Chapter 40, Chapter 38, Chapter 37 Final

Dean, a partner in Equipment Sales, applies for a loan with Farmers Bank allegedly on Equipment's behalf but without the authorization of the other partners. The bank knows that Dean is not authorized to take out the loan. Liability in the event of default will be imposed on

Dean.

Glen is a partner in Home Builders, a construction firm. Glen's assignment of his interest in the partnership to Investment Consultants results in

Glen's wrongful dissociation and liability for any damages.

Jana and Kwan are partners in Lawyers LLP, a limited liability partnership. Jana supervises the firm's associate Milo, who negligently fails to appear in court on behalf of Norm, a client. Liability to Norm rests only with

Jana and Milo.

Kris and Linda are partners in Mobile Devise, an online marketing firm. Kris signs a contract with Nature's Best Chocolate, a candy maker, apparently on Mobile's behalf. The contract is binding on

Kris, Linda, and Mobile.

Molly is a director and Ned is an officer of Online Education Inc. Liability for the torts of employees under their supervision may extend to

Molly and Ned.

With respect to a corporation, a director is

a fiduciary.

Greenway Corporation and Happy Trails Inc. combine their efforts to build a network of biking and hiking trails along an unused railroad spur. Their form of business organization is

a joint venture.

Rocket Corporation and Star Inc. wish to combine their capabilities to launch a single flight to the moon. The appropriate legal entity for this project is most likely

a joint venture.

Grape Vineyards LLC, the members of which include Howie and Ilya, can hold title to property because as a limited liability company the firm is

a legal person.

When directors vote on issues affecting the corporation, ordinary matters generally require

a majority vote.

A limited liability company that wants to distribute profits to its members could avoid "double taxation" by electing to be taxed as

a partnership.

Rural Development Company and Suburban Real Estate Corporation form a joint stock company. This firm can be formed for, at the most,

a perpetual existence.

Erin, a shareholder of Finance Inc., demands the right to inspect corporate records to determine whether management has engaged in self-dealing that impacts the company. The firm refuses the request. On Erin's challenge, a court is most likely to hold that her request constitutes

a proper purpose.

Carmen and Diego are shareholders of Espresso Inc. Carmen's written authorization to Diego to vote her shares at a shareholders' meeting is

a proxy.

Bayside Restaurant LLC is a limited liability company. Its sole member is Conrad. For federal income tax purposes, unless the firm indicates otherwise, it will automatically be taxed as

a sole proprietorship.

Leon, Michael, Nolan, and O'Neill join together to buy a professional basketball franchise. Their selected form of business organization is an investment group, which is also known as

a syndicate.

The rights of the director of a corporation include a right to

access the corporation's books, records, facilities, and other property.

As the promoter of Glassworks LLC, Hans enters into a contract with Interstate Transport Company. Once formed, Glassworks can

adopt the contract through novation.

Olivia is a partner in Pacific Trade. In the majority of states, with respect to any partnership obligations that Olivia does not participate in, know about, or ratify, she would be liable for

all of the obligations, jointly and severally.

Cal, Dex, and Erin agree to be partners in Fajitas, a food cart outfit, splitting the profits equally. Cal contributes 65 percent of the capital. When Fajitas is dissolved, its liabilities are greater than its assets. The losses are paid by

all of the partners in proportion to their shares of the profits.

Orly's Adventure Travel and Paquito's Wild River Tours form a joint venture. Orly can participate in the venture's management to

any extent.

Nell is considering forms of business organization for Optic Center, a medical eye clinic. An advantage of a limited liability partnership is that, depending on the applicable state statute, partners can avoid personal liability for

any partnership obligation.

The number of directors that serve on a corporate board is determined by its

articles of incorporation.

Ensure Care LLC's owners are Fez and Guan. As a limited liability company, Ensure Care enters into contracts

as a legal entity apart from its owners.

In some states, to form a limited liability company, a business must have

at least two members.

Betsy is a director of ChemCo Inc. Because of this position, she becomes involved in litigation. With respect to the costs, fees, and damages involved, she has a right to

be reimbursed, or indemnified.

Kay and Leo form Metro Delivery Inc. Responsibility for all policymaking decisions related to corporate affairs lies with Metro's

board of directors.

Brent and Char are limited partners in Dental Center, a limited partnership. In terms of the firm's books and information regarding partnership business, Brent and Char are entitled to

complete access.

Holly is an officer of Indelible Inc. The board removes Holly in violation of an employment contract. Indelible may be liable for breach of

contract.

Liability for negligence in the performance of corporate duties may extend to

directors and officers.

Oscar is a partner in Party Caterers. Oscar's death will

dissociate the partner from the firm.

Cathy, Don, and Ethel are partners in Fruit Orchard Farms. Cathy gives notice to quit the firm, which otherwise continues to do business. This is

dissociation.

Kim and Lyle are partners in K&L Sales, which exports technical equipment. If Congress declares that the equipment can no longer be exported, K&L

dissolves immediately unless the partners change its business.

Start-Up LLC is a limited liability company without a written operating agreement. Among the members, a dispute arises concerning the division of profits. Under most LLC statutes, the profits will be

divided equally among the members.

With respect to a corporation, an officer's rights are defined by

employment contracts.

A corporate director may not

engage in self-dealing.

Like other limited liability companies, for federal jurisdictional purposes, Rodeo Productions LLC is most likely a citizen of

every state of which its members are citizens.

Del and Efron want to form a limited partnership to do general business bookkeeping with an emphasis on tax accounting. In most states, a limited partnership will be created when Del and Efron

file a certificate of limited partnership.

With respect to taxes imposed on limited liability companies, most states

follow the federal rules.

Dairy Products, Inc., and Eden Farms Corporation form a joint venture to make and test-market Frosty Ice Cream. If this joint venture is like most joint ventures, it will continue

for a single project only.

Kathy is a director of Line Production Inc. As a director, with respect to the corporation, Kathy is expected to subordinate

her personal interests to the corporation's welfare.

Gwen and Hera do business as G&H Civil Engineers, a partnership. The Uniform Partnership Act governs the firm

in the absence of an express agreement.

Sol and Thom agree to form a partnership to sell real property. To be enforceable under the Statute of Frauds, their agreement must be

in writing

A limited liability company that operates in more than one state may not receive consistent treatment. This is because, according to the principle that in most states determines the law that applies to a foreign limited liability company, one state's courts must

interpret and apply another state's laws.

The major features of an LLP are that it limits the personal liability of the partners and

it allows the partnership to continue as a pass-through tax entity.

Cornell and Duke are partners in Equity Lending. They decide to admit Fran to the firm as a new partner. Fran's liability for partnership debts incurred before her admission is

limited to her capital contribution to the firm.

Accounting LLC is a member-managed limited liability company. Unless the members have agreed otherwise, all decisions with respect to the firm's business are made by

majority vote.

Roy is a director of Sales Inc. Sales enters into a contract with TeleCenter Corporation in which Roy has a personal interest. Roy must

make a full disclosure of the conflict of interest.

A corporate officer

manages day-to-day operations of the corporation.

Data Analytics LLC is a limited liability company. Unless the firm's articles of organization specify otherwise, it will most likely be assumed that the firm is

member-managed.

Belle is a director on the board of Construction Corporation. The board delegates certain tasks to Dido, the corporate president, and other officers. Belle fails to reasonably supervise the work. She is most likely liable for

negligence or mismanagement.

Vern is one of three partners in Waffles Food Truck. Concerning all aspects of the partnership business, Vern is entitled to information

on a complete basis.

Development LP is a limited partnership that invests in residential real estate projects. Its limited partners include more than 150 sophisticated investors and investment professionals, including Ethan. Ethan loses his limited liability if he

participates in the firm's management.

Oil Inc. and Petro Corporation form a joint venture to design and test petroleum storage facilities and equipment. When a dispute arises, Oil files a suit against Petro. The court is most likely to apply the same principles to this joint venture as it applies to

partnerships.

Rosa is a partner in Sugar & Spice, a partnership consisting of the owners of a bakery. Sugar & Spice incurs debt for new ovens. With respect to this debt, Rosa is

personally liable to the full extent.

To gain an advantage in a business deal, Masonry LLC engages in fraud. Nicole, a member of Masonry, significantly contributes to the firm's misconduct. For any resulting damages, a court is most likely to hold Nicole

personally liable.

Randy is a director of STEM Inc. As a director, with respect to the corporation, Randy is expected to use

prudent business judgment.

Phone Apps LLC is forming as a limited liability company. To become a manager-managed firm, Phone Apps' members must

refrain from participating in the firm's operations.

Dhani, Ezra, and Finn are the first directors on the board of Global Shipping Corporation. Subsequent directors will be elected by a majority vote of Global's

shareholders.

Among the states, the law governing limited liability companies is far from uniform because

state limited liability company statutes vary from state to state.

A business organizational form that limits its owners' liability allows the firm to lawfully

take risks.

Guy is a director of Healthcare Corporation. Guy attempts to use his best judgment in guiding corporate management but makes a few honest mistakes. He may be protected from liability for these mistakes by

the business judgment rule.

Blake is one of three partners in Commercial Custodial. With respect to Blake's interest in the firm, when she dies, her heirs are most likely entitled to

the buyout price paid by the firm for the interest.

When a vacancy occurs on a corporate board, how the position will be filled is most likely set forth in

the corporation's articles or bylaws.

Nora and Owen do business as Property & Profit, a real estate investment partnership. In acting on the firm's behalf, Nora takes advantage of an opportunity to make a secret profit. To her firm, Nora is liable for a breach of

the duty of loyalty.

Singh, a member of Trucking LLC, ceases to be associated in the carrying on of the business of the firm. Despite the dissociation

the member's duty of care continues with respect to prior events.

Brad and Carol are partners in Doctors for Children, a medical clinic. Brad's dissociation from the firm results in

the partnership's buyout of Brad's interest in the firm.

The audit committee of a publicly held corporation is responsible for

the selection, compensation, and oversight of accountants who audit the firm's financial records.

Olin is a partner in Precision Plumbing. When the partners decide to dissolve the firm, Olin collects and distributes the assets. This results in

the termination of the firm's legal existence.

Vaughn starts Wind Systems to make and sell turbines. Later, Vaughn contracts with Xi to invest additional capital in the firm in exchange for 25 percent of the profits. Vaughn and Xi are not partners in Wind Systems because

they do not have joint control over the business.

Risk Insurance Inc. has a board of five directors. Risk's bylaws do not state any quorum requirements. As in most states, a quorum for Risk's board meetings is

three directors

Dain is a limited partner in Eco Baits, a pest control service organized as a limited partnership, which cannot pay its debts. Dain is liable for the debts

to the extent of his capital contribution to the firm.

Han is a shareholder of Insulation Inc. When the directors fail to undertake an action to redress a wrong suffered by the firm, Han files a suit on its behalf. Any damages recovered by the suit will go to the firm's

treasury.

Paving LLC is a foreign limited liability company in the state of Ohio. In dealing with Paving, Ohio will apply the law of the state where the firm

was formed.