BUL 3310 Exam 4 true and false
LLC combine the limited liability of the partnership and the tax advantages of corportations
false
Limited Liability companies are one of the oldest forms of business organizations
false
Vic and Thom bought an antique corvette at auction with the intent of restoring it and selling it for a profit, which they will share equally. Vic and Thom have formed a professional association
false
a business organized as a proprietorship may have up to, but not more than 35 owners
false
a commonly citied disadvantage of an LLC is that its members often risk personal liability if the business of the LLC fails
false
a creditor can never be required to give the surety notice that the debtor is in default
false
a creditor in possession of collateral given to him or her by the principal may return it to the principal without the consent of the surety
false
a creditor must exhaust his or her judicial remedies against the principal before seeking to recover from the surety
false
a directors duty of care under the business judgement rule is a lower standard than that of professional negligence
false
a disadvantage of the limited liability company is that profits are taxed both as income to corporation and as dividends to the membes
false
a doctor who practices as part of a professional association cannot be sued for malpractice
false
a joint venture cannot sue or be sued
false
a lien for the value of materials and labor used in the construction or improvement of real property is an artisans lien
false
a limited partnership has to have at least two general partners and at least one limited partner
false
a member of an LLC can never be personally liable for the debts of the LLC
false
a partner's capital contribution may consist in business experience or service to the firm
false
a partnership cannot have a provision for the continuation of a partnership upon death of one of the partners
false
a partnership is a taxable entity
false
a shareholders desire to discover why a dividend was not paid is not a "proper purpose" for allowing the shareholder access to the corporations records
false
a shareholders right to dissent from a proposed merger and have his shares purchased by the corporation is the right of preemption
false
a surety and guarantor have always been treated as the exact same
false
a suretyship provides a lien credit a legal interest in the property of the debtor to secure repayment of the loan
false
absent an agreement otherwise, each partner is entitled to compensation for his or her services in managing business
false
an artisans lien is a special lien that applies exclusively to the liens artists receive on artwork they personally performed
false
an artisans lien is always assignable
false
an improvement to real property necesarily increases the market value of the real propety
false
an llc must have at least two members that participate in management in order to lawfully do business.
false
any money recovered in a successful derivative suit belongs to the shareholder who initiated the suit
false
any profits which a surety makes when called upon to perform the principals duties belong to the surety
false
any profits which a surety makes when called upon to perform the principals duties belongs to the surety
false
article 2A of the Uniform Commerical Code governs the sale of securities
false
bob voluntarily surrenders a watch that he repaired back to the owner. Bob had a lien on the property for the value of his labor. Bob later re-acquires the property. Bob has no revived his lien since he was able to re-acquire possession of the property.
false
bonding companies are usually uncompensated sureties
false
compared to other business entities, a general partnership requires filing complex documentation with the secretary of states office before it is authorized to do business
false
courts will allow creditors to pierce the corporate veil of any corporation that has only one shareholder
false
directors and shareholders may vote by proxy
false
directors have no personal liability for illegally declared dividends
false
directors may be compensated by their services
false
directors may vote on matters in which they have personal interest
false
if a partner assigns his or her interest in a partnership to a creditor, the assignee steps into the shoes of the pater and becomes entitled to participate in the management of the business
false
if you form an LLC you are required to have a written operating agreement
false
in a closely held corporation, the shareholders will be personally liable for torts committed by employees of the corporation if committed while carrying out their employee duties
false
in a closely helf corporation, the majority shareholders have a statutory duty to purchase the stock of a minority shareholder who has died
false
in a limited liability company, the unanimous consent oft eh member is required to hire a new employee
false
in a limited partnership, a general partners fiduciary duty is breached when limited partners are not permitted to participate in managment
false
in a limited partnership, each limited partner has an equal right to participate in the management of the business
false
in a manager-managed LLC, only the manager-members have acsess to LLCs books
false
in a partnership for a term of years, each partner has both the power and the right to withdraw from the partnership at any tiime
false
individual members of the LLC can never bind the LLC in a valid enforceable contract
false
lack of capacity and discharge in bankruptcy are two common defenses that are available to a surety that may be asserted against a creditor
false
limited partnerships must have one general partner for every seven limited partners
false
limited partnerships offer a convenient way for professional and family-owned enterprises to do business
false
marshaling of assets is the tax doctrine that allows income to be taxed only at the owner level and not at the organization level
false
minority shareholders have the best chance of electing someone to the board of directors under the straight method of voting
false
misconduct of the principal that induces a party to become a surety allows that surety to avoid the contract
false
modernly, surety and indemnification contracts are the same thing
false
one of the disadvantages of a limited liability partnership is double taxation
false
participating preferred stock allows holders to trade their preferred shares for common shares when the trading price reaches a specified target
false
partners may use partnership property for both partnership and personal reasons
false
partnerships are required to give notice to creditors when they dissolve, but corporation are not required to give notice of their dissolution
false
partnerships are required to use the term "company" in their names
false
receivers have liability on the pre-incorporation contracts of the corporation
false
shareholders are taxed on the value of the stock they receive in the stock dividend
false
shareholders have virtually unrestricted access to corporate books and records
false
state laws regulating the sale of securities within the state are called red herring laws
false
stock that is issued and then repurchased by a corporation is watered stock
false
the articles of incorporation are drawn up at the first organizational meeting of the corporation
false
the general contractor is eligible for a mechanics lien on the real property, but the subcontractors on the project are not
false
the majority of states have not yet enacted limited liability partnership enabling statues
false
the owner may be liable for more than the contract price even if they follow the statutory procedures
false
the owner of a limited liability company (LLC) has unlimited personal liability for the debts of the LLC
false
the partnership must pay interest each year on the capital contributions of the partners
false
the person appointed by a corporation to receive service of process is the receiver
false
the release of the principal always releases the surety
false
the statue of limitations does not apply to surety contracts
false
the surety relationship requires good faith, but not fair dealing
false
there must be an equal ratio of limited partners to general partners in all limited partnerships
false
Absent a contrary provision in the partnership agreement, all partners have equal rights in the management of the business.
true
BOTH performance bonds and fidelity bonds are sureties
true
LLC are taxed as partnerships unless the owners choose to be taxed as a corporation
true
Once a corporation has been dissolved and the remaining assets of the corporation have been distributed to the shareholders, a creditor of the corporation may be able to sue the former shareholders on the corporate debt
true
a buy and sell agreement normally specifies the terms under which a withdrawing or deceased partner's interest will be bought out
true
a buy and sell agreement specifies the terms under which a withdrawing or deceased partners interest will be bought out
true
a corporation is a person for purposes of the due process clauses of the 5th and 14th amendments
true
a corporation must qualify to do business in each state where it conducts business activities
true
a corporation officer may be personally liable to the injured third party if he or she aided the corporation in violating a copyright infringing on a patent
true
a creditor can assign a general guarantors promise to a new creditor for value
true
a directors duty of care is that of a normally prudent businessperson in the management of his or her own affairs
true
a general guarantors promise is not limited to a single transaction
true
a limited partner has liability to the full extent of his or her capital contribution
true
a limited partner normally has no liability beyond his or her contribution
true
a limited partner risks personal liability when he or she actively participates in the management of partnership affairs
true
a limited partnership allows limited partners to be only liable for their capital contribution
true
a limited partnership must have at least one general partner and one limited partner
true
a new partner is liable only to the extent of his or her capital contribution for the already existing debts of the partnership
true
a partner in a trading partnership has the implied power to make warranties on goods sold by the partnership
true
a person may become a partner without making capital contribution
true
a principal who is discharges in bankruptcy is released from his duty to reimburse the surety
true
a promotor has a fiduciary responsibility toward the prospective corporation
true
a receiver is an officer of the court who takes possession of the property involved in a lawsuit for the benefit of the ultimate owner
true
a shareholder who has not fully paid the corporation for an original issue of stock may become liable to a creditor of the corporation for the unpaid balance
true
a shareholder who holds watered stock is potentially liable to the creditors of the corporation should the corporation become insolvent and unable to meet its obligations
true
a sole proprietorship is not taxable entity; all profits or losses are reported and taxed as individual income
true
a sub-surety becomes liable to the creditor only when another surety fails to perform
true
a subchapter s corporation is taxed the say way a partnership is taxed
true
a surety who only guarantees collection is entitled to notice
true
a suretys obligation is generally a promise to do what the principal agreed to do
true
absent an agreement otherwise, a limited liability company's operating agreement can only be amended with the unanimous consent of the members
true
an advantage to doing business as a corporation is that ownership interests can be transferred without impact on day-to-day business operations
true
because the LLC is a relatively new type of business entity, there are often fewer published court options adressing LLC issues
true
boards of directors normally have the power to purchase insurance to indemnify directors who are sued personally for corporation related actions
true
both contractors and subcontractors are entitled to a mechanics lien against the owner for nonpayment of their accounts
true
california and new york allow only professional services firms to do business as limited liability partnerships
true
co-sureties share joint and several liability to the creditor
true
contractors have a long period in which to file mechanics liens that subcontractors of suppliers have
true
contracts of suretyship are legally indistinguishable from contracts of indemnity
true
corporations normally have the power to make charitable contributions
true
courts will not allow a merger of corporations if the only purpose is to get rid of minority shareholders
true
directors are fiduciaries of the corporation and may have liability to both contract and tort
true
if a credit gets a judgment against the creditor, and then surety pays the creditor, the surety gets to benefit from the judgement that was obtained by the creditor
true
if a director discovers illegal activity he or she must report the activity or problem, and if the officers of the corporation refuse to take action, the director must resign and notify the appropriate authorities
true
if net profits are retained in a subchapter S corporation, income tax must be paid by shareholders on these earnings even though the earnings have not yet been received
true
if the formalities of creating limited partnership are not met, a partnership will be treated by courts as a general partnership
true
if the principal does not default, the surety never becomes liable to the creditor
true
in a closely held corporation, shareholders owe each other substanitially the same fiduciary duties that partners owe one another.
true
in a limited liability company, the losses stay with the corporation although the profits pass through to the shareholders
true
in a manger-membered LLC, an individual or small group has the authority to control and make decisions for the LLC
true
in a member managed LLC all members participate in managment
true
in a member-managed LLC all members participate in management
true
in most states corporations can have perpetual existence
true
in the majority of states an LLC can be both formed and managed by only one member
true
investors favor using limited partnerships to invest in commercial real estate because they can use the depreciation of the property as a tax loss
true
legal capacity is the ability of an organization to sue and to own property
true
limited partners may lose the full amount of their capital contribution if the limited partnership incurs debts that exceed its assets
true
limited partnership must have at least one general partner
true
members of professional associations and professional corporations are eligible under the tax code to participate in pension and profit sharing plans
true
modification of the creditor-principal agreement generally discharges the surety
true
most states consider a shareholder attempt to oust management to be a proper purpose for allowing shareholders access to corporation books and papers
true
officers of a corporation are responsible for carrying out the policies set by the board of directors
true
once a cash dividend is declared, it becomes a debt of the corporation
true
one partner has the ability to veto admissions of a new partner into the business
true
one recognized advantage to a general partnership is that it allows partners to share in managment and profits of the partnership
true
partner A defrauded a client of the partnership. Partners B and C are jointly and severally liable with A to the client, even though they were unaware of the fraud
true
partnership must be kept in the firm's place of business and be accessible to all partners
true
partnerships typically buy life insurance policies on each partner in order to fund the required pruchase of the partner's interest in the partnership when the partner dies.
true
premiums paid by corporations for the health insurance it provides employees are tax-deductible exprense
true
professional corporation are business entities organized under state law
true
professional corporations are under business entities organized under state law
true
relative to corporate and partnership law there is not a comparable amount of case law involving LLCs.
true
restatment of security treats contracts of suretyship as interchangeable with guarantor contracts
true
shareholders are entitled to notice when a special meeting is called
true
shareholders may dissent from both stock-for-stock mergers and cash-for-stock mergers
true
shareholders may vote on matters in which they have a personal interest
true
shareholders of a corporation may also be employees of that corporation
true
shareholders of corporations pay taxes on the dividends distributed by the corporation
true
some states use the alter ego theory to require corporations to assume liability for contracts negotiated on their behalf by the promotors
true
state law determines whether or not a mortgage will have priority over a mechanics lien
true
state laws regulating the sale of securities within the state are called blue sky laws
true
states have statue of limitations limiting the time after the dissolution of a corporation when creditors of the corporation may sue former shareholders on corporate debts
true
stock warrants are not transferable and cannot be sold on any stock exchange
true
subrogation means the substitution of one person in place of another
true
surety agreements may also be created by operation of law
true
the admission of a new partner automatically dissolves the partnership
true
the agreement to purchase stock in a future corporation is a pre-incorporation subscription
true
the bankruptcy of a parter will cause the dissolution of the partnership by the operation of law
true
the business judgment rule protects directors who are loyal and careful, from liability for business decisions that results in loss to the corporation
true
the capital contribution of each partner is a liability to the partnership and must be returned to the partner when the partnership ends
true
the directors duty of loyalty continues after the directors resignation
true
the limited liability partnership is often an attractive option for professional associations such as law firms, accountants and medical doctors
true
the manager of a manger-managed limited liability company may be a non-member
true
the party who signs the application for a corporate charter is the incorporator
true
the provisions of the law and partnership agreement govern the operations of the partnership
true
the surviving corporation in a merger assumes the liabilites and obligations of the merged corporation
true
the surviving partner is entitled to compensation for winding up the affairs of the partnership
true
the tax code does not allow corporations to deduct as expenses excessive or unreasonable compensation to officers and employees
true
the two types of guaranty agreements are general and special
true
to create a limited liability corporation, articles of organization must be filed with the state's secretary of states office
true
under rupa, a partnership may take title to real life property as a tendendcy in partnership
true
unless agreed to otherwise, all partners have an equal vote in the management decisions of the partnerships
true
usury laws do not apply to corporations when they borrow money
true
voluntary surrender of persona property subject to an artisans lien generally terminates the lien
true
when dealing with an absolute guarantor, the creditor does not have to first attempt to collect from the debtor prior to proceeding agains the guarantor
true
when holders of mechanics liens are equal in priority, and there are not sufficient funds to satisfy all their claims, they will share the funds that are available on a pro-rata basis.
true
