Legal Business 14

nontrading partnership

A partnership engaged in performing services; dependent on the work results of the partners rather than on capital they contribute.

Joel, a manager at a retail store, buys new stock from a wholesale dealer and uses an oral consent from his employer to charge the expenses to his company's account with the dealer. Identify the form of contractual authority held by Joel in this scenario

Actual Authority

Identify a guideline that must be followed when selecting a name for a partnership.

Any word that would imply the existence of a corporation must not be used in the name

Simply alleging that a person is the sole owner of a corporation that is engaged in wrongful activity will result in a piercing of the corporate veil

False

Which one of the following statements is corporation?

If it wishes to conduct business in states other than the state of incorporation, it must licensed in these foreign states

Identify a true statement about a derivative suit brought by minority shareholder in a closely held corporation.

It may seek to collect damage for the corporation

Identify the true statement about a non-profit organization.

It must returned any profits made to the organization to used for future operations It is not created for the personal benefit of owners or members

What are the factors that should be considered when selecting the best organizational form for a particular business activity?

The cost of creating the organization. The continuity or stability of the organization. The control of decisions. The personal liability of the owners. The taxation of the organization's earnings and its distribution of profits to the owners.

Identify the disadvantages of the corporate form of organization

The cost of forming and maintaining a corporation, with its formal procedural requirements, is significant. License fees and franchise taxes often are assessed against corporations but not partnerships. A corporation must be qualified in all states where it is conducting local or intrastate business. Generally, corporations are subject to more governmental regulation at all levels than are other forms of business. Corporate income may be subject to double taxation

foreign corporation

a corporation is called in places other than the state in which it is incorporated

In the context of corporations, a situation of double taxation occurs when

a dividend received by shareholders is taxed again after being taxed at the corporate level

In the context of an employer's tort liability from the actions of agents, identify the true statement about respondent superior cases

an employer who must pay for an employee's tort under respondeat superior may legally sue the employee for reimbursement Frolic and detour is a valid defense to the strict liability of respondeat superior

trading partnership

buys and sells goods and services commercially

The use of a sole proprietorship as a business organization is very limited because it

cannot be created by multiple owners

Identify a true statement about the continuity of a partnership

A change in the partners at any time results in the dissolution of the organization

Consulting with or advising a general partner makes limited partners lose the benefit of personal liability in a limited partnership

False

Partnerships, limited partnerships, or corporations can be shareholders in an S corporation

False

Implied Authority

It arises from the position of authority held by an agent and by the history of actual authority situations

In the context of the creation of a limited partnership, identify the true statement about a limited partnership certificate.

It contains the name of the partnership and the character of the business It must be recorded in the country where the partnership has its principal place of business

Apparent Authority

It may arise in a situation where a principal terminates an agent's authority but fails to inform third parties about the termination

Identify the disadvantages of partnership as a form of business organization

Only a limited number of people can be partners for practical reasons A partnerships dissolved any time a partner regardless of weather the reason is withdrawal or death

Identify the advantages of a partnership as a form of business organization

Partnerships generally are subject to less regulation than are corporations A partnership may operate in more than one state whiteout a license to do business Partnerships are not a tax-paying entity

_____________ occurs when a principal voluntarily decides to honor an agreement, which otherwise would not be binding due to an agent's lack of authority

Ratification

Identify the true statement about corporations

They have higher costs of formation than partnerships

What are the advantages of the corporate form of organization

This form is the best practical means of bringing together a large number of investors. Control may be held by those with a minority of the investment. Ownership may be divided into many unequal shares. Shareholders' liabilities are limited to their investments. The organization can have perpetual existence. In addition to being owners, shareholders may be employees entitled to benefits such as workers' compensation.

The personal liability of the owners should be taken into account when selecting the best form of organization for one's business.

True

identify the circumstances in which the limited partners in limited partnership organization do not lose the benefit of limited personal liability

When they receive a share of the profits by way of income When they act as a guarantor of the partnership's obligations When they demand full information about the partnership in just situation

Alien Corporation

a corporation created under the authority of a foreign country may be called so

domestic corporation

a corporation in the state in which it is incorporated

The formal application for a corporate charter is called the _____________ ___________ _____________________

articles of incorporation

In the context of the significant factors one should consider when selecting the best organizational form for a business activity,___________ refers to the legal steps necessary to form a particular business organization

creation

To avoid the double taxation of corporate it is advisable for corporation to

deduct reasonable salaries paid to corporate officials in computing the taxable business income

If the majority in a closed held organization is oppressing the rights of the minority shareholders or acting illegally, minority shareholder may bring a lawsuit on behalf of the corporation. the lawsuit is known a(n) ____________ ______________

derivative suit

A partnership is a form of business organization that

does not require permission from each state in which it does business

A feature of the partners in a general partnership is that they

have unlimited liability for the organization debts

identify a true statement about a sole partnership

he or she is personally obligated for the proprietorship's debt

A feature of a limited liability company is that

it is treated as a nontaxable entity for federal income tax purposes

In the context of the factors that need to be considered when selecting the best organizational form for a business activity, the meaning of the word "continuity" becomes associated with the stability of the organization when one questions the___________.

manner in which the existence of the organization relate to its owners

An agreement between two or more persons to share a common interest in a commercial endeavor and to share profits and losses is known as a(n)

partnership

An agent appointed by a shareholder for the purpose of voting the shares in a publicly held corporation is known as a(n)

proxy

_____________ ____________ is the legal doctrine that states that any time an employee is liable for tortious acts in the scope of employment, the employer is also liable.

respondent superior

A feature of the shareholders of S corporations is that they are

responsible for accounting on their individual income tax returns for their share of their organization's profits or losses

The members of the board of directors of a corporation are elected by the

shareholders

In the context of a corporation's liabilities, the corporate veil is said to be pierced when

the corporate entity is disregarded because courts find that the corporate organization is being misused

Identify a true statement about a limited partnership.

the limited partner have no right to participate in management

When an individual is selecting the best organizational form for his or her business, he or she should consider

the taxation of the organization's earning