law chp.12

In Storetrax.com v Gurland, where Gurland, the founder of Storetrax.com, was removed as president but denied severance pay and sued for that, the appeals court held that he was:

-due the severance pay promised because there was no conflict of interest in his role as a board member and his compensation -protected by "safe harbor" because he gave the company sufficient notification of the imminence of a lawsuit

Shareholders of a corporation:

-have limited rights to see the corporations books and records -vote on matters that may effect a change in the corporations structure

A limited liability company:

-is taxed like a partnership and has the liability of a corporation -has the liability of a corporation

Which of the following is included in the articles of incorporation

-name and address of the corporation -name and address of the corporations registered agent -purpose of the business -names and addresses of the incorporators

the articles of incorporation usually include all of the following except:

-name of the CEO -address of the corporation and the purpose of the business and classes of stock to be issued are included

A disadvantage of the sole proprietorship form is often:

-the limited alternatives for raising financial capital -the owner is personally liable for all the business debts

a written partnership agreement typically specifies the following:

-the ownership interests of the partners -the method of accounting to be used -the name of the partnership business -the procedures for dissolution of the partnership

which of the following is a right of a limited partner in a limited partnership:

-the right to see the partnership books -the right to participate in the dissolution of the business

In Ironite Products v. Samuels, where a major shareholder of Ironite sued, contending the bylaws had been violated, the appeals court held that:

-there was no fraud, the directors followed the rules, so he had no suit -the bylaws had not been violated because the companies' bylaws clearly sanctioned the board of directors to manage the business and affairs of the company

The dissolution of a partnership occurs:

-when an event takes place that precludes the partners from continuing in business -if a partner is found to be bankrupt or if a partner dies or if the business of the partnership is unlawful

the _____ provides "default rules" that determine the operation of partnerships when the partnership agreement is silent or where there is no formal agreement among the partners

Revised Uniform Partnership Act

in general, if a partnership agreement does not specify what happens in case of the death or departure of a partner, one looks to:

Uniform Partnership Act

In Zhou v Bickley, Zhou helped Bickley start a motorcycle repair shop. When they got into a dispute later, the courts held that:

Zhou and Bickley were not partners, Bickley owed Zhou for money received to start the business run by Bickley

During the course of a partnership's winding-up process, the partners owe each other:

a duty to disclose all finances of the partnership

A limited partnership is usually dissolved by the bankruptcy of:

a general partner, but not a limited partner

in most circumstances, a partnership is now treated as:

a legal entity

At a shareholder meeting, there must be:

a quorum

A partnership can begin with:

a written agreement or an oral agreement or an implied agreement that can be inferred from the conduct of the parties doing business

General partners in a limited partnership:

are personally liable to the partnership's creditors

in general, a corporation's ______, along with an application, must be filed with the appropriate state office, along with payment of a fee to create a corporation

articles of incorporation

The company name, the address of the company or its registered agent, the name and addresses of company members and whether any members are to be liable for company debts are all included in a limited liability company's:

articles of organization

involuntary dissolution of a corporation is usually caused by:

bankruptcy or fraud in the establishment of the corporation

the duty of partners to a partnership is:

based on extraordinary trust and loyalty to the partnership

Limited partners receive their share of the profits and their capital contributions:

before general partners receive anything

the governing commitee of a corporation is the:

board of directors

limited partners are similar to corporate shareholders in that:

both are liable to the extent of their investment

After reviewing a corporation's application, the state issues a:

certificate of incorporation

a _____ is an artificial person, or legal entity, created under state law

corporation

which form of business incurs double taxation:

corporations

A board of directors' fiduciary duty of loyalty requires that:

directors place the interests of the corporation before their own interests

the process of settling the accounts and liquidating the assets of a corporation is called:

dissolution

A complete termination comes about only after the partnership has been ____ and its affairs have been wound up.

dissolved

Directors are under a _____ to conduct themselves on behalf of the corporation as a reasonably prudent person in the conduct of personal business affairs

duty of care

A ____ is any name other than the name of the individual who owns the business

fictiticious name

Partners in a partnership owe each other:

fiduciary duty

A_____ requires that each partner act in good faith for the benefit of the partnership

fiduciary relationship

under traditional common law rules, a partnership:

generally was not treated as a single legal entity

In a sole proprietorship, profits are taxed to the:

individual owner of the proprietorship

the termination of a corporation:

is conducted in two phases: dissolution and winding up, and prevents the corporation from taking on any new business and may be brought about either voluntarily and involuntarily

the owner of a sole proprietorship:

is legally the same as the business and is taxed the same as the business and may hire any number of employees

A certification of incorporation from the government:

is necessary for a corporation to be recognized legally

in a limited partnership _____ are investors who may not participate in managing the business

limited partners

A business organization made up of two or more persons who have entered into an agreement to carry on a business venture for a profit, and not all persons have the right to participate in management decisions is a:

limited partnership

dissolution of a corporation:

may be voluntary or involuntary

limited partners are investors who ____ participate in the management of the business

may not

Usually the members of a limited liability company:

may not transfer membership interests without the consent of the other members

In a sole proprietorship, the capital usually:

must come from the owner's own resources or be borrowed

the articles of incorporation usually provide all of the following except

name of all shareholders

most limited liability companies have statues that state that:

no member or manager will be personally liable for the debts of the company

In K.C. Roofing Center v. On top roofing inc. where k.c. roofing asked the courts to hold nugent, the owner of on top roofing, a cooperation which no longer existed, personally liable for the cost of roofing supplies sold to on top roofing while it existed, the appeals court held that:

nugent was personally liable for the debts owed the plaintiffs because he was using corporate status to avoid debts to the plaintiff

A limited partnership must have at least ____ general partner

one

Unless otherwise stated by the contract, the law of partnership presumes which of the following NOT to be true?

only managing partners are fully responsible for debts of the partnerships

there are _____ businesses in the United States

over 30 million

A _____ is an association of two or more persons to carry on a business as co-owners for profit

partnership

In the final dispersal of the assets of the limited partnership, creditors' rights:

precede partner's rights

Legally, the board of directors is the ____ of a corporation

principal

many states now allow groups of doctors in practice together to form a particular legal entity allowed by statute called:

professional corporation

the business judgement rule:

protects directors and managers of a corporation who have made honest mistakes in judgement

A written authorization to cast their vote so they do not have to attend a shareholder meeting in person

proxy

____ are those with stock traded on a stock exchange and, therefore are likely to have many shareholders

publicly held corporations

directors of a corporation may be:

removed for cause and be liable for a breach of duty

A corporation consists of:

shareholders, board of directors, and officers or managers

A person doing business for himself or herself is a(n):

sole proprietor

The majority of businesses in the United States are

sole proprietorships

A corporation must be created according to ____ law

state

under traditional common law rules, if you wanted to sue a partnership you had to:

sue each partner individually

The change in the relationship of partners that shows an unwillingness or an inability to continue with business may bring about _____ of the partnership

termination

a close corporation is one:

that has a small number of stockholders

In a sole proprietorship, the owner is:

the business

Which of the following are not required to be in a certificate of limited partnership

the business positions to be held by each partner

the rules that regulate and govern the internal operations of a corporation are known as

the bylaws

To create a corporation:

the corporation's articles of incorporation are filed with the appropriate officer of the state

Under the Uniform Limited Partnership Act, a written partnership agreement must include:

the name of the business and the type or character of the business and the contributions of each partner

the relation of the parties taking part in a limited liability company are:

there are two more members and the parties have a membership interest in the business

In In re 1545 Ocean Avenue, LCC, where two managers of a real estate development llc disagreed about the project and one of the managers, king, sued for work to stop the company to be dissolved, the appeals court held that:

there was not sufficient evidence that the llc could not effectively operate under the operating agreement so the trial court's decision to grant King's requests was not correct

A ____ of a corporation involves approval of the shareholders and the board of directors

voluntary

the articles of organization filed for a LLC must include:

whether it will be managed by its members or by manager and the address of the company or its registered agent and whether any members are liable for company debts

If a shareholder supplies needed material to the business then he:

will become a creditor of the corporation and will enjoy the same rights of recovery against the corporation as any other creditor

The _____ of partnership affairs involves completing any unfinished business and then collecting and distributing the partnership's assets

winding up