Business Law 2 LLC Test
A franchisor is never liable for the act of a franchisee's employee.
False
A franchisor may not specify personnel training methods
False
A limited liability company cannot be taxed as a corporation.
False
A partner's fiduciary duties may be waived or eliminated in the partnership agreement.
False
A partnership for a definite term cannot be dissolved before the expiration of the term.
False
A sole proprietorship's income is taxed as the firm's profit, not as the owner's personal income.
False
An agreement that requires a franchisee to buy materials exclusively from the franchisor may violate contract.
False
Contracts between a franchisee and its customers define the franchise relationship.
False
For federal jurisdictional purposes, a limited liability company is treated like a corporation.
False
For most purposes, the law treats a partnership as an aggregate of its members.
False
In a family limited liability partnership, only persons related to each other may be partners.
False
In a limited partnership, the liability of a general partner is the amount of capital he or she has invested in the partnership.
False
In choosing a form of business organization for a new enterprise, important factors include the titles of the organization's officers.
False
In winding up a general partnership, partners receive distributions of profits before non-partner creditors are paid.
False
In winding up a partnership, partners can create new obligations on behalf of the partnership.
False
Most limited liability company statutes have strict provisions regulating members' meetings.
False
Most states have adopted a model uniform franchise law.
False
Normally, a franchisee determines the territory that it will serve.
False
The death of a limited partner dissolves a limited partnership.
False
The members, managers, and agents of a limited liability company are personally liable for its obligations by virtue of their status.
False
A franchise exists when the owner of a trademark licenses its use to another party to sell goods or services.
True
A franchisee may be required to pay for certain of the franchisor's administrative expenses.
True
A franchisee normally pays an initial lump sum for a franchise license.
True
A franchisor is never liable for the act of a franchisee's employee.
True
A limited liability company is a legal entity apart from its owners.
True
A limited liability company is operated in compliance.
True
A limited liability partnership must be formed in compliance with state law.
True
A limited partner who participates in the management of the partnership may be personally liable to the firm's creditors.
True
A partner may pursue his or her own interest without automatically violating the fiduciary duties that he or she owes to the firm.
True
A sole proprietor may own and manage any type of business.
True
A sole proprietorship automatically dissolves on the death of the owner.
True
An operating agreement for a limited liability company need not be in writing.
True
Any limit on a partner's capacity to act on the partnership's behalf generally does not affect a third party who does not know about the limit.
True
Contract law governs franchise relationships.
True
Forming a limited liability company requires filing articles of organization in a state office.
True
General principles of agency law govern a partner's authority to bind the partnership in contract.
True
In a chain style business operation, a franchisor's trade name.
True
In a limited liability company, members do not have to participate in its management.
True
In a limited liability limited partnership, the liability of a general partner is the same as the liability of a limited partner.
True
In choosing a form of business organization for a new enterprise, important factors include the ease of creation.
True
In determination whether a franchisor acted in good faith in terminating a franchise relationship, a court would balance the rights of both parties.
True
In most states, a general partner is jointly and severally liable for all partnership obligations.
True
In winding up a limited partnership, non-partner creditors are paid before the partners receive their capital contributions.
True
Joint ownership of property in and of itself creates a partnership.
True
Most franchise agreements provide that notice of termination must be "for cause."
True
On a partner's dissociation, his or her interest in the partnership must be purchased.
True
One of the disadvantages of a sole proprietorship is that the owner is liable for the losses of the business.
True
The Uniform Partnership Act has done much to reduce controversies in the law relating to partnerships.
True
The dissociation of a member of a limited liability company in violation of the operating agreement is legally wrongful.
True
The maximum amount of funds at risky by a limited partner is the amount of his or her investment in the limited partnership.
True