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Which of the following is NOT governed by the operating agreement of an LLC
the name of the LLC
A stockholder purchases $10,000 of a preferred stock that pays a 6 percent dividend annually. The stockholder has ________.
the right to receive $600 each year as a dividend on the preferred stock.
Which of the following is NOT a corporate power?
to make excessive contributions to a political campaign
Michael is a member of a member-managed LLC. While engaging in LLC business, Michael is driving an automobile and accidentally hits Ibrahem, a pedestrian, and severely injures him. Ibrahem sues the LLC and recovers $500,000 in damages. If Michael breached his duty of care to the LLC, he is liable ________.
to the LLC and to Ibrahem Michael is liable as tortfeasor to Ibrehem and to the LLC for the $500,000 because he breached a duty of care. A duty of care is a duty owed by a member of a member-managed LLC and a manager of a manager-managed LLC not to engage in (1) a known violation of law, (2) intentional conduct, (3) reckless conduct, or (4) grossly negligent conduct that injures the LLC. This duty is a limited duty of care because it does not include ordinary negligence. Thus, if a covered member or manager commits an ordinarily negligent act that is not grossly negligent, he or she is not liable to the LLC.
A ________ is a person who intentionally or unintentionally causes injury or death to another person.
tortfeasor
A member or a shareholder is the owner of a Limited liability company (LLC).
true
A simple legal argument, in this class, has a minimum of 3 parts but may have more than 3 paragraphs
true
AC #1. Mr. Leeland can be expected to testify as follows: I called up Turner, the agent for RM, Inc. and asked if they would install my air conditioning system for $25,000 and Turner said, "Yes". We have a contract but they refused to comply. I had to hire another company to do the job for $45,000 and they should have to pay me $20,000.Ms. Turner can be expected to testify as follows: Mr. Leeland called me and asked if we installed air conditioning systems. I said we do. He asked how much it would cost. I said, we have to come out and see your store. He said "I have a store similiar to Far West and Mr. West, the owner of Far West said you did his store for $25,000. Is that true?" I told him yes, we did the Far West store for $25,000. Would you like us to come and do an estimate at your place? When we went out to do the estimate he had a much larger store than the one at Far West and I told him I did not think we could do it for less than $46,000. He said, "Let me think about it". We never heard from him again until we got served with the lawsuit. This scenario raises an issue of fact: What was said?
true
The state legislature of the state of Michigan can pass any law it wants to unless that law violates Michigan or US constitutional law.
true
An LLC (limited liability company) is a(n) ________
unincorporated business entity
Sarah, Jim, and Alex decided to form Super Company, LLC. Sarah contributed $5,000; Jim contributed $10,000; and Alex contributed $15,000. While on LLC business, Jim accidentally hits and injures Ronald. Who is liable for Ronald's injuries?
Sarah, Jim, and Alex could all be held liable but only up to their capital contributions
An LLC is a(n) _____ LLC unless it is designated as a(n) _____ LLC.
at-will; term
Which of the following is true about non-for-profit corporations?
Although not-for-profit corporations may make a profit, they are prohibited by law from distributing this profit to their members, directors, or officers.
Which of the following is a CORRECT statement regarding common stock?
Common stock does not have a fixed maturity date. Common stock is an equity security that represents the residual value of a corporation. Common stockholders have the right to elect corporate directors. Common stock has no preferences.
Which of the following is a CORRECT statement regarding corporations
Corporations range in size from one owner to thousands of owners.
Which of the following is true of an S corporation?
The corporation can have no more than 100 shareholders
A domestic LLP is
a limited liability partnership in the state in which it is organized
Delaware has a special court—the court of _____—that hears and decides business cases.
chancery Delaware has a special court—the court of chancery—that hears and decides business cases. This court has been around for more than 200 years. In that time, it has interpreted Delaware corporation law favorably for large corporations in matters such as electing corporate boards of directors, eliminating negligence liability of outside directors, and upholding the antitakeover provisions of the Delaware corporation code.
Which of the following is NOT part of a member's fiduciary duty of care in a member-managed LLC?
duty not to commit an ordinarily negligent act that injures the LLC
Firac Stands for: Facts Issue Rule or law Argument Conclusion
false
GOVERNMENT 11TF: Contract law is primarily a matter of federal law.
false
The owner of an LLC (limited liability company) is called a ________.
member
An LLC is a _____-managed LLC unless it is designated as a _____-managed LLC in its articles of _____.
member; manager; organization
This question relates to an argument which I have titled "The Hot Dog Passage". I want you to read it before class so you have some understanding before you try to brief it. If you did not read the argument, do so now. A copy is located in the Weekly Assignment folder for Week 3. This passage involves a Michigan statute.
true
Which of the following is NOT a correct statement regarding a limited liability company (LLC)
An LLC cannot sue or be sued. An LLC cannot enter into contracts. An LLC is indistinguishable from its members. An LLC cannot be found civilly or criminally liable for violations of law.
Which of the following is a correct statement regarding a limited liability company (LLC)
An LLC is a separate legal entity.
Which of the following is NOT true about continuing an LLC?
At the expiration of the term of a term LLC, the members may not continue the LLC.
Which of the following is a source of a corporation's express powers?
A corporation's express powers are found in (1) the U.S. Constitution, (2) state constitutions, (3) federal statutes and state statutes, (4) federal and state administrative agency rules, (5) articles of incorporation, (6) bylaws, and (7) resolutions of the board of directors.
A(n) _____ corporation is a corporation that does not qualify to or does not elect to be federally taxed as an S corporation.
C
A corporate name cannot contain the word University if it is not authorized to conduct the business of granting undergraduate and graduate degrees.
False
Foreign corporations can elect to be taxed as an S corporation
False
Shareholders cannot seek an injunction against an ultra vires act by a corporation
False
Which of the following is a corporate power?
Generally, a corporation has the power to purchase, own, lease, sell, mortgage, or otherwise deal in real and personal property; make contracts; lend money; borrow money; incur liabilities; issue notes and bonds and other obligations; invest and reinvest funds; sue and be sued in its corporate name; make donations for the public welfare or for charitable, scientific, or educational purposes; and the like. An ultra vires act is an act by a corporation that is beyond its express or implied powers such as to make excessive contributions to a political campaign.
Which of the following is true about winding up a limited liability company (LLC)?
It is good practice for members to specify in the operating agreement how distributions will be made to members. If an LLC is not continued, the LLC is wound up. After dissolution and winding up, an LLC may terminate its existence by filing articles of termination with the secretary of state. The winding up of an LLC involves preserving and selling the assets of the LLC and distributing the money and property to creditors and members.
Which of the following is a CORRECT statement regarding selecting a state for incorporation?
Large corporations generally opt to incorporate in the state with the laws that are most favorable to the corporation's internal operations.
Which of the following is NOT a correct statement regarding a limited liability partnership (LLP)?
Limited liability partnership codes do not regulate the operation of LLPs. Once enacted, a state legislature cannot amend its LLP statutes. An LLP can be created only pursuant to the laws of the United States Code. Limited liability partnership codes do not regulate the dissolution of LLPs.
Which of the following is NOT true regarding limited liability companies?
Most LLCs are taxed at the entity level.
Which of the following is a CORRECT statement regarding selecting a state for incorporation?
Most corporations choose to incorporate in the state in which the corporation will be doing most of its business.
Which of the following is a CORRECT statement regarding corporations
Owners of corporations are called shareholders
Which of the following is an INCORRECT statement regarding preferred stock?
Preferred stock is an equity security that represents the residual value of a corporation.
Which of the following is a CORRECT statement regarding preferred stock?
Preferred stockholders have limited liability. Preferred stockholders generally do not have the right to vote for the election of directors. Preferred stock can be issued in classes or series. Preferences of preferred stock must be set forth in the articles of incorporation.
Which of the following must be included in the articles of incorporation?
The number of shares the corporation is authorized to issue
Which of the following is true regarding limited liability companies?
The owners of LLCs are usually called members. An LLC is a separate legal entity from its owners. An LLC may elect to be taxed as a corporation. They are creatures of state law, not federal law.
Which of the following is true about administrative dissolution?
The secretary of state can obtain administrative dissolution of a corporation if it did not pay its franchise fee. The secretary of state can obtain administrative dissolution of a corporation if it failed for 60 days to maintain a registered agent in the state. The secretary of state can obtain administrative dissolution of a corporation if it failed to file an annual report. The secretary of state can obtain administrative dissolution of a corporation if it failed for 60 days after a change of its registered agent to file a statement of such change with the secretary of state.
Which of the following is NOT true about administrative dissolution?
The secretary of state can obtain administrative dissolution of a corporation if the corporation has been sued.
What is an 'assumption'?
The statement of a fact or law without proof of its existence
In this class you will be given factual situations. Which of the following is true regarding these factual situations?
The student must assume that all facts have been proven
Which of the following is NOT true about non-for-profit corporations?
They are prohibited from making a profit.
Which of the following is true about non-for-profit corporations?
They can be formed for charitable purposes.
Which of the following is true about non-for-profit corporations?
They can be formed for educational purposes.
Which of the following is true about non-for-profit corporations?
They can be formed for religious purposes.
Which of the following is true about the ownership of for-profit corporations?
They can be owned by a small group of family members.
Which of the following is true about the ownership of for-profit corporations?
They can be owned by one person.
Which of the following is true about the ownership of for-profit corporations?
They can be owned by professionals.
Which of the following is NOT true about the ownership of for-profit corporations?
They can be owned by the government.
Which of the following is true about the ownership of for-profit corporations?
They can sell their shares on an organized securities market.
Which of the following is an INCORRECT statement regarding corporations
Today, most corporations are formed pursuant to general corporation laws of the federal government.
A C corporation pays taxes at the corporate level and the shareholder's level
True
An operating agreement is
an agreement entered into among members that governs the affairs and business of the LLC and the relations among members, managers, and the LLC An agreement entered into among members that governs the affairs and business of the LLC and the relations among members, managers, and the LLC is called an operating agreement. The operating agreement may be amended by the approval of all members unless otherwise provided in the agreement. The operating agreement and amendments may be oral but are usually written. A statement of disassociation is a document filed with the secretary of state that gives constructive notice that a member has disassociated from an LLC. The articles of organization are the formal documents that must be filed at the secretary of state's office of the state of organization of an LLC to form the LLC. A certificate of interest is a document that demonstrates evidence of a member's ownership interest in an LLC.
The ________ is the basic governing document of a corporation which must be filed with the secretary of state of the state of incorporation.
articles of incorporation
An LLC that has no specified term of duration is termed a(n) ________.
at-will LLC
Which of the following is primarily a job of the state government, not the federal government
both b and c are correct (tort law c. contract law)
Which of the following statements completes this sentence most correctly? Pre/post test 8) "The US Supreme Court chooses which cases it will decide __________________."
but it can only choose cases that involve federal law or rights in some way.
A(n) ________ refers to a document that demonstrates evidences of a member's ownership interest in an LLC (limited liability company).
certificate of interest
Which of the following is not a job of the federal government?a. Control military c. Contract lawb. Promote free trade among the states d. International relations
contract law
A ________ is a long-term unsecured debt instrument that is based on a corporation's general credit standing
debenture
A member's ownership interest in an LLC (limited liability company) is called a ________
distributional interest
Which of the following is governed by the operating agreement of an LLC
division of profits and losses the relations among the members, managers, and company ownership interests of its members the affairs of the company
An LLC (limited liability company) is a ________ in the state in which it is organized.
domestic LLC
Which of the following is a part of a member's fiduciary duty of care in a member-managed LLC?
duty not to engage in intentional conduct that injures the LLC duty not to engage in a known violation of law that injures the LLC duty not to engage in grossly negligent conduct that injures the LLC duty not to engage in reckless conduct that injures the LLC
Appeal Court #1 in State M makes a piece of case law. You do not need to know the specifics. This piece of case law is binding on all courts in the judicial branch of State M.
false
The purpose of a legal argument is to dissect and label the parts.
false
A limited liability company (LLC) in any state other than the one in which it is organized is a(n)
foreign LLC
An LLC (limited liability company) that is organized in Alabama and is operating in Texas with no operations outside the U.S. is considered a ________ in Texas
foreign limited liability company
Which of the following is NOT a source of a corporation's express powers?
local ordinances
Ester, Yi, Maria, and Enrique form the member-managed LLC Big.Business.com, LLC, which conducts online auctions over the Internet. Ester secretly starts a competing business to conduct online auctions over the Internet. Ester is liable for breaching her duty of _____ to the LLC with Yi, Maria, and Enrique.
loyalty
If someone is suing a corporation, the complaint and summons is typically served on the corporation's _____.
registered agent
Rad Television aired a show entitled "Do It Yourself." this program instructed the viewing audience on how to manufacture certain illegal drugs and where to buy the necessary ingredients. Rad television was notified that it was being charged by the Federal Communications Commission, a federal agency, with violation of a(n) ______________.
regulation
Limited liability partnership codes are
state statutes that regulate the formation, operation, and dissolution of limited liability partnerships (LLPs)
Which of the following best defines the duty of care to which a member of a member-managed LLC (limited liability company) must adhere?
the duty of not engaging in a known violation of law
In an LLP, all partners have limited liability. This means that their liability is limited to ________.
the extent of their capital contributions
Which of the following is a CORRECT statement regarding the corporation as a legal person?
A corporation can be found criminally liable for violations of law.
Which of the following is an INCORRECT statement regarding selecting a state for incorporation?
A corporation can be incorporated in more than one state.
Which of the following is true of a C Corporation?
It must have more than 100 shareholders.
Suppose that Jasmin, Shou-Yi, and Vanessa form an LLC, and each contributes $25,000 in capital. The LLC operates for a period of time, during which it borrows money from banks and purchases goods on credit from suppliers. After some time, the LLC experiences financial difficulty and goes out of business. If the LLC fails with $600,000 in debts, which of the following is a correct statement regarding the personal liability of Jasmin?
Jasmin will lose her capital contribution of $25,000, but she is not personally liable for the rest of the unpaid debts of the LLC.
Which of the following is NOT true about limited liability partnerships (LLPs)?
LLPs are creatures of federal law, not state law
Which of the following is a correct statement regarding a limited liability partnership (LLP)?
LLPs are creatures of state law.
Which of the following is a CORRECT statement regarding the corporation as a legal person?
A corporation can enter into contracts.
Which of the following is a CORRECT statement regarding the corporation as a legal person?
A corporation can hold title to property.
Which of the following is a CORRECT statement regarding the corporation as a legal person?
A corporation can sue in its own name.
Which of the following is an INCORRECT statement regarding the corporation as a legal person?
A corporation has the same identity as its shareholders.
Which of the following is true about continuing an LLC?
A term LLC can be continued in two situations after expiration of the term. To continue the LLC requires the unanimous vote of all the members and the filing of an amendment to the articles of organization with the secretary of state, stating this fact. In the absence of a unanimous vote to continue the term LLC, the LLC may be continued as an at-will LLC by a simple majority vote of the members of the LLC. The members of the LLC may vote prior to the expiration date to continue the LLC for an additional specified term.
What is one of the differences between an LLC and an LLP?
Accountants, lawyers, and doctors must use the LLP form of partnership, not an LLC.
Which of the following is an INCORRECT statement regarding common stock?
The RMBCA encourages the concept of par value.
Which of the following statements is most correct?
The US Supreme Court can make (interpret) federal case or judge-made law, it cannot make state laws
Which of the following is an INCORRECT statement regarding the creation of a limited liability partnership (LLP)?
The articles of limited liability partnership is a private document.
Which of the following is NOT true about winding up a limited liability company (LLC)?
The assets of an LLC that are being dissolved must first be applied to paying off the members; thereafter, the surplus amount is distributed to the creditors in equal shares, unless the operating agreement provides otherwise.
Which of the following is a requirement for a corporation to qualify as an S corporation?
The corporation can have no more than 100 shareholders.
Which of the following is a requirement for a corporation to qualify as an S corporation?
The corporation cannot be a member of an affiliated group of corporations.
Which of the following is a requirement for a corporation to qualify as an S corporation?
The corporation must be a domestic corporation.
Which of the following is NOT a requirement for a corporation to qualify as an S corporation?
The corporation must have begun its business operations as either a sole proprietorship or a general partnership.
Which of the following is a CORRECT statement regarding corporations
Corporations are the most dominant form of business organization in the United States.
Which of the following is a CORRECT statement regarding corporations
Corporations generate more than 85 percent of the country's gross business receipts.
_____ has the most advanced corporation law in the United States.
Delaware Delaware has the most advanced corporation law in the country, and the statute is particularly written to be of benefit to large corporations. For example, the Delaware corporation code provides for corporations incorporated in Delaware to adopt so-called poison pills, which make it difficult for another company to take over a Delaware corporation unless the board of directors of the target corporation agrees and removes such poison pills.
Which of the following is a CORRECT statement regarding selecting a state for incorporation?
Delaware is a state that is very favorable to a corporation's internal operations.
Distinguish between a member-managed and a manager-managed LLC (limited liability company). Mention the exceptional actions that cannot be delegated to managers.
In a member-managed LLC, each member has equal rights in the management of the business of the LLC, regardless of the size of his or her capital contribution. Any matter relating to the business of the LLC is decided by a majority vote of the members. In a manager-managed LLC, the members and nonmembers who are designated managers control the management of the LLC. The members who are not managers have no rights to manage the LLC unless otherwise provided in the operating agreement. In a manager-managed LLC, each manager has equal rights in the management and conduct of the company's business. Any matter related to the business of the LLC may be exclusively decided by the managers by a majority vote of the managers. Certain actions cannot be delegated to managers but must be voted on by all members of the LLC. These include (a) amending the articles of organization, (b) amending the operating agreement, (c) admitting new members, (d) consenting to dissolve the LLC, (e) consenting to merge the LLC with another entity, and (f) selling, leasing, or disposing of all or substantially all of the LLC's property.
Which of the following is NOT true about a corporate dissolution?
In a voluntary dissolution, the liquidation is usually carried out by the secretary of state. A dissolved corporation continues its corporate existence but may not carry on any business except as required to wind up and liquidate its business and affairs [RMBCA Section 14.05]. In a voluntary dissolution, the liquidation is usually carried out by the board of directors. If the dissolution is involuntary or the dissolution is voluntary but the directors refuse to carry out the liquidation, a court-appointed receiver carries out the winding up and liquidation of the corporation [RMBCA Section 14.32]. Termination occurs only after the winding up of the corporation's affairs, the liquidation of its assets, and the distribution of the proceeds to the claimants. The dissolution of a corporation does not impair any rights or remedies available against the corporation or its directors, officers, or shareholders for any right or claim existing or incurred prior to dissolution.
Which of the following is a CORRECT statement regarding the liability of partners in a limited liability partnership (LLP)?
In an LLP, all partners have limited liability. In an LLP, all partners stand to lose only their capital contribution if the partnership fails. In an LLP, all partners are limited partners. None of the partners is personally liable for the debts and obligations of the partnership beyond his or her capital contribution.
Which of the following is an INCORRECT statement regarding the liability of partners in a limited liability partnership (LLP)?
In an LLP, there must be at least one general partner who is personally liable for the debts and obligations of the partnership.
Which of the following is an INCORRECT statement regarding a manager-managed LLC?
In a manager-managed LLC, all actions can be delegated to managers by members of the LLC.
Which of the following is a CORRECT statement regarding a manager-managed LLC?
In a manager-managed LLC, the members who are not managers have no rights to manage the LLC unless otherwise provided in the operating agreement. In a manager-managed LLC, each manager has equal rights in the management and conduct of the company's business. In a manager-managed LLC, any matter related to the business of the LLC may be exclusively decided by the managers by a majority vote of the managers. In a manager-managed LLC, a manager must be appointed by a vote of a majority of the members; managers may also be removed by a vote of the majority of the members
Which of the following is true about limited liability partnerships (LLPs)?
In most states, the law restricts the use of LLPs to certain types of professionals, such as accountants, lawyers, and doctors. Many states have enacted legislation to permit the creation of limited liability partnerships (LLPs). An LLP can be created only pursuant to the laws of the state in which the LLP is being organized. Nonprofessionals cannot use the LLP form of partnership
The person responsible for incorporation of a corporation is known as a(n) ________
Incorporator
Which of the following is a requirement for a corporation to qualify as an S corporation?
Shareholders must be individuals, estates, or certain trusts.
Which of the following is a CORRECT statement regarding selecting a state for incorporation?
Small corporations tend to incorporate in the state in which the corporation will be doing most of its business.
Which of the following is true about a corporate dissolution?
Termination occurs only after the winding up of the corporation's affairs, the liquidation of its assets, and the distribution of the proceeds to the claimants. In a voluntary dissolution, the liquidation is usually carried out by the board of directors. The dissolution of a corporation does not impair any rights or remedies available against the corporation or its directors, officers, or shareholders for any right or claim existing or incurred prior to dissolution. A dissolved corporation continues its corporate existence but may not carry on any business except as required to wind up and liquidate its business and affairs.
Which of the following is a CORRECT statement regarding the creation of a limited liability partnership (LLP)?
The LLP is a domestic LLP in the state in which it is organized. Many state laws require LLPs to carry a minimum of $1 million of liability insurance that covers negligence, wrongful acts, and misconduct by partners or employees of the LLP. An LLP is created formally by filing articles of limited liability partnership with the secretary of state of the state in which the LLP is organized. An LLP may do business in states other than the state in which it is organized; in order to do so, however, the LLP must register as a foreign LLP in any state in which it wants to conduct business.
