Business Test 4

•When a court holds shareholders personally responsible for corporate debts it is said to be:

"piercing the corporateveil"

•Partners in a partnership owe each other:

A fiduciary duty.

•Limited liability company.

A limited partnership is different from a general partnership because:

Third-party beneficiary​

A party who is not part of an original contract who acquires rights under the contract is a:​

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

A professional corporation.

An offer is:​

A promise to do something or to refrain from doing some specific thing.​

The general rule regarding acceptance is:​

A reasonable acceptance is valid when sent to the offeror​

delegation​

A transfer of contractual duties to a third party is a(an):​

A contract is formed only when an offer is:​

Accepted by the offeree.​

satisfaction​

An accord is an agreement by the parties to offer and accept some performance different from that originally bargained for. The actual performance of the new obligation is​

When someone accepts an offer by an exchange of mutual promises, what kind of contract has been formed?​

Bilateral

Anticipatory breach​

Discharges the duties of the non-breaching party under the contract.​

•The ability of a business to continue to operate in the event of the death, retirement, or other incapacity of an owner of the business is known as:

Duration

•Directors are under what type of duty to conduct themselves on behalf of the corporation as a reasonably prudent person in the conduct of personal business affairs?

Duty of care

•What relationship requires that each partner act in good faith for the benefit of the partnership?

Fiduciary relationship

•To get the right to sell goods or services associated with a franchisor's trademark, trade name or trade dress, the franchisee must pay a(n):

Franchise fee

The purpose of a contract is to:​

Give parties confidence that bargained-for exchanges will be enforceable.​

Ads are usually considered:​

Invitations for others to submit offers to buy.​

Preliminary negotiations are:​

Invitations to negotiate or to make an offer.​

The Restatement (Second) of Contracts

Is an authoritative document that provides an orderly summary and presentation of the common law of contracts.​

A binding promise​

Is central to the modern definition of contracts.​

A contract​

Is the legal relationship that consists of the rights and duties of the agreeing parties growing out of promises.​

•Legally, what role does the board of directors have for a corporation?

It is the principle.

•What type of business organization is treated like a corporation for liability purposes but like a partnership for federal tax purposes?

Limited liabilitycompany

Liquidated damages​

Must be reasonably related to actual losses that could be suffered.​

Without consideration​

Neither party can enforce the promise or agreement​

•About what fraction of retail sales in the U.S. takes place in franchise operations?

One Third

•What document of a limited liability company establishes the company's method of management, allocation of profits and losses among members, restrictions on the transfer of membership interests, and the process to be followed in dissolving the company.

Operating agreement

What is an association of two or more persons to carry on a business as co-oWners for profit?

Partnership

•At a shareholder meeting, shareholders vote to approve or disapprove important corporate business, which is presented to the shareholders in the form of what?

Resolutions

Consideration ​

Something of value or something bargained for in exchange for a promise ​

In a sole proprietorship, the owner is:

The Business

•The board of directors of a corporation are elected by:

The Shareholders

•Protects directors and managers of a corporation who have made honest mistakes in judgment.

The business judgment rule:

If the subject matter of the offer is destroyed:​

The contract is terminated by the operation of law​

Legal benefit​

What exists for the promisor when the promisor acquires some legal right through the promise's act, promise to act, or refraining from doing some act.​

Unilateral mistake​

What type of mistake occurs when one party to a contract enters into it with false information or accidentally makes an error in a significant matter:​

May be voidable​

When both parties to an agreement are mistaken as to a material fact, the contract:​

Novation​

When parties agree to discharge one party from a contract and create a new contract with another party who is to become responsible for the discharged party's performance​

Terminated or discharged​

When the obligations of a contract have been performed, the contract is:​

A transfer of contract rights to another party is:​

assignment

A proposal by the offeree to change the terms of the original offer is a:​

counteroffer

Acceptance of an offer must be unequivocal, meaning that it is _______.​

definite

A contract cannot be formed if what is lacking?​

intent

•What is the written authorization to cast their vote that shareholders who are not able to attend a shareholder meeting in person give to third parties called?

proxy

Withdrawal of an offer by the offeror is a:​

revocation​

Once an offer has been made, the offeror can terminate the offer by:​

revoking it

•The owners of a corporation are called?

shareholders

A counteroffer does what to the original offer?​

terminates it

State law

•A corporation must be created according to:

A sole proprietorship comes into existence when:

•A person begins to do business for herself.

Unlimited liability

•A potential drawback of sole proprietorships is that the parties involved have:

Limited liability is:

•An advantage to the corporation form of organization

General partners in a limited liability partnership:

•Are personally liable to the partnership's creditors.

The governing committee of a corporation is the:

•Board of directors

Dissolution

•In the process of termination of a partnership, before the business affairs can be wound up

Shareholders of a corporation have:

•Limited rights to see the corporation's books and records in some states, but not others.

Limited partners are investors who:

•May not participate in management of the business.

The manager of a limited liability company:

•Need not be a member of the company.

a corporation separates:

•Ownership from control.

In general, limited partners lose their limited status by:

•Participating in managerial decisions in the partnership.

A close corporation is one:

•That has a small number of stockholders as set by state law.

Franchises may be terminated by:

•The bankruptcy of the franchisee.

Limited partnership

•The business organization that has at least one general partner and other investors who have limited liability is a:

A written partnership agreement typically specifies which of the following?

•The ownership interests of the partners.

The bylaws

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

A corporation

•What is an artificial person, or a legal entity, created under state law known as?

Articles of incorporation

•What, along with an application, must be filed with the appropriate state office, along with payment of a fee to create a corporation?