MGT MindTap Practice

Yakov hires Melina to be his Vice President for Marketing. The job description is pretty broad but does not include the ability to hire or terminate lower-level employees in the Marketing division. If Melina has this power, it is based on her:

b. implied authority.

Chet is a partner in Diligent Accounting Service. Chet can inspect Diligent's books and records​

c. ​in their entirety.

The executive officers represent the ultimate authority in every corporation.​

False

As a director and officer of Max Transport, Inc., Max would most likely be considered to have breached his duty of loyalty if he:

a. buys stock in Arnold's Transport, Inc., a competing trucking firm.

Tammi purchases stock in Vivaldi Corporation. Vivaldi Corporation later encounters legal issues and faces significant legal claims. As a shareholder, Tammi's liability is:

a. limited to her investment in the stock.

Kim hires Michelle to go to the art gallery and purchase a specific painting for him. The painting costs $1,500. Because this is the purchase and sale of goods for more than $500, the contract for the painting must be in writing. In order to have a legal purchase of the painting, Kim:

a. may have Michelle sign on his behalf if the agency agreement is in writing.

Marsha is a sole proprietor of a small quilting shop. She has considered changing her business structure, but she cannot find an alternative structure that would give her the main advantage she enjoys as a sole owner. The main advantage is that she:

a. receives all the profits.

Ida and Jay are the directors of Keystone Property Management Inc. Lily and Mike are Keystone officers. Nina is a Keystone shareholder. The responsibility for the overall management of this firm rests with​

a. ​Ida and Jay.

Home Healthcare, LLC's owners are Inez and Jan. For purposes of entering into contracts, Home Healthcare is​

a. ​a legal entity apart from its owners.

Dan is a member of eLearning Courses LLC. As a member, Dan is​

a. ​an owner.

John contracts with Kelly to buy a certain number of cattle for Kelly's Circle K ranch. John makes a deal with Lawson, the owner of a local herd, and makes a down payment. Kelly fails to pay the rest of the price. Lawson sues John for breach of contract. John's right to hold Kelly liable for any damages that he has to pay is the right of​

a. ​indemnification.

Kay and Linda decide to do business as Marketing & Promotion. To be a partnership, this association can result from an agreement that is​

a. ​oral, written, or implied by conduct.

Rosa is a partner in Silver Dragon, a partnership consisting of the owners of a restaurant. Silver Dragon incurs debt for new dining tables and chairs. With respect to this debt, Rosa is​

a. ​personally liable to the full extent.

An agent can represent two principals in the same transaction as long as neither of them knows about it.​

b. False

With preemptive rights, shareholders can preempt the decisions of directors and officers with respect to corporate policy.​

b. False

Napoleon owns Napoleon's Construction and agrees to renovate Mrs. Cernan's bathroom. She will provide him with the plans and then he will do the work in the manner he determines is most cost effective and appropriate. Napoleon is likely to be classified as:

b. an independent contractor.

Jason instructs his agent Miguel to obtain a piece of artwork from Martina by threatening to beat her if she refuses to sell the artwork. Miguel follows Jason's instruction and beats Martina when she refuses to sell the item. In this situation:

b. both Jason and Miguel are liable for Martina's injuries.

Francis drives a delivery truck for Weston Industries. In the middle of his delivery route, Francis stops to have a two-hour lunch with friends twenty miles away. While in the restaurant, Francis spills some water and another person falls on it. That person sues Weston Industries. To determine liability, a court would likely decide that Francis was acting:

b. outside the scope of employment.

Genevieve is a member of the board of directors and the chief financial officer of The Shoe Fits. Under the duty of care that she owes the corporation, Genevieve does not need to:

b. oversee every aspect of the business, including such things as ordering merchandise and arranging for janitorial services

Xavier consults with an attorney and some business acquaintances from the chamber of commerce about the management of his LLC. He is told that management may take one of two forms, a member-managed LLC or a manager-managed LLC. In the second form:

b. the managers may be members, nonmembers, or a combination of both.

Lee wants to go into the business of architectural design. Among the reasons that might convince Lee to set up his business as a sole proprietorship would be​

b. ​its greater organizational flexibility.

Rita and Susan want to form and do business as Trips & Travel, Inc. They will serve as the firm's directors and officers, and will initially hold all of the stock in the company. A corporation is owned by​

b. ​the shareholders.

Julie, Manuel, and Emilio are three dentists who formed a limited liability partnership (LLP) for their dental practice. Emilio accidentally removes the wrong tooth of a patient. The patient sues the partnership for negligence and wants to hold all three doctors personally liable. A court will most likely find:

c. Emilio personally liable for negligence, but not Julie and Manuel.

Michael, Sarah, and Mindy are partners in a limited partnership that buys commercial real estate. Michael and Sarah are limited partners and Mindy is a general partner. Business is booming so Mindy asks Sarah for help. Sarah offers to buy land from LandInvest Co., and holds herself out as a representative of the limited partnership. Sarah drafts the contracts, participates in the negotiation, and completes the sale on her own. Sarah also takes on bookkeeping and related tasks to free up Mindy to locate new sellers. If a dispute arises with LandInvest Co. related to the contract and LandInvest Co. sues the limited partnership, it is possible that:

c. Sarah will be held personally liable even though she is a limited partner, and Mindy will also be held liable as a general partner.

Gina buys a piece of pottery from Woodward for her principal, Kelvin. If Woodward knows that Gina is buying the pottery on behalf of someone other than herself but does not know the identity of that person, Kelvin is:

c. a partially disclosed principal.

Dara gives her agent, Marla, money to purchase a new commercial oven. Marla takes the money and deposits it into her personal checking account. Marla then accidentally spends some of Dara's money. Marla has violated her duty of:

c. accounting.

Micah and Jonah want to start a corporation but want to be taxed as a partnership. They should form:

c. an S corporation.

Carmen is the vice president for marketing for Nita's Web Design. She also sits on the board of directors. Carmen would be considered:

c. an inside director

Mark is a director of Bromley Corp. Mark also owns a printing company named BooksMark. Bromley Corp. needs a marketing brochure printed. If BooksMark is being considered as the printer for that brochure, Mark must:

c. fully disclose his interest to the other board members and abstain from voting on the matter.

Doug is the vice president of product development for a corporation that makes flavored honey. Doug proposes to the board that they approve three new products: chili-flavored honey, seaweed-flavored honey, and black-licorice honey. Doug and his team have market tested the flavors, and they received positive reviews from focus groups. The board approves the flavors, which then fails miserably and cost the company thousands of dollars. If some shareholders sue the board for its decision to market the flavors, the board most likely will:

c. not be held responsible because of the business judgment rule.

Sarah owns half of Smith Realty, Inc., and her brother, Bill, owns the other half. Sarah routinely uses the company car, which is supposed to be only used for taking clients to view property, to run her personal errands. She also routinely uses company funds for personal uses, but always pays the money back into the corporation. When Smith Realty failed to pay its lawyer for work completed on its behalf, the lawyer sued both Smith Realty as well as Sarah and Bill personally. In this situation the court likely will:

c. pierce the corporate veil due to Sarah's commingling of interests.

Kristin signs a contract with Nature's Best Chocolate, a candy maker, apparently on Mobile's behalf. The contract is binding on​

c. ​Kristin, Lindsey, and Mobile.

Spicy Hot Dog Vendors, Inc., grants its agent Teona an exclusive territory in which to sell Spicy products. Spicy's attempt to compete with Teona in that territory would most likely violate​

c. ​the duty of cooperation.

Lizzie works for Gary in his dance supply shop and is authorized to sell inventory but not to order new merchandise. Rena, a sales representative for a new line of dance wear, comes into the store, and Lizzie places an order with her. When Gary learns the details of Lizzie's purchase, he wants to ratify the contract. The one condition that is NOT necessary for ratification is:

d. Rena must withdraw from the transaction before Gary ratifies it.

Rena incorporates her business, Rena's Rhinestones, in her home state of Maryland. She wants to expand and sell some of her jewelry in Virginia. In Virginia, her company will be considered:

d. a foreign corporation, and she will probably have to obtain a certificate of authority to do business there.

Jason, Julian, and Rebecca are members of a longstanding and successful LLC. The three members want to dissolve their LLC and distribute their assets but they know the LLC has debts. Once all the LLC's assets have been sold, the proceeds:

d. are distributed to pay off creditors first and member capital contributions next. Any remaining amounts are then distributed to members in equal shares or according to the operating agreement.

Katrina and Shannon form a general partnership to operate a gourmet kitchen business. In most states, if they do not specify their respective management rights then:

d. both partners have equal management rights.

Charlie tells Jamal that Marisol has agreed to allow him to sell her racing bicycle. Marisol is present at the time, hears the conversation, and says nothing. Jamal agrees with Charlie to buy Marisol's bike. Marisol then refuses to sell the bicycle. Marisol claims that she is not bound by the agreement formed by Charlie and Jamal because Charlie is not her agent. Marisol likely is:

d. bound by the contract, under a theory of agency by estoppel.

Kris represents Josh in the sale of his house as his real estate agent. Kris is entitled to:

d. compensation.

Suzy signs a written agreement with Phillip, giving Phillip the right to cast Suzy's votes for a certain group of people nominated for the Syllibar Corporation board of directors. This agreement between Suzy and Phillip is known as a:

d. proxy.

Laura owns and operates Meditation Center without creating a separate business organization. She receives all the profits from the fees for the classes and the sales of the center's merchandise. This is most likely​

d. ​a sole proprietorship.

Jen and Kay would like to form Lunch Garden, Inc., to enter the food vending business. Most likely, the articles of incorporation for the firm will not include​

d. ​the minutes of the first organizational meeting.

Dana is a member of Earthground Coffee, LLC, a limited liability company. Dana is liable for Earthground's debts​

d. ​to the extent of her investment in the firm.

Sarah has to move from the East Coast to the West Coast for her job. Elmo agrees to act as Sarah's agent to sell her New York condo. As her agent, Elmo owes Sarah all of the following duties except:

payment

Cheryl knows that Jake is looking to buy a new scooter. She sees one that would be perfect and negotiates with the seller on Jake's behalf. She signs a contract for the scooter using her name but clearly indicating that she is working for Jake. She actually is not. When Jake sees the scooter, he loves it and agrees to pay the contract price. If agency exists in this situation, it is agency by:

ratification