Bul unit 12

Which of the following parties could claim an artisan's lien? A common carrier of goods. A jeweler who repaired a watch The owner of a storage facility All of the above are eligible for an artisan's lien.

All of the above are eligible for an artisan's lien.

In a manager-managed LLC ___________. No one member of the LLC has authority to make business decisions on behalf of the LLC. An individual or small group has the authority to control and make decisions for the LLC. All members of the LLC participate equally in business decisions. The authority of the members of the LLC to make decisions is directly proportionate to the amount their capital contribution.

An individual or small group has the authority to control and make decisions for the LLC.

Mel, who owns a car repair shop, replaced the clutch in Ellen's car. Until Ellen pays for the repairs, Mel has a ______lien on the car. Artisan's Mechanic's Judicial Guarantor's

Artisan's

A security interest in personal property in favor of one who has performed services on the personal property is an ________. Mechanic's lien. Artisan's lien. Color of title. Security Deposit.

Artisan's lien.

In a _______, a creditor must have made reasonable but unsuccessful attempts to collect from the principal before the guarantor can be held liable. Absolute guaranty. Unconditional guaranty. Conditional guaranty. Satisfaction guaranty.

Conditional guaranty.

An extension of time of payment between a creditor and principal must be a valid agreement supported by ______ if it is to have an impact on the surety's liability. Consideration Collateral Personal property. Real property.

Consideration

Bob is a co-surety with Sue on a loan that was made to Sue's business. If the business defaults on the loan and Bob is required to pay the full amount, Bob has the right of ____________ against Sue. Reimbursement Indemnification Contribution Subrogation.

Contribution

Paul sued Dan and won a $90,000 judgment against him. Paul has identified property belonging to Dan that would be used to satisfy the judgment. The order the court will give to the sheriff instructing him or her to seize and sell Dan's property is a writ of ________________. Attachment Garnishment Execution Expropriation

Execution

Which of the following is recognized as a disadvantage to doing business as an LLC? Existing court decisions addressing LLC issues and formation are relatively undeveloped, which may lead to legal uncertainty when making business decisions. Individual members of the LLC can never bind the LLC in a valid and enforceable contract. Compared to other business entities, the LLC is taxed more heavily by the IRS. An LLC requires the participation of several owners, which can sometimes complicate day-to-day business decisions.

Existing court decisions addressing LLC issues and formation are relatively undeveloped, which may lead to legal uncertainty when making business decisions.

A surety has no obligation to the creditor unless the principal _______. Fails to perform. Fulfills his or her contractual obligations. Voids the contract. Assigns the contract.

Fails to perform.

An LLC must have at least two members that participate in management in order to lawfully do business. t/f

False

Any profits which a surety makes when called upon to perform the principal's duties belong to the surety. t/f

False

Bonding companies are usually uncompensated sureties. True False

False

Bonding companies are usually uncompensated sureties. t/f

False

Contracts of suretyship are legally indistinguishable from contracts of indemnity. t/f

False

In a limited partnership, a general partner's fiduciary duty is breached when limited partners are not permitted to participate in management. t/f

False

In a limited partnership, each limited partner has an equal right to participate in the management of the business.

False

Individual members of the LLC can never bind the LLC in a valid and enforceable contract. t/f

False

Limited Liability Companies are one of the oldest forms of business organization t/f

False

Misconduct of the principal that induces a party to become a surety allows that surety to avoid the contract. t/f

False

The Statute of Limitations does not apply to surety contracts. t/f

False

State law requires that state chartered banks post bonds to protect the banks from losses caused by embezzlement by bank employees. The bonds posted by banks are __________bonds. Fidelity Performance Bank Fiduciary

Fidelity

Which business entity has the following characteristics: liability of the owners is limited to their investments; ownership interest is easily transferrable and there are no legal limits to the number of owners; owners elect the managers of the business who operate under duties of loyalty and due care; the entity is organized under state law and may have perpetual existence; profits are subject to double taxation? General partnership General corporation Limited liability corporation Limited partnership

General Corporation

Which of the following usually provides an investor the least protection from personal liability for the debts of the business? General Partnership Limited Partnership LLC Corporation

General Partnership

In which of the following business forms are profits taxed at both the entity level and the owner level? General corporation Limited Partnership LLC LLP

General corporation

Which business entity has the following characteristics: the entity is organized under state law; the owners must declare to the state whether the organization will be managed by the owners or by persons hired by the owners; owners have limited liability for the debts of the entity; both profits and losses pass through to the owners? General Corporation Limited Liability Company (LLC) General partnership Limited Liability Partnership (LLP)

General partnership <- wrong maybe lip

Which business entity has the following characteristics: owners are normally professionals engaged in selling their services; owners have both limited liability for the debts of the entity and limited liability for the contracts and torts of the other owner-professionals; the entity is organized under state law; profits are taxed only at the owner level? General partnership Limited partnership Limited Liability Partnership Limited Liability Company

Limited Liability Partnership

In which of the following business organizations does an owner risk losing his or her limited liability by actively and publicly managing the business? Limited Partnership Limited Liability Partnership General corporation Limited liability corporation

Limited Partnership

Which business entity has the following characteristics: one owner has unlimited personal liability for the debts of the business while other owners are liable only to the extent of their investments; owners lose their limited liability if they actively manage the business; the entity is organized under state law; both profits and loses pass through to the owners? General partnership Limited partnership Limited Liability Partnership Limited Liability Company

Limited Partnership

An LLC where a single person or select group has the power to manage is a ____________________LLC. Manager-managed Member-managed Proprietary Subchapter S

Manager-managed

A lien for the value of material and labor expended in the construction of buildings and other improvements is a _________. Artisan's lien. Mechanic's lien. Suretyship. Right of redemption.

Mechanic's lien.

Which of the following is a quality that an LLC shares with a corporation? Members are only personally liable for debts to the extent of the money they put into the business. Members of an LLC usually have little to no control in major business decisions. An LLC and a corporation are treated identically for tax purposes. Both an LLC and a corporation require complex and costly procedures and filings before they can legally do business.

Members are only personally liable for debts to the extent of the money they put into the business.

Which of the following statements about the operation of a member-managed LLC is false? Articles of organization must be filed with the state as part of the application process. The application must state that it is to be a member-managed LLC. Only the managing members have access to the books and records of the LLC Any member of the LLC may bind the LLC on a contract.

Only the managing members have access to the books and records of the LLC

All of the following could be accurate statements about a general partnership, except: Partnership liabilities in a general partnership are limited to the amount of capital contribution. Partners can share in management of the partnership. Partners can share partnership profits. The general partnership allows for quick, easy and immediate control.

Partnership liabilities in a general partnership are limited to the amount of capital contribution.

Perfect Painters submitted a bid to paint the dorm rooms at State University during the summer. State Law requires that all bidders for state contracts post a bond protecting the state against loss if the bidder fails to perform within the contract time. The kind of bond Perfect Painters will post is a _______________bond. Fidelity Mechanic's Performance Artisan's

Performance

A _______ provides protection against losses that may result from the failure of a contracting party to perform the contract as agreed. Performance bond. Foreclosure sale. Finance agreement. Payment schedule.

Performance bond.

The right of first refusal refers to the right of LLC members to Dissent from a business decision by a non-member manager. Vote against admitting another member. Purchase the interest of another member in the LLC before it is offered to an outside buyer Purchase an asset of the LLC before it is offered for sale to the public

Purchase the interest of another member in the LLC before it is offered to an outside buyer

A ________ is a party who limits his or her promise to a single transaction or to a single creditor. General guarantor. Special guarantor. Creditor. Obligee.

Special guarantor.

Allison is going to create a lawn service business. Allison would like to limit her liability by creating a subchapter "S" corporation. She does not know if the state she lives in allows for a single shareholder corporation. Where should Allison look to find the answer to her question? State statutes Federal statutes US Code of Federal Regulations Local ordinances

State statutes

A ________ promises to be liable to the creditor only in the event that the surety refuses to perform and thereby defaults. Debtor. Co-surety. Subsurety. Obligee.

Subsurety.

A document that an LLC must submit to the secretary of state's office prior to doing business is The Operating Agreement. A Partnership Agreement. The Articles of Organization. A Security Interest Filing.

The Articles of Organization.

In a suretyship, security for the creditor is provided by Granting the creditor an interest in the debtor's real property A statutory lien on the debtor's personal property. The promise of a third party to perform if the debtor does not perform. A pledge by the debtor of personal property.

The promise of a third party to perform if the debtor does not perform.

A limited partner risks personal liability when he or she actively participates in the management of partnership affairs. t/f

True

Absent an agreement otherwise, a Limited Liability Company's operating agreement can only be amended with the unanimous consent of the members. t/f

True

Both contractors and subcontractors are entitled to a mechanic's lien against the owner for nonpayment of their accounts. t/f

True

Contractors have a longer period in which to file mechanic's liens that subcontractors or suppliers have. t/f

True

If the formalities of creating a limited partnership are not met, a partnership will be treated by courts as a general partnership. t/f

True

Limited Partnership must have at least one general partner. t/f

True

Limited partners may lose the full amount their capital contribution if the limited partnership incurs debts that exceed its assets. t/f

True

Voluntary surrender of personal property subject to an artisan's lien generally terminates the lien. t/f

True

When holders of mechanic's 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. t/f

True

Individual members of an LLC may do all of the following, except: Bind the LLC in legally enforceable contracts. Voting on business personnel issues. Making capital contributions to the LLC. Using LLC funds to satisfy personal debts.

Using LLC funds to satisfy personal debts.

A _________ is the voluntary relinquishment of the right to a mechanic's lien before a notice of lien is filed. Satisfaction and accord. Waiver. Collection proceeding. Confessed judgment.

Waiver

If a judgment for dollar damages is not paid, the judgment creditor may apply for a ______. Default judgment. Writ of Execution. Writ of Habeas Corpus. Writ of first refusal.

Writ of Execution.

A disadvantage of the Limited Liability Company is that profits are taxed both as income to the corporation and as dividends to the members. t/f

false