BLF

Quantum Meruit

"As much as he deserves" - the damages awarded in a quasi-contract case

Limited Partnership

(LP) exists when two or more partners go into business together, but the limited partners are only liable up to the amount of their investment.

The______, or owners, of a corporation elect the_____who then hire the_____to run the daily operations.

shareholders; directors; officers

What governs the operation of a partnership when there is no express partnership agreement?

the Uniform Partnership Act

courts contract rules

the contract is interpreted against the part that drafted it

Which of the following is NOT typically a part of the contents of an LLC's articles of organization filed with the central state agency?

the hours of operation of the business

legalese

the language of lawyers

Promissory Estoppel

the legal enforcement of an otherwise unenforceable contract due to a party's detrimental reliance on the contract

Norman wants to start a new company with different partners to explore real estate opportunities in several states. When discussing the LLC form, Norman's attorney mentions that one of the biggest disadvantages of the LLC form is that:

there is no uniform law governing LLCs in the United States

An LLC that has ___ can choose to be taxed either as a partnership or as a corporation.

two or more members

Eduardo and Larson enter into a partnership agreement to sell gourmet dog biscuits, but they do not specify how long it will last. Consequently, it will end:

whenever either partner wants it to end

[T/F] Directors and officers may be liable for the actions of corporate employees under their supervision as well as for their own torts and crimes.

True

[T/F] LLCs are legal entitles apart from their owners and as such can sue or be sued, enter into contracts, and hold title to property.

True

[T/F] LLCs share many characteristics with corporations, such as they must be formed and operated in compliance with state law.

True

[True/False] -- If a partner withdraws prematurely from a 'partnership for a term,' that partner has breached the partnership agreement and may be liable for any resulting losses.

True

[True/False] -- If the partnership agreement does not indicate how the profits will be shared, the Uniform Partnership Act provides that profits will be shared equally.

True

[True/False] -- The sharing of both profits and losses creates a legal inference that a partnership exists.

True

Dividends

a distribution of profits or income to shareholders

S Corporation

a form of corporation that avoids double taxation by having its income taxed as if it were a partnership

contract

a legally enforceable agreement between two or more parties

objective theory of contracts

a party's intention to enter into a legally binding agreement, or contract, is judged by outward, objective facts as interpreted from a reasonable person

Partnership by Estoppel

a person who is not technically a partner can be held liable as a general partner would be for any debts and damages owed to a third party.

Partnership by estoppel

a person who is not technically a partner can be held liable as a general partner would be for any debts and damages owed to a third party.

A Partnership Probably Does Not Exist if Shared Profits Were Received as Payment of Any of the Following:

a. A debt by *installments* or interest on a loan. b. Wages of an employee or for the *services* of an independent contractor. c. *rent* to a landlord. d. A(n) *annuity* to a surviving spouse or representative of a deceased partner. e. A(n) *sale* of the goodwill of a business or property.

requirements of a valid contract

agreement- offer and acceptance consideration- something valuable promised contractual capacity- both parties are competent legality- legal and not against public policy

Under common law, a partnership was treated only as

an aggregate of its members.

The business judgment rule states that directors and officers:

are immune from liability for bad business judgments so long as they exercised reasonable care

Select the two most common committees formed by large boards of publicly traded companies.

audit committee; executive committee

voluntary consent

both parties must voluntarily enter into the contract

Quasi Contract

An obligation or contract imposed by law (a court), in the absence of an agreement, to prevent the unjust enrichment of one party.

Termination by Revocation

An offer is revoked when the offeror "takes it back" before the offeree accepts

Pass-through entity

Any entity that does not have its income taxed at the level of that entity; examples are partnerships, S corporations, and limited liability companies.

extrinsic evidence

Any evidence not contained in the contract itself (which may include the testimony of the parties, additional agreements or communications, or other information relevant to determining the parties' intent)

Professional Corporation

Corporation formed by members of certain professions

Nonprofit Corporation

Corporation formed without concern for making money

Inside Directors

Directors who are also officers of the corporation

Outside Directors

Directors who do not hold management positions at the corporation

[T/F] A corporate director who sits on more than one board is engaging in illegal activity.

False

[T/F] Directors are hired by the shareholders through an interview process.

False

[T/F] LLCs are created by state statute and are uniform across the states.

False

[T/F] There is no difference between a public corporation and a publicly held corporation.

False

[True/False] -- If a third party knows that a partner had no authority to commit the partnership, the partner's actions with the third party still bind the partnership and its partners.

False

[True/False] -- In all cases, joint ownership of property creates a partnership.

False

Foreign Corporation

In a given state, a corporation that does business in the state without being incorporated in that state

Domestic Corporation

In a given state, a corporation that is organized under the law of that state

Joint and Several Liability

In partnership law, a doctrine under which a plaintiff may sue, and collect a judgment from, one or more of the partners separately (severally, or individually) or all of the partners together (jointly).

Charging order

In partnership law, an order granted by a court to a judgment creditor that entitles the creditor to attach profits or assets of a partner on dissolution of the partnership.

Expressions of Opinion

It does not indicate an intention to enter into a binding agreement

Which of the following fiduciary duties does a partner owe the partnership? (Two terms)

Loyalty; Care

termination by the offeree

Rejection or counteroffer

Today most state corporate statutes are at least partially based on the

Revised Model Business Corporation Act

Joint Liability

Shared liability. In partnership law, partners incur joint liability for partnership obligations and debts.

Quorum

The directors required to make a decision or take official action

Retained Earnings

The portion of the corporation's profits or income that is not paid out to shareholders

[T/F] A corporation automatically will be taxed under subchapter C unless it elects to become an S corporation.

True

[T/F] Because risk is associated with the potential for higher profits, businesspersons are motivated to choose organizational forms that limit their liability while allowing them to take risks that may lead to greater profits.

True

Three Essential Elements to Determine Whether a Partnership Exists:

1. A(n) *sharing* of profits or losses. 2. A joint *ownership* of the business. 3. A(n) *equal* right to be involved in the management of the business.

Void Contract

A contract having no legal force or binding effect.

executed contract

A contract that has been completely performed by both parties.

executory contract

A contract that has not yet been fully performed.

voidable contract

A contract that may be legally avoided at the option of one or both of the parties.

Benefit Corporation

A corporations formed with concern for making money but also with concern for the public good

Limited Liability Company (LLC)

A hybrid form of business enterprise that offers the limited liability of the corporation but the tax advantages of a partnership.

A limited liability company (LLC) combines the tax characteristics of:

A partnership with the liability of a corporation

offeree

A person to whom an offer is made.

offerer

A person who makes an offer.

bilateral contract

A promise made in exchange for another promise

offer

A promise or commitment to perform or refrain from performing some specified act in the future.

Information return

A tax return submitted by a partnership that only reports the income earned by the business.

Unenforceable Contract

A valid contract rendered unenforceable by some statute or law.

Articles of Partnership

A written agreement that sets forth each partner's rights and obligations with respect to the partnership.

Limited Liability Partnership

All partners are limited partners and not responsible for the debts and other liabilities of other partners

Partnership

An agreement by two or more persons to carry on, as co-owners, a business for profit.

Most corporate enterprises in the United States can be considered:

close corporations

Select the three names that close corporations are often called.

closely held corporations; family corporations; privately held corporations

A director or officer may violate the duty of loyalty by directly_______the corporation, by________or stealing a corporate opportunity, by having a________of interest, by engaging in_______trading, by authorizing an action that is_______to minority shareholders or by selling_______the corporation.

competing with; usurping; conflict; insider; detrimental; control over

Preliminary Agreements

constitutes a binding contract if the parties have agreed on all essential terms and no disputed issues remain to be resolved

An LLC's members may want to reinvest the profits in the business rather than distribute the profits to members. In that situation, the members prefer that the LLC be taxed as a

corporation

A corporation is a legal entity:

created by state statute

When a corporation enters into a contract or engages in business with another corporation in which one of the board members has a personal interest, that board member must fully_____the conflict and_____voting.

disclose; abstain from

Generally, a partner obtains compensation from the partnership by

distribution of profits according to the partner's share in the business

Corporations____enjoy many of the same rights and privileges under state and federal law that people enjoy.

do

Individual corporate directors_______have the ability, as agents of the corporation, to bind the corporation.

do not

One main disadvantage of the corporate form of business is

double taxation of distributed income

One basic difference between partnership and agency law is that:

each partner has an ownership interest in the firm

equitable

fair, just, embodying principles of justice

Officers and directors have a special relationship with the corporation and its shareholders and are called:

fiduciaries

One of the benefits of LLCs, and one that helps promote investment, is the fact that:

foreign investors are allowed to become LLC members

Directors and officers have a duty of care to act______, to exercise the care that a(n)________person would exercise in similar circumstances, and to do what the director or officer believes is in the_______of the corporation.

in good faith; ordinarily prudent; best interest

When a group of members join to form an LLC, the name of the organization must:

include the words "limited liability company" or the letters LLC

What type of liability occurs when a third party has the option of suing all the partners together or one or more of the partners separately?

joint and several liability

One of the key advantages of the corporate form of business is

limited liability of ownership

requirements of an offer

made seriously and intentionally definite and reasonably certain communicated to the offeree

Under modern criminal law, a corporation___be held liable for the criminal acts of its employees. The punishment for guilt of a crime by a corporation consists of ____. Corporations_____ liable for the torts of their agents if committed_____the scope of the agency.

may; fines; may be; within

Statements of Future Intent

not an offer

To become an S corporation, a corporation must meet specific criteria, with restriction on the_____of shareholders, as well as the types of_____that can be issued.

number; stock

An LLC that has only____member(s) cannot be taxed as a partnership.

one

Management of a close corporation often resembles that of a______, but a corporation must meet the statutory requirements to remain a corporation. Often, shareholders in a close corporation_______the transferability of shares. If a majority shareholder misappropriates company funds, the normal remedy for the other shareholders is to have their shares_____to determine value and then_____that value.

partnership; restrict; appraised; receive

unilateral contract

promise in exchange for an act

Preliminary Negotiations

request or invitation to negotiate is not an offer