up the business.
dissolution
In a given state, a corporation that is organized under the laws of that state.
domestic corporation
a _____ gives the gift
donor
A major disadvantage of the corporate form is that corporate profits can be subject to _____ taxation
double
A partner owes fiduciary duties to both the partnership itself and to the other partners. These include which 2 duties
duty of care and duty of loyalty
Corporate officers and other executives are ______ of the corporation.
employees
a law defining a finder's rights in property when the true owners are unknown.
estray statute
The ____ powers of a corporation are found in: The state and federal constitutions The statutory law of the state of incorporation Its articles of incorporation, bylaws and corporate resolutions
express
t or f: A partner is a co-owner of the partnership's property
false
t or f: A shareholder can sue the corporation, but the corporation can NOT sue a shareholder.
false
t or f: The general principles of agency law pertain to a partner's authority to bind a partnership in contract. If a partner acts within the scope of her or his authority, the partnership is not legally bound to honor the partner's commitments to third parties.
false
t or f: a partner's personal liability for the malpractice of other partners is generally unlimited in an LLP
false
t or f: Loans can be a gift
falsee
Numerous rights are involved in real property ownership, which is why property ownership is often viewed as a bundle of rights. One who possesses the entire bundle of rights is said to hold the property in ____ _____, which is the most complete form of ownership.
fee simple
an ownership interest in land in which the owner has the greatest possible aggregation of rights, privileges, and power.
fee simple absolute
Ownership interests in real property have traditionally been referred to as estates in land, which include which 2 estates?
fee simple, life
Directors and officers are _______ of the corporation because their relationship with the corporation and its shareholders is one of trust and confidence.
fiduciaries
a relationship founded on trust and confidence.
fiduciary
Tenancy under which property is leased for a specified period of time, such as a month, a year, or a period of years. At the end of the period specified in the lease, the lease ends (without notice), and possession of the property returns to the lessor.
fixed-term tenancy
When personal property is affixed to real property in a permanent way, it is known as a ____
fixture
an item of personal property that has become so closely associated with real property that it becomes legally regarded as part of that real property.
fixture
WM does business in Texas mainly, but is incorporated in deleware. It is a _______ corporation to texas
foreign
In a given state, a corporation that does business in that state but is incorporated in another state.
foreign corporation
Directors' and officers' fiduciary duty requires them to make a _____ disclosure of any potential conflicts of interest that might arise in any corporate transaction.
full
In a ______ partnership, all partners have equal rights in managing the partnership.
general
One significant disadvantage associated with a _______ partnership is that all partners are personally liable for the debts of the partnership (not the personal debts of the partner). In most states, the liability is essentially unlimited, because the acts of one partner in the ordinary course of business subject the other partners to personal liability.
general
A partner who assumes responsibility for the management of the partnership and has full liability for all partnership debts.
general partner
3 types of partnerships
general, limited, limited liability
a voluntary transfer of property made without consideration, past or present.
gift
A gift made in contemplation of imminent death.
gift causa mortis
A gift made during one's lifetime and not in contemplation of imminent death, in contrast to a gift causa mortis.
gift intervivos
Whether a corporation retains its profits or passes them on to the shareholders as dividends, those profits are subject to _____ ______ at the corporate level by various levels of government.
income taxation
After incorporation, the first organizational meeting must be held. If the articles of incorporation did not name the initial board of directors, then the ______ hold the meeting to elect the directors and complete any other business necessary.
incorporators
The federal Sarbanes-Oxley Act requires that these three (audit, compensation, nomination/governance)committees include only _______ directors. Audit Committee must also have at least one member with expertise in finance and accounting.
independent
A person on a corporation's board of directors who does not hold a management position in the corporation.
independent director
A partnership itself is responsible only for filing what with the Internal Revenue Service?
information return
a tax return submitted by a partnership that reports the business's income and losses.
information return
A person on a corporation's board of directors who is also an employee of the corporation.
inside director
A corporate director must have certain rights to function properly in that position, including the rights to which 3 things
inspection, participation, and indemnification
When a gift is challenged in court, the court will determine whether donative _____ exists by looking at the following: The language of the donor The relationship between the parties The size of the gift in relation to the donor's other assets The donor's mental capacity
intent
a true hybrid form of business organization that combines characteristics of a corporation and a partnership.
joint stock company
also a joint ownership of property by two or more co-owners in which each co-owner owns an undivided portion of the property.
joint tenancy
A joint undertaking by two or more persons or business entities to combine their efforts or their property for a single transaction or project, or for a related series of transactions or projects.
joint venture
Combines resources of both companies to achieve a goal in a venture, saves money
joint venture
When several contractors combine their resources to build and sell houses in a single development, it is called a
joint venture
The tenant's right to possession is temporary under a ______ _______, which is what distinguishes a tenant from a purchaser, who acquires title to the property.
leasehold estate
an interest in real property that gives a tenant a qualified right to possess and / or use the property for a limited time under a lease.
leasehold estate
Mark buys house in CS. He owns the house. It's all his. Mark wants his M-I-L to be able to live in the house so they can take care of her. There are a lot of ways he can do this. Leave it in his name and let her live there. Can just lease it to her. Or he can convey to her a life estate in property (Mark owns it now, indefinitely. Part of that right is carved out and given to MIL. She owns that property during her life). This is a _____ estate
life
an interest in land that exists only for the duration of the life of a specified individual, usually, but not always, the holder of the estate.
life estate
A key advantage of the L L C is the ______ liability of its members.
limited
The liability of a ______ partner is limited to the capital that she or he contributes or agrees to contribute to the partnership.
limited
A partner who contributes capital to the partnership but has no right to participate in its management and has no liability for partnership debts beyond the amount of his or her investment.
limited partner
A partnership consisting of one or more general partners and one or more limited partners.
limited partnership
Mark's chef friend: Earns 2% per year for 5 years, was at 5 years. Now, he was getting just a paycheck. It was 2007, he wanted to open his own restaurant. He wanted Mark to invest. Mark does with others. They got a payback. All limited partners got 100% of all profits until they were paid off in full plus interest. Got profits at a lesser amount afterwards. General partner didn't get anything until limited partners were paid off. If someone got cancer from the food, they couldn't sue the limited partners (they just lose their investment). This is an example of a
limited partnership
A hybrid form of business enterprise that offers (i) the limited liability of a corporation and (ii) the tax advantages of a partnership.
llc
___ has become the preferred structure for many small businesses.
llc
The classification of a corporation normally depends on which 3 things?
location, purpose, ownership characteristics
property that the owner has involuntarily parted with and then cannot find or recover.
lost property
The duty of ______ requires a partner to account to the partnership for "any property, profit, or benefit" derived by the partner in the conduct of the partnership's business or from the use of its property
loyalty
The duty of ______ requires directors and officers to subordinate their personal interests to the welfare of the corporation. Cases dealing with this duty typically involve one or more of the following: Competing with the corporation Usurping (taking personal advantage of) a corporate opportunity Pursuing an interest that conflicts with that of the corporation
loyalty
Instead of plurality voting, a corporation may have ______ voting. This differs from plurality voting in that a director is required to receive a majority of votes to be elected. This means that even in an uncontested election, a director can fail to win a board seat if over half of all outstanding votes are withheld from him or her.
majority
Unless the partners agree otherwise for a general partnership, a ______ vote controls decisions on ordinary matters connected with partnership business.
majority
L L C members have two options for managing the firm:
manager managed or member managed
Elect people to manage. They do not have to be a member of the LLC.
manager-managed
Most states provide that unless the articles of organization state otherwise, you're presumed to be ________-managed for an LLC
member
All members have the right to participate in management of the organization. Decisions made based on a majority vote for the LLC.
member-managed
Like the shareholders of a corporation, the owners of an L L C, who are called ______, enjoy limited liability.
members
In many states, ownership of the surface of the land can be separated from ownership of its subsurface (called _____ rights).
mineral
______ _______ is property that the owner has voluntarily parted with and then has inadvertently forgotten. A person who finds mislaid property does not obtain title to the goods. Instead, the owner of the place where the property was mislaid becomes the caretaker of the property, because it is highly likely that the true owner will return.
mislaid property
"Once I'm finished with this car, I will give you this one." Is this a gift?
no
If Ben says "I don't want your car." Is there acceptance?
no
If daughter buys a plane trip to Hawaii, can she say she was acting on behalf of her parents?
no
Martin and Mark go into partnership together. Martin is smart, not financially, incurs a lot of debt. He needs to get his property back to pay off his debt. Can he?
no
A&B, A committed fraud. LP. A was GP, B was LP. A is bankrupt, can't go after him. Can they go after B? What will B lose?
no, what he put in
_____ Corporations are formed for purposes other than for making a profit. Examples: Private hospitals, educational institutions, charities, religious organizations
nonprofit
A,B,C equal shareholders in close corporation. C wants to withdraw shares. They're all shareholders. In a typical shareholders agreement, what must C do?
offer to sell shares back to company or to other shareholders
A director usually serves for a term of ____ year—from annual meeting to annual meeting. Most state statutes permit longer and staggered terms (called staggered boards).
one
At least _____ general partner is necessary in a limited partnership so that someone has personal liability.
one
Unless the partners agree otherwise for a general partnership, each partner has _____ vote in management matters regardless of the proportional size of his or her interest in the firm.
one
The members of an L L C can decide how to operate the various aspects of the business by forming a ______ agreement.
operating
This is an agreement in which the members of a limited liability company set forth the details of how the business will be managed and operated. Sets out how managers are chosen, how profits are split, how members can leave, voting rights, etc. All of the same content as a partner's agreement.
operating agreement
The acquisition of a share of stock makes a person an ____ and a shareholder in a corporation.
owner
When an individual purchases a share of stock in a corporation, that person becomes a shareholder and an _____ of the corporation.
owner
Are co-owners of the business Have joint control (management) over its operation Have the right to share in its profits
partners
An L L C that wants to distribute profits to its members usually prefers to be taxed as a ________ to avoid the "double taxation" that is characteristic of the corporate entity.
partnership
If the JV has not formed a separate entity, it is treated as a _______ for taxes
partnership
Most features of a joint stock company are more characteristic of a _______: It is formed by agreement (not statute). Property usually is held in the names of the owners, who are called shareholders, and they have personal liability.
partnership
Unless a multi-member LLC wishes to be taxed as a corporation, the government automatically taxes the organization as a ________
partnership
If no fixed duration is specified, the partnership is a ______ __ ______. Can be dissolved at any time without liability.
partnership at will
an express agreement made at the time of partnership formation for one or more of the partners to buy out the other or others should the situation warrant.
partnership buy-sell agreement
If the partnership agreement specifies the duration of the partnership by stating that it will continue until a designated date or until the completion of a particular project, the partnership is called a
partnership for a term
A partnership may be terminated (dissolved) if the partners no longer wish to (or are unable to) continue the partnership business. This is called ________ ______
partnership termination
An L L C that has two or more members can choose to be taxed as a ______ or a _____
partnership, corporation
a business entity that has no tax liability
pass-through entity
A lease interest in land for an indefinite period involving payment of rent at fixed intervals, such as week to week, month to month, or year to year. The tenancy is automatically renewed for another rental period unless properly terminated.
periodic tenancy
A fixture is generally attached to the real property in a _______ way. An item may even sit on the land without being attached, as long as the owner intends it to be a fixture.
permanent
Property that is movable; any property that is not real property.
personal property
the action of a court to disregard the corporate entity and hold the shareholders personally liable for certain corporate debts and obligations.
piercing the corporate liability
Directors generally win an election by obtaining a ______ of votes, meaning that the directors who receive the most votes win, regardless of whether they receive a majority of votes.
plurality
a security that entitles the holder to preference in the payment of dividends and that has priority over common stock in the distribution of assets on the corporation's dissolution.
preferred stock
The ________ has the right to control the agent's conduct in matters entrusted to the agent.
principal
in a ________ relationship, the parties have agreed that the agent will act on behalf and instead of the principal in negotiating and transacting business with third parties.
principal-agent
any legally protected rights and interests in anything (with an ascertainable value?) that is subject to ownership
property
When shareholders want to change a company policy, they submit a shareholder ______ to the board of directors for a shareholder vote.
proposal
an authorization to represent a shareholder to serve as his or her agent and vote his or her shares in a certain manner
proxy
A ____ corporation is one owned by a federal, state, or municipal government. This is not to be confused with a publicly-held corporation. Examples: U.S. Postal Service, AMTRAK
public
Abel orally contracts to sell Ben $400 item of personal property. Needs to satisfy 4 requirements of a contract and simply needs to give to Ben. If it is ____ property, needs to be written and have a deed recorded with the state.
real
Each state assesses property taxes on _____ property.
real
Personal property can be transferred with a minimum of formality, whereas _____ property transfers generally involve a written sales contract and a deed that is recorded with the state.
real
Land and everything attached to it, such as trees and buildings.
real property
Stones in Mark's driveway. They will be permanently attached, but aren't now. Today, they are personal property. Once permanently attached, they become part of
real property
consists of land and everything permanently attached to it, including structures and other fixtures. Encompasses: Airspace and subsurface rights Rights to plants and vegetation
real property
How property is taxed and what is required to transfer or acquire the property is determined by whether the property is classified as ____ or ______ property.
real, personal
LLC designates this person to accept service of any legal documents
registered agent
Corporations normally are financed by the issuance and sale of corporate ______
securities
A corporation can have one or more owners (called __________).
shareholders
If you can have an LLC with only 1 member, you are automatically taxed as a _____ _______ unless you want to be taxed as a corporation
sole proprietorship
The rights and duties of partners are governed largely by the specific terms of their partnership agreement. In the absence of provisions to the contrary in the partnership agreement, ______ law imposes certain rights and duties.
state
An ownership (equity) interest in a corporation, measured in units of shares.
stock
"Corporate securities" may include shares of _____ which constitute an ownership interest in a corporation. Or the sale of _____ which represent a promise of repayment of debt by a corporation.
stock, bonds
Encourage and facilitate the return of property to its true owner and may reward the finder for honesty if the property remains unclaimed. These laws provide an incentive for finders to report their discoveries by enabling them, at the end of a specified time, to acquire legal title to the found property.
stray statutes
a corporation that has most of the attributes of a close corporation, including limited liability, but qualifies under the Internal Revenue Code to be taxed as a partnership
subchapter S corporation
A group of individuals or firms that join together to finance a project (also called an investment group).
syndicate
A temporary alliance of businesses that joins together to manage a large transaction, which would be difficult, or impossible, to affect individually.
syndicate
_____ personal property: LED TV, car, heavy construction equipment
tangible
A tenancy that arises when a tenant wrongfully continues to occupy leased property after the lease has terminated.
tenancy at sufferance
A type of tenancy that either the landlord or the tenant can terminate without notice. This type of tenancy can arise if a landlord rents property to a tenant "for as long as both agree" or allows a person to live on the premises without paying rent.
tenancy at will
Joint ownership of property in which each party owns an undivided interest in the property. The interest is undivided because each tenant shares rights in the whole property. Unless the co-tenants have agreed otherwise, a tenant in common can transfer her or his interest in the property to another without the consent of the remaining co-owners.
tenancy in common
During his lifetime, a joint tenant can transfer his rights (by sale or gift) to another without the consent of the other joint tenants. Doing so terminates the joint tenancy and the person who purchases the property becomes a ____________________ with the others, not a joint tenant.
tenant in common
If you and siblings inherit land from grandparents, you will probably be what?
tenants in common
After incorporation, the first organizational meeting must be held. If the articles of incorporation named the initial board of directors, then who calls the meeting by majority vote?
the directors
In contrast, when an employer hires an independent contractor—such as a freelance artist, writer, or computer programmer, who owns the copyright?
the independent contractor
When a court needs to determine whether a certain item is either a fixture or personal property, they examine what mostly?
the intention of the party who placed the object on the real property.
A shareholder is given a number of votes equal to what? The shareholder can allocate those votes among board candidates as he or she chooses. To increase the chances of electing a specific director, the shareholder might concentrate more votes toward a single candidate or a subset of candidates.
the number of shares owned times the number of seats to be elected
After a partner's dissociation and assuming the partnership continues, his or her interest in the partnership must be purchased by who?
the partnership
The most important difference between the LLC and LP relates to:
the personal liability of the participants
When the person holding the life estate dies, the ownership reverts back to original owner. If Mark sells his reversion of the land, who gets it?
the purchaser of the revision
#1 reason why companies are incorporated in delaware
the rich history of incorporating the business judgment rule
what is the problem with LLCs
they are governed by state statute, and the laws differ from state to state
the personal property of a commercial tenant that has been installed or affixed to real property for a business purpose.
trade fixture
an exception to the rule that fixtures are a part of the real property to which they are attached
trade fixtures
t for f: The rights of partners in a partnership relate to the following areas: -Management -Interest in the partnership -Compensation -Inspection of books -Accounting -Property
true
t or f: A close corporation may be managed according to a shareholders' agreement instead of by a board of directors or bylaws.
true
t or f: A common practice is to elect one-third of the board members each year for a three-year term to allow for greater management continuity.
true
t or f: A corporation enjoys constitutional guarantees of due process, freedom of speech, and freedom from unreasonable search and seizure
true
t or f: A corporation is an artificial being
true
t or f: A corporation must notify its shareholders of the date, time, and place of its annual or special shareholders' meeting. Notice of a special meeting must include a statement of the purpose of the meeting, and business transacted at the meeting is limited to that purpose.
true
t or f: A fee simple absolute is potentially infinite in duration and is assigned forever to a person and her or his heirs without limitation or condition. The owner has the rights of exclusive possession and use of the property.
true
t or f: A finder of lost property can claim title to the property against the whole world, except the true owner. If the true owner is identified and demands that the lost property be returned, the finder must return it. When a finder of lost property knows the true owner and fails to return the property to that person, the finder may be guilty of the tort of conversion.
true
t or f: A general partner has unlimited personal liability for the debts and obligations of the limited partnership, meaning they can be held personally liable for those debts and obligations.
true
t or f: A joint tenant's interest can be levied against (seized by court order) to satisfy the tenant's judgment creditors. If this occurs, the joint tenancy terminates, and the remaining owners hold the property as tenants in common.
true
t or f: A joint venture is similar to dating before marriage
true
t or f: A mineral owner's rights would be of little value if he or she could not use the surface to exercise those rights.
true
t or f: A new corporation's name cannot be the same as, or deceptively similar to, the name of an existing corporation doing business within the state.
true
t or f: A partner has the right to bring an action for an accounting during the term of the partnership, as well as on the partnership's dissolution.
true
t or f: A partner may subject the partnership to tort liability under agency principles. When a partner is carrying on partnership business with third parties in the usual way, apparent authority exists, and both the partner and the partnership itself share liability.
true
t or f: A partnership agreement may specify that one or more partners will determine the value of the interest being sold and that the other or others will decide whether to buy or sell
true
t or f: A partnership for a fixed term or a particular undertaking is dissolved by operation of law at the expiration of the term or on the completion of the undertaking.
true
t or f: A partnership usually can sue or be sued, collect judgments, and have all accounting performed in the name of the partnership entity.
true
t or f: A,B,C run for one seat. A has 3000 votes, B has 2000, C has 1500. If using plurality voting, Abel would win (has the most, even though he doesn't have a majority).
true
t or f: Acceptance is the easiest element to establish because, as long as the gift benefits the donee, acceptance will be presumed once there is a delivery.
true
t or f: Agreements to form a partnership can be either oral, written, or implied by conduct
true
t or f: All states require corp's official name to include "Corp., Inc., Co., or Ltd."
true
t or f: Although a shareholder has no legal title to corporate property, such as buildings and equipment, he/she does have an equitable (ownership) interest in the firm.
true
t or f: Although one of the methods of acquiring ownership of property is to possess it, simply finding something and holding onto it does not necessarily give the finder any legal rights in the property.
true
t or f: An LLC can have as many members as it would like. The rights and responsibilities of an LLC's members are outlined in the LLC's Operating Agreement. Unless the Operating Agreement states otherwise, all members have the right to participate in the business' management.
true
t or f: An LLP can only be taxed as a partnership
true
t or f: An LLP is a pass-through entity for tax purposes
true
t or f: An LLP is also a formal structure that offers the partners at least some legal protection from the partnerships' liabilities.
true
t or f: An accounting of partnership assets or profits is required to determine the value of each partner's share in the partnership. This accounting can be performed voluntarily or compelled by court order.
true
t or f: Any partnership (including one for a fixed term) can be dissolved by the partners' agreement. If the partnership agreement states that it will dissolve on a certain event, such as a partner's death or bankruptcy, then the occurrence of that event will dissolve the partnership.
true
t or f: As a legal "person," a corporation enjoys many, but not all, of the same rights and privileges under state and federal law that U.S. citizens enjoy. Corporations possess the same right of access to the courts as citizens. Corporations can sue or be sued.
true
t or f: As a legal entity, the L L C can sue or be sued, enter into contracts, and hold title to property.
true
t or f: As an entity, a partnership may hold the title to real or personal property in its name rather than in the names of the individual partners.
true
t or f: As elsewhere, in Texas, shareholders in close corporations may agree to limit the conditions under which shares may be transferred or sold, and further agree how to apportion profits and losses.
true
t or f: As employees of the company, their rights may be defined by written employment contracts. Nevertheless, the board of directors normally can remove a corporate officer at any time with or without cause.
true
t or f: As fiduciaries, directors and officers owe ethical—and legal—duties to the corporation and to the shareholders as a group. These fiduciary duties include the duty of care and the duty of loyalty.
true
t or f: Because a close corporation generally has a small number of shareholders, the transfer of one shareholder's shares to someone else can cause serious management problems. The other shareholders may find themselves required to share control with someone they do not know or want to share ownership with.
true
t or f: Because an LLC is considered a separate business entity, it creates a financial barrier between the owner(s) and the company. This means that business creditors cannot go after an owners' personal assets. It affords the owners the same legal protections as a corporation, but typically requires less paperwork and fees.
true
t or f: Below articles of incorporation are bylaws, can't conflict with articles of corporation
true
t or f: Ben given keys, doesn't pick it up for several years. Maybe an acceptance, maybe not
true
t or f: Blake owns island. Mark goes to Blake and says they will be opening his fence. Will build a road and have trucks coming through to dig for oil. Blake says you cannot get oil on my land. The law says sorry blake since mark has mineral rights owner. Mineral rights owner is the DOMINANT estate. Can use any reasonable means to locate and extract minerals under the surfaces that may interfere with Blake's enjoyance of the land. Some limitations. If Mark's work wholly destroyed Blake's enjoyance of the land, issues could come up.
true
t or f: BoD can be sued, BUT have a statement that if they are sued individually, the company will indemnify them for ANY loss. D&O insurance. If goes over that, company must indemnify.
true
t or f: Bonds normally have a designated maturity date—the date when the principal, or face amount, of the bond is returned to the bondholder. Before the maturity date, bondholders receive fixed-dollar interest payments, usually semiannually. For that reason, bonds are sometimes referred to as fixed-income securities.
true
t or f: Both individuals and other legal entities can be shareholders of a corporation
true
t or f: Businesses may also have to pay taxes on the personal property they own, use, or lease.
true
t or f: CS holders may acquire voting rights
true
t or f: Capital contribution from partners can be cash, equity, or property. Will be set out in agreement.
true
t or f: Common stock is lowest in priority with respect to payment of dividends and distribution of the corporation's assets on dissolution.
true
t or f: Companies often don't even vote on shareholder proposals
true
t or f: Constructive delivery is allowed: Means of a painting ownership or symbolic act relinquishing ownership
true
t or f: Contract with cathy. Paul fails to perform. Paul must still compensate Abel for his efforts even though Paul failed. Really just another example of compensation.
true
t or f: Corporate resolutions are made and enacted by BoD
true
t or f: Corporations are incorporated under 1 state law (like the state of birth, can still do business in other states)
true
t or f: Corporations may not have right to do business in a certain state. Often have to get a certificate of authority (housekeeping thing), Generally can exercise powers earned by home state after doing that.
true
t or f: Costco is not a co-op. You need a membership card to get in, but you have no ownership. Brilliant marketing, but not very different than amazon prime.
true
t or f: Decisions that significantly change the nature of the partnership or that are outside the ordinary course of the partnership business require the unanimous consent of the partners in a general partnership
true
t or f: Delivery does not necessarily mean that the object must be handed over directly from the donor to the donee. All delivery means is that the donor must do an act that demonstrates an intent to transfer the property.
true
t or f: Directors adopt first set of bylaws and amend them as needed. If an amendment is super important (merger, sell all assets), they must be voted on by shareholders
true
t or f: Dissociation normally entitles the partner to have his or her interest purchased by the partnership.
true
t or f: Each director has one vote and decisions are typically made by majority rule. To make inform decisions, the Board relies on materials prepared by the company's management. Periodically, the outside directors meet outside the presence of management ("executive sessions")
true
t or f: Each partner has the right to receive full and complete information concerning the conduct of all aspects of partnership business. Partners have a duty to provide the information to the firm, which has a duty to preserve it and to keep accurate records.
true
t or f: Each partner in general partnership is potentially personally liable for the tortious actions that his co-partner committed to further the business
true
t or f: Each partner is an agent of every other partner and acts as both a principal and an agent in any business transaction within the scope of the partnership agreement.
true
t or f: Each partner is entitled to the proportion of business profits and losses that is specified in the partnership agreement. If the agreement does not apportion profits (indicate how the profits will be shared), then profits will be shared equally. If the agreement does not apportion losses, losses will be shared in the same ratio as profits.
true
t or f: Either company management or shareholders may propose changes or affirmation to company policy.
true
t or f: Eminent domain involves government coming and taking your property
true
t or f: Every act of a partner concerning partnership business (and "business of the kind") and every contract signed in the partnership's name bind the firm.
true
t or f: Every partner is entitled to inspect all books and records on demand and can make copies of the materials.
true
t or f: Fee simple absolute goes to heirs. You can sell it and it can be exclusive
true
t or f: Fence separating mark and hannah's land. The fence is too far on mark's side of property. Don't know who did it. Mark may acquire land that was really his.
true
t or f: Fixtures are, therefore, included in the sale of land unless the sales contract specifies otherwise.
true
t or f: Flights over private land normally do not violate property rights unless the flights are so low and so frequent that they directly interfere with the owner's enjoyment and use of the land.
true
t or f: General partners in an LP are personally liable to the partnership's creditors.
true
t or f: General partnerships are almost completely extinct
true
t or f: Generally, withdrawing from a partnership for a term prematurely (before the expiration date) constitutes a breach of the agreement, and the responsible partner can be held liable for any resulting losses.
true
t or f: Holders of common stock benefit when the market price of the stock increases.
true
t or f: Holders of preferred stock may or may not have the right to vote.
true
t or f: If a corporation dissolves, PS holders paid first
true
t or f: If an individual director disagrees with the majority's vote at a board of directors meeting, the dissent should be entered in the minutes. Otherwise, the director is presumed to have assented. If the directors are later held liable for mismanagement as a result of a decision, dissenting directors are rarely held individually liable to the corporation.
true
t or f: If directors or officers fail to exercise due care and the corporation or its shareholders suffer harm as a result, the directors or officers can be held liable to the corporation or its shareholders. An exception is made if the business judgment rule applies.
true
t or f: If shareholders believe that the duties of loyalty and care have not been met, they may take legal action against the board as a whole, or against one or more board members or executives.
true
t or f: If the JV is a separate entity, it will pay taxes as any other business or corporation does. So, if it operates as an LLC, then the profits and losses would pass through to the owners' personal tax returns just like any other LLC
true
t or f: If you buy land next to airport, you'll have a harder time arguing airspace rights
true
t or f: In California, Nevada and New York, only certain licensed professionals such as accountants, attorneys and architects can operate as an LLP.
true
t or f: In Texas, a close corporation must state in its certificate of formation that "this corporation is a close corporation."
true
t or f: In a LP, the manager can not be an outsider. Can, however, hire a COO outside of the company to do work for tax returns, etc. BUT the GP is the one responsible.
true
t or f: In a partnership, each partner's share of the profit (whether distributed or not) is taxed as individual income to that partner.
true
t or f: In a partnership, if firm makes 10M and you have a 5% distribution, you get $500,000. You won't know what profits are until after the year ends, however. So, you receive a draw (lowest estimate of what you think profits will be). If firm not doing so good, they may skip a draw. The last draw can be 5 draws to bring you back up to the appropriate distribution.
true
t or f: In a partnership, partners can NOT self deal
true
t or f: In almost all states, LLCs names must include the words "LLC" or "Limited liability company"
true
t or f: In an LLP, all partners can participate In management
true
t or f: In an uncontested election, a director is elected as long as he or she receives at least one vote. If vote for yourself, you can win.
true
t or f: In every leasehold estate, the tenant has a qualified right to exclusive possession.
true
t or f: In his capacity as a shareholder, a person has no responsibility for the management of the corporation. However, shareholders are ultimately responsible for choosing the board of directors, which does have such control.
true
t or f: In most companies, the board of directors is elected by shareholders on a one-share, one-vote basis. For example, if there are nine seats on a board, a shareholder with 100 shares can cast 100 votes for each of the nine people nominated.
true
t or f: In most states, a director cannot be removed from the Board until his/her term expires. However, if specified in a company's articles of incorporation or bylaws, a director may be removed for cause—that is, for failing to perform a required duty.
true
t or f: In most states, an LLP provides the same liability protection as an LLC. However, in other states, the protection is more limited; partners aren't liable for other partners' negligence, but may remain fully liable for general business obligations.
true
t or f: In most states, an individual can hold more than one office and be both an officer and a director of the corporation.
true
t or f: In most states, the LLP must be managed by a partner.
true
t or f: In the U.S., government has the right to take your property, but otherwise can use property as you want it
true
t or f: In the United States, a substantial body of law protects the rights of property owners. Property owners may still have to prove that their ownership rights in a particular item of property are superior to the claims of others. In addition, through its police powers, the government can impose regulations and taxes on property, and take or seize private property under certain circumstances.
true
t or f: Individuals often pay sales tax when purchasing personal property, but generally they are not required to pay annual taxes on personal property that is not used for business.
true
t or f: JV is when 2 or more people combine their assets and resources to form a new business entity. Syndicate focuses on financing a single transaction or project, rather than a LT collaborative project
true
t or f: JVs generally resemble a partnership, but aren't necessarily one
true
t or f: L L Cs must be formed and operated in compliance with state law.
true
t or f: LLCs can choose what to do for tax purposes
true
t or f: LLPs generally only have limited partners
true
t or f: Land includes: The soil on the surface of the earth and the minerals underneath the land; The natural products or artificial structures that are attached to the surface; All the waters contained on or under its surface; and Much, but not necessarily all, of the airspace above its surface.
true
t or f: Legally speaking, a JV is not a partnership.
true
t or f: Like corporations or partnerships, an L L C is a separate legal entity apart from their owners.
true
t or f: Majority of shareholders don't give a proxy and do nothing
true
t or f: Management of a close corporation resembles that of a sole proprietorship or a partnership, in that control is held by a single shareholder or a tightly knit group of shareholders. The firm must still meet all of the specific legal requirements for a corporation set forth in state statutes.
true
t or f: Many times, the incorporator is the companies' lawyer
true
t or f: Most companies pick Delaware as their state of incorporation
true
t or f: Most corporations are private
true
t or f: Most partners' agreements are for an indefinite period, rather than a fixed term
true
t or f: Most states require at least 1 annual meeting of shareholders (To elect directors)
true
t or f: Normally, corporate shareholders are not personally liable for the obligations of the corporation beyond the extent of their investments.
true
t or f: Not every executive is an officer of the company
true
t or f: On the death of one of the joint tenants, his or her interest automatically passes to the surviving joint tenant(s).
true
t or f: Once transferred title from his name to the partnerships name, the partnership now owns it
true
t or f: Other forms that can be used to organize a business include: Joint ventures, Syndicates, Joint stock companies, and Cooperatives. Unlike corporation or partnership, these terms do not have a legal meaning. It is more of a business term that can mean different things to different people.
true
t or f: Other specialized committees of the Board carry no such restrictions and often have a combination of inside and outside directors.
true
t or f: Person with life estate usually lives there, but doesn't have to. However, if caroline has the life estate, she can turn around and lease it to casey. She doesn't HAVE to live there.
true
t or f: Personal property can be tangible or intangible.
true
t or f: Practices that invite trouble for a close corporation include: The commingling of corporate and personal funds and the shareholders' continuous personal use of corporate property
true
t or f: Production—the fruits of one's labor—is another means of acquiring ownership of personal property.
true
t or f: Property acquired by a partnership is the property of the partnership and not of the partners individually.
true
t or f: Real property ownership can be transferred by: Sale Gift Will or inheritance Adverse possession Eminent domain
true
t or f: SS is withheld from paychecks and matched, but not with respect to an independent contractor (supposed to pay it, but it's not coming out of paycheck)
true
t or f: Senior executives (Senior VP), but VP of accounting that reports up to CFO is usually an officer
true
t or f: Shareholder proposals generally relate to changes in the company's bylaws, social policy or executive compensation.
true
t or f: Shareholders can still vote with a proxy statement/card if they can't make the meeting
true
t or f: Shareholders have the right to view every single document in the company
true
t or f: Some partnership agreements must be in writing to be legally enforceable.
true
t or f: Some states only allow certain professionals to open an LLP. Not every state allows the formation of an LLP, either.
true
t or f: Some states require LLPs to designate a general partner who is fully liable, while the other partners have limited liability.
true
t or f: Someone who finds abandoned property acquires title to it. That title is good against the whole world, including the original owner.
true
t or f: Sometimes, a person can become the owner of personal property merely by possessing it (more later).
true
t or f: Texas has a requirement for corps to have board meetings, keep corporate record, and have meeting of shareholders once a Even in a close-corp with wife, a man still has to do all of this.
true
t or f: Texas is a community property state. Property acquired by spouse during marriage is community property. Makes no difference where income came from or whose name is on it, just matters if it was purchased during marriage
true
t or f: The BoD hires corporate officers. They also normally hire CEO, who will hire his leadership team.
true
t or f: The Board is responsible for the major decisions of the company. They do not handle the day-to-day operations of the company.
true
t or f: The LLC as an entity can be held liable for any loss or injury caused by the wrongful acts or omissions of its members. However, members themselves generally are not personally liable.
true
t or f: The acceptance presumption can be overcome by showing that the donee rejected the gift.
true
t or f: The articles of incorporation can exclude or limit voting rights.
true
t or f: The boards of publicly-traded corporations typically create committees of directors and delegate certain tasks to these committees. By focusing on specific subjects, committees can increase the efficiency of the board.
true
t or f: The bylaws typically describe such matters as: Voting requirements for shareholders The election of and methods for replacing the board of directors
true
t or f: The choice of a corporate name is subject to state approval to ensure against duplication or deception. Most state statutes require a search to confirm that the chosen corporate name is available.
true
t or f: The corporation substitutes itself for its shareholders when conducting corporate business and incurring liability. Its authority to act and the liability for its actions are separate and apart from the shareholders who own it.
true
t or f: The directors are elected by the shareholders
true
t or f: The duties of corporate directors and officers are similar because both groups are involved in decision making and are in positions of control.
true
t or f: The issue of whether an item is a fixture (and thus real estate) or not a fixture (and thus personal property) often arises with respect to: Land sales Real property taxation Insurance coverage Divorces
true
t or f: The item must be lost property, not merely mislaid property, for estray statutes to apply.
true
t or f: The members of an L L C have considerable flexibility in managing and operating the business.
true
t or f: The nonprofit corporation is a convenient form of organization that allows various groups to own property and to form contracts without exposing the individual members to personal liability.
true
t or f: The only exception to the business judgment rule is if shareholders can show that the board or executives engaged in fraud, illegal activities, or were grossly negligent while managing the corporation."
true
t or f: The potential for corporate assets to be used for personal benefit is especially great in a close corporation.
true
t or f: The presence of consideration is what distinguishes a contractual obligation to transfer ownership of property from a gift.
true
t or f: There are a number of public-policy reasons for the adverse possession doctrine. These include society's interest in: Resolving boundary disputes, determining title when title is in question, and assuring that real property remains in the stream of commerce More fundamentally, the doctrine punishes owners who do not take action when they see adverse possession and rewards possessors for putting land to productive use.
true
t or f: There are not a lot of differences between syndicate and JV
true
t or f: To be effective, a gift causa mortis must meet the same three requirements of intent, delivery, and acceptance. The gift is revoked if the donor does not die as contemplated. A gift causa mortis may also be revoked if the prospective donee dies before the donor.
true
t or f: Today, especially in publicly-traded corporations, directors receive substantial compensation. In addition to cash compensation, directors also may receive equity (i.e., stock) in the company.
true
t or f: Today, in contrast, a majority of the states treat a partnership as a legal entity for most purposes.
true
t or f: Under SEC Rule 14a-8, a shareholder owning at least $2,000 or 1% in market value of a company's securities for at least one year is eligible to submit a shareholder proposal. The shareholder must continue to hold the shares through the annual meeting and present the proposal in person at the meeting. Shareholders are limited to submitting one proposal at a time. Only those proposals that relate to significant policy considerations, not ordinary business operations, must be included.
true
t or f: Under Texas law, mineral rights can be severed from the surface rights and sold and transferred as a separate unit.
true
t or f: Under a periodic tenancy, if leaving or kicking out, must give notice of term (if week to week, give 1 week notice. if month to month, give 1 month rent notice)
true
t or f: Under a tenancy in common, tenants can each own different percentages
true
t or f: Undue influence, duress, and fraud can come into play in determination of whether something is a gift
true
t or f: Unless otherwise specified, a JV shares property equally and get equal share of profits.
true
t or f: Unless you're willing to purchase a lot of insurance, there isn't a reason to NOT go to an LLC from a sole proprietorship
true
t or f: Unlike the partners in a partnership, the body of shareholders can often change without affecting the continued existence of the corporation.
true
t or f: Usually, a joint stock company is regarded as a partnership for tax purposes.
true
t or f: WM mainly hires their lawyers from the law firms that they worked with. WM also hired accountants from the accounting firms that they worked with. Even if you are an LLP, you can hire specialists to do the work. You are just ultimately responsible for it.
true
t or f: WM's shortest shareholder meeting was 7 mins long
true
t or f: When a corporation is created, the express and implied powers necessary to achieve its purpose also come into existence.
true
t or f: When a partner gives notice of intent to withdraw, the remaining partners must decide whether to continue the partnership business. If they decide not to continue, the voluntary dissociation of a partner will dissolve the firm.
true
t or f: When forming a JV, the most common thing the two parties can do is to set up a new entity.
true
t or f: When only some of the rights in the bundle are transferred to another person, the effect is to limit the ownership rights of both the transferor and the transferee.
true
t or f: When ownership is separated into surface and mineral rights, each owner can pass title to what she or he owns without the consent of the other owner.
true
t or f: When two or more persons agree to do business as partners, their relationship is similar to an agency relationship. Each partner is deemed to be the agent of the other partners and of the partnership. In their relationships with one another, partners—like agents—are bound by fiduciary ties.
true
t or f: When you get rid of a member, the board can elect an interim director or go to the shareholders (depending on bylaws)
true
t or f: With double taxation for corporations, the company pays taxes on its profits and when profits are passed on to shareholders, the shareholders pay income tax on them.
true
t or f: With few exceptions, the life tenant has an exclusive right to possession during his or her lifetime. The tenant also has duties to keep the property in repair and to pay property taxes. The life tenant's ownership rights cease to exist on the life tenant's death.
true
t or f: With plurality, can vote for abel or withhold my vote. If abel owns 1 share of stock and votes for himself (even though 10M shares were withheld), he wins
true
t or f: Writers and inventors who produce personal property may thereby acquire title to it.
true
t or f: creditors often will not extend credit to small companies unless the shareholders assume personal liability, as guarantors, for corporate obligations.
true
t or f: establishing ownership is simpler for personal property than for real property.
true
t or f: partners can deduct a share of the partnership's losses on their individual tax returns (in proportion to their partnership interests).
true
t or f: state law governs LLPs
true
t or f: tax law does not treat a partnership as separate legal entity for federal income tax purposes
true
t or f; Because it is not always practical for shareholders of publicly traded corporations to attend a shareholders' meeting, the law allows stockholders to appoint another person as their agent to vote their shares at the meeting.
true
t or f; Derivative lawsuits are usually brought against insiders of the corporations like directors and officers who have been accused or suspected of acts that caused harm against the corporation. Any recovery goes to the company b/c you brought lawsuit on behalf of the company.
true
During the _____ ___ process, the partners cannot create new obligations on behalf of the partnership, and they have authority only to: Complete transactions begun but not finished at the time of dissolution Wind up the business of the partnership.
winding up
A & B. A returns from netherlands, signs a really terrible contract with C who is going to provide widgets at a really bad cost. Is the partnership legally bound and liable for A's contract?
yes
A partner in a partnership is looking to buy a building in CS, but there is one in Bryan. Partners say they're not interested, now you can take it. If you go acquire it, partners may complain. Will you maybe have to sell it to the partnership for the amount you paid?
yes
A&B. A contract with C. A defrauds her, commits act of fraud. C sues partnership/Abel/Ben. Ben will say he had no clue that this happened, which is true. B can see her suing A and the partnership, but doesn't think it's allowed for C to sue B. Can C sue B?
yes
Abel says 'Thank you for all you've done. In appreciation of all of that, I want you to have this car." Is this a gift?
yes
If Ben had worked for Abel for several years, is it more believable that it is a gift?
yes
If abel was going to give ben a watch and hands him it, does that constitute delivery for a gift?
yes
If trees are cut from the land, does the timber becomes personal property?
yes
You and your brother own a piece of property from your grandmother together. Is this, in itself, a partnership?
yes
You buy 100 acres of land in texas. Probably got surface rights and mineral rights. You sell land, goes on and on. Original owner had both rights. These rights can be separated. Can say "I don't need that land, but i want the minerals and everything underneath." This is a separate estate and that is okay. If sold to brady, brady gets surface rights. Does mark still owns mineral rights?
yes
The principal has certain duties to the agent relating to (4 things):
Compensation Reimbursement and indemnification Cooperation Safe working conditions
a relationship between two parties in which one party (the agent) agrees to represent or act for the other (the principal).
agency
the fiduciary relation [that] results from the manifestation of consent by one person to another that the other shall act in his [or her] behalf and subject to his [or her] control, and consent by the other so to act.
agency
Any person can be an ______, regardless of whether he or she has the capacity to contract (including minors).
agent
t or f: Mark's dad owed shipley's. Can't give it to someone else, would be breach and he wouldn't be cooperating.
true
t or f: Partnerships are governed both by common law concepts and statutory law
true
M goes to work for ABC accounting firm, who is M's agent. M is doing the work, but as an employee of the agency accounting firm. ______ is the agent. Agreement will generally say how much associates, partners, etc. are paid per hour.
ABC
The principal has the duty to indemnify an agent for which 2 things?
For liabilities incurred because of authorized and lawful acts and transactions For the value of benefits that the agent confers on the principal
A agent for P. A asked to find an appropriate office building for P's business. A contacts C who is offering to sell 1M building that is worth 2M. A buys it or has his wife buy it, tries to sell if to P for worth of 2M. What aspect did A breach his contract with?
Loyalty
P employs A and authorizes him to purchase inventory up to $10,000. A buys $25,000. Beyond A's authority. P approves it. Can P claim that A exceeded his authority and get out of the agreement?
No
Any copyrighted work created by an employee within the scope of her or his employment at the request of the employer is a "work for hire." Who owns the copyright to the work?
The employer
A (R/E agent) is a friend of P's who offers to sell his house for free. If A tries to sell house and does so negligently (says has certain features/tested/misrepresentation) when it hasn't, can P sue A?
Yes
An implied condition in every agency contract is the agent's agreement to use reasonable diligence and skill in performing the work. When an agent fails to perform his or her duties, can liability for breach of contract result?
Yes
P employs A, authorizes A to purchase 10k of inventory. A buys total from C of 25k and goes beyond authority. P immediately rejects the purchase. Generally, Paul would be right. Here, C sues P and says that A has purchased inventory over 25k in the past and P never rejected it. Is C is entitled to rely on P's previous performance?
Yes
A is agent for P, who is acting properly. Entering into contract. Contract breached another contract. Whoever got harmed, sues. A was only acting on behalf of P, acted properly. Both being sued or A being sued. Does P have to indemnify A for any liability that has occurred? How about if A exceeds his authority?
Yes, No
Abel and Scarlet. Scarlet is actress, Abel is agent. Abel negotiates with fake company, Disney, for Scarlet to act in movie where Scarlet will get a big payout when movie hits theatres, small payout when movie hits netflix. Abel learns disney will release movie to both simultaneously (Scarlet will get less money). Abel did not tell Scarlet. Did Abel breach the contract? Can Scarlet sue Disney? Why or why not?
Yes. No, the law assumes she is aware, whether he tells her or not.
All employees who deal with third parties are deemed to be _______
agents
who allows corporations to enter into contracts
agents
An agency relationship can arise in four ways:
agreement of parties, ratification, estoppel, and operation of law
In deciding whether a worker is categorized as an employee or an independent contractor, the courts often consider the following questions: How much _______ does the employer exercise over the details of the work? Is the worker engaged in an occupation or business distinct from that of the _______? Is the work usually done under the employer's direction or by a specialist without supervision? Does the employer supply the tools at the place of work? For how long is the person employed? What is the method of payment—by time period or at the completion of the job? What degree of skill is required of the worker?t
control, employer
A principal has a duty to cooperate with the agent and to assist the agent in performing his or her duties. At a minimum, the principal must:
do nothing to prevent that performance
If the truck driver drives for UPS, he is often given a route sheet telling him exactly where to drive. He is a
employee
The deeds or statements of the principal, rather than the acts or declarations of a purported agent in and of themselves, create an agency by _________
estoppel
t or f: Agency relationship agreements must be in writing
false
t or f: Agency relationship agreements need consideration
false
t or f: Paying on completion of job (not by hour), more likely it is an employee
false
The courts may find an agency relationship in the absence of a formal agreement in which 2 situations
family relationships and emergency situations
Once the principal-agent relationship has been created, both parties have duties that govern their conduct. The principal-agent relationship is ______—based on trust. Each party owes the other the duty to act with the utmost good faith.
fiduciary
a person having a duty created by his or her undertaking to act primarily for another's benefit in matters connected with the undertaking.
fiduciary
Abel property owner, hires Ben to repair house. Abel doesn't control way that Ben gets the job. Ben is a
independent contractor
Hire someone to do lawn improvements for your house. He is probably a
independent contractor
Truck driver owns his truck. Has contracts with everyone on 2nd row of class. They all hire driver to pick up stuff from point A to take to point B. Can put some requirements in there, but you don't have any control over the day to day decisions. He is a
independent contractor
one who works for, and receives payment from, an "employer," but whose working conditions and methods are not controlled by the "employer."
independent contractor
Mark works for some one. He will provide certain services and get some money. Must determine whether employee or independent contractor. The first relationship is called employer/employee relationship and the second relationship is called a contractual relationship. The people building his pool have a contract with him, but they are not Mark's employees. They are probably employees of the company Mark has a contract with. The pool builders would be considered:
independent contractors
Most people who drive for uber are
independent contractors
Probably the main reason state governments endeavor to classify workers as employees is what?
loss of tax revenue
Can be the most common breach of duty by an agent
loyalty
Someone comes to your house once a week to do the cleaning. You supply mops, brooms, cleaning supplies, etc. Tell the person to be there by 8 and will pay a lump sum or pay off over time. Was the person an independent contractor? Someone may argue yes because they only come once a week, but that doesn't matter. What's the big deal? People said that you're taking advantage of the person because you are treating them as an employee but not paying SS, etc. Way to pay some taxes for them so you follow all of the rules. This dilemma was referred to as the:
nanny tax
arises from an agreement, express or implied, between two or more persons to carry on a business for a profit.
partnership
Historically, two or more persons entering into business together have most commonly organized their business as one of which 2 things?
partnership or a corporation
If a person who is in fact not an agent (or who is an agent acting outside the scope of her or his limited authority) makes a contract on behalf of another (a principal), and the principal later approves or affirms that contract by word or by action, an agency relationship is created by ________
ratification
The principal has a duty to _______ the agent: Whenever an agent properly distributes funds at the request of the principal; For any necessary expenses incurred in the course of the reasonable performance of her or his agency duties.
reimburse
When one party to the agency relationship violates his or her duty to the other party, the non breaching party is entitled to a ________
remedy
The Internal Revenue Service (I R S) has established its own criteria for determining whether a worker is an independent contractor or an employee. The most important factor is:
the degree of control the business exercises over the worker.
t or f: Lawyers and accountants often considered independent contractors
true
An agent who acts gratuitously—that is, without payment: Is subject only to ______ liability (he or she cannot be liable for breach of contract because there is no contract). Must perform in an acceptable manner. Is subject to the same standards of care and duty to perform as other agents.
tort
t or f: A R/E agent must notify homeowner of an offer on the house.
true
t or f: A is P's lawyer and agent. P gives A authority to complete a task of getting rid of the lawsuit. P says he will give him $10,000 (nothing behind). A gets busy, case gets to trial. A gets bored and isn't ready when trial comes. P says he won't give him $15,000. A better come up with $5,000.
true
t or f: A person must have contractual capacity to be a principal.
true
t or f: A receives a new laptop from customer for thanks for business. A must make an accounting, the laptop properly belongs to P.
true
t or f: Accountants have fiduciary relationships with clients
true
t or f: Agency relationships are almost always consensual. They come about by voluntary consent and agreement between the parties.
true
t or f: An agency agreement can: Take the form of an express written contract Be created by an oral agreement Be implied by conduct
true
t or f: An agency contract can state "I will give my best efforts, but if something fails, I'm not liable"
true
t or f: An agency relationship can be created for any legal purpose.
true
t or f: An agent is required to notify the principal of all matters that come to her or his attention concerning the subject matter of the agency.
true
t or f: An independent contractor is not an employee, but may be considered an agent
true
t or f: Any information or knowledge acquired through the agency relationship is confidential.
true
t or f: Anything truly confidential cannot be disclosed to other persons during relationship AND after relationship ends.
true
t or f: Because employees who deal with third parties generally are deemed to be agents of their employers, agency law and employment law overlap considerably.
true
t or f: Critical benefits and protections we may take for granted depend on whether the person is an employee include: Minimum Wage & Overtime Family & Medical Leave Civil Rights Laws Unemployment Insurance Workers Compensation Affordable Care Act Right to Unionize (NLRB)
true
t or f: EY is the agent of companies. When an accountant does work on account of a company, he is not the agent, just the employee of the agent. Company will hold EY responsible and EY may hold the accountants responsible.
true
t or f: Employment laws (state and federal) apply only to the employer-employee relationship. Most statutes governing workplace issues apply only if an employer-employee relationship exists. These laws do not apply to independent contractors.
true
t or f: For every duty of the principal, the agent has a corresponding right, and vice versa.
true
t or f: Frequent flyer miles, flying on behalf of your employer. United doesn't know and you put the frequent flyer points on your account. Technically, you owe your employer an account. However, employees generally don't care.
true
t or f: Go to Joe's Hardware. Mary comes up in a shirt that says "Joe's hardware." Has name tag. Implied she works there. Can imply when given a menu by someone that they are an agent of the restaurant.
true
t or f: If employee injured on job, Texas/other states have plans where you get paid, but don't sue the company. For an independent contractor, you can sue.
true
t or f: If wife purchases necessaries and charges them to the other spouse's account, the courts say the spouse is responsible for payment
true
t or f: Independent contractors are not protected in regards to age discrimination and union representation
true
t or f: Independent contractors can get unemployment compensation
true
t or f: Railroad. Emergency situations come up, expect them to act. Don't want engineer to wait for someone with authority to come out. If truly an emergency, a principal can't say they were not authorized
true
t or f: Shorter the time period, more likely it is an independent contractor
true
t or f: Studies estimate that the federal government loses between $2.7B to $4.3B annually when workers are classified as independent contractors. States' studies have shown millions in annual losses of tax, unemployment and workers' compensation revenue
true
t or f: The agent has a duty to maintain a separate account for the principal's funds and must not intermingle these funds with the agent's personal funds.
true
t or f: The agent has the duty to act solely for the benefit of his or her principal and not in the interest of the agent or a third party.
true
t or f: The common law requires the principal to provide safe working premises, equipment, and conditions for all agents and employees. The principal has a duty to inspect working areas and to warn agents and employees about any unsafe conditions.
true
t or f: The courts may find an agency relationship in the absence of a formal agreement.
true
t or f: The degree of skill or care required of an agent is usually that expected of a reasonable person under similar circumstances. You don't have to be perfect.
true
t or f: The principal has a duty to pay the agent for services rendered and to pay that compensation in a timely manner.
true
t or f: There are over 100 different legal tests in the U.S. to determine the status of workers. Federal law alone has three different tests for determining IC status. Layered on top of these, states may have up to six different tests under different laws.
true
t or f: Unless the agency relationship is gratuitous and the agent does not act in exchange for payment, the principal must pay the agreed-on value for the agent's services. If no amount has been expressly agreed on, then the principal owes the agent the customary compensation for such services.
true
t or f: Unless the agent and principal agree otherwise, the agent must keep and make available to the principal an account of all property and funds received and paid out on the principal's behalf.
true
t or f: W-4 is also taken out of each paycheck for employees, but not independent contractors
true
t or f: When a principal causes a third person to believe that another person is the principal's agent, and the third person acts to his or her detriment in reasonable reliance on that belief, the principal is "estopped to deny" (prevented from denying) the agency relationship. The principal's actions have created the appearance of an agency that does not in fact exist, creating an agency by estoppel. The third person must prove that he or she reasonably believed that an agency relationship existed. Facts and circumstances must show that an ordinary, prudent person familiar with business practice and custom would have been justified in concluding that the agent had authority.
true
t or f: When acting on behalf of the principal, an agent has a duty to follow all lawful and clearly stated instructions of the principal. Any deviation from such instructions is a violation of this duty (except during emergency situations when the principal cannot be consulted).
true
t or f; Agency law is based on common law, whereas much employment law is statutory law.
true
t or f; Most agency relationships are based on an agreement that the agent will act for the principal and that the principal agrees to have the agent so act.
true
t or f; The law assumes that the principal is aware of any information acquired by the agent that is relevant to the agency—regardless of whether the agent actually passes on this information to the principal.
true
P hires A as real estate agent. A is agent, P is principal and wants house sold. A represents that he has had over 20 years of experience in selling homes. He makes many mistakes and caused $10,000 damages. P has no experience in selling houses. If P sues A, will he most likely win or lose?
win
