Law exam 2

When a partner commits a tort or breach of trust, all partners who are jointly and severally liable may be responsible for: - 100% of the judgment, regardless of percentage of liability. - their share of the judgment only. - 75% of the judgment, regardless of percentage of liability. - 50% of the judgment, regardless of percentage of liability.

- 100% of the judgment, regardless of percentage of liability.

Which of the following statements is true of the liability of incoming partners? - A new partner has no liability for any obligations that occurred before he or she was added. - A new partner can be held personally liable for the obligations that occurred before he or she was added. - A new partner assumes limited liability for any obligations that occurred before he or she was added. - The capital a new partner adds cannot be used to pay off debts that occurred before he or she was added.

- A new partner assumes limited liability for any obligations that occurred before he or she was added.

Which of the following is not an example of dissolution of a partnership by an act of a partner? - A partner withdraws from a partnership at will. - A partner is expelled from the partnership in accordance with the partnership agreement. - A partner is expelled from the partnership but not in accordance with the partnership agreement. - A partner withdraws from the partnership in accordance with the partnership agreement.

- A partner is expelled from the partnership but not in accordance with the partnership agreement. - it would have to be in accordance with the agreement

What occurs in a self-tender offer? The aggressor offers to buy the target corporation's stock. The aggressor offers to exchange its stock for the target corporation's stock. The target corporation makes a cash tender offer. The target corporation offers to buy its own shareholders' stock.

The target corporation offers to buy its own shareholders' stock.

Which of the following is not a characteristic of a corporation? Perpetual existence Centralized management separate from owners Unlimited liability of shareholders Corporate liability for torts and crimes of agents

Unlimited liability of shareholders

Neal is aware that Lara is making an agreement on behalf of a principal and also knows that Jonathan is the principal. In this situation, Jonathan is said to be a(n) ________ disclosed principal unveiled principal identified principal known principal

disclosed principal When a third party is aware an agent is making an agreement on behalf of a principal and also knows who the principal is, the principal is said to be disclosed.

A corporation is a(n) ________corporation in the particular state in which it is incorporated. domestic alien state foreign

domestic

A principal has a duty to ________ the agent for any losses the agent incurs in the course of working on behalf of the principal. indemnify compensate pay wages to account to

indemnify

An ________ is a person who contracts with another to do something for another person but who is not controlled by the other nor subject to the other's right to control with respect to his or her physical conduct in the performance of the undertaking. apparent agent independent employee independent contractor employee

independent contractor

Which of the following is true of agency law? It is included under the category of customary law. is primarily state law. It is standardized and is the same from state to state. It is included under the category of federal law.

is primarily state law.

Once a partnership has been ________, the partners begin the process of ________ dissolved; liquidation performed; redistribution terminated; dissolution liquidated; winding up

liquidated; winding up

When a partner becomes incapable of carrying out his or her duties as established by the partnership agreement, any other partner may ________ to dissolve the partnership. distribute partnership assets rewrite the partnership agreement complete unfinished partnership business petition the court

petition the court

The _______ is one method of restricting stock transferability. right of first refusal sale of par value stock limitation doctrine issuance of watered stock

right of first refusal

If a partner dies, his or her partnership property transfers to the remaining partners under the ________ assignment allocation covenant of agreement right of partnership transfer right of survivorship

right of survivorship

A(n) ________main liability is for the extent of their investment when the company loses money. unaffiliated director's shareholder's officer's inside director's

shareholder's

Which statement best describes a principal's liability for acts of an independent contractor under the doctrine of respondeat superior? - A principal is generally not liable for the acts of an independent contractor. - A principal is liable for the acts of an independent contractor if the agency agreement is in writing. -A principal is never liable for the acts of an independent contractor. - A principal is always liable for the acts of an independent contractor.

- A principal is generally not liable for the acts of an independent contractor.

Which of the following is required for an agency by ratification to be effective? - The principal may ratify some parts of the agent's acts or all parts of the agent's act. - A principal must choose which parts of the agent's acts to ratify and which to reject. - The principal must have some knowledge of all facts regarding the implied contract. - An individual must misrepresent their identity as an agent for another party.

- An individual must misrepresent their identity as an agent for another party.

Partners complete the winding-up stage by which of the following methods? - When any partner stops fulfilling the role of a partner to the business by choice - By taking account of the assets of the partner who has left and redistributing them among the other partners - By working for the benefit of the partnership in accordance with the partnership agreement - When any partner stops fulfilling the role of a partner to the business by default

- By taking account of the assets of the partner who has left and redistributing them among the other partners

Which of the following statements is true of the property rights of a partner? -- Partners can use the partnership property to pay a personal debt. - Partners can sell or use the partnership property if the purpose is outside the partnership interest. - Property in the name of an individual partner but purchased with partnership funds is not to be considered partnership property. - Partners own the partnership property as tenants in property, which means they own it as a group.

- Partners own the partnership property as tenants in property, which means they own it as a group. Partners own the partnership property as tenants in property, which means they own it as a group. Any property brought into or acquired by a partnership is considered property of the partnership.

Which of the following statements best describes a secured bond? - Secured bonds are those that shareholders may use to exchange for company stock. - Secured bonds are those that have specific corporate assets to support the corporation's obligation to repay - Secured bonds are those that have no assets to support a corporation's obligation to repay. - Secured bonds are those that shareholders can sell back to the corporation.

- Secured bonds are those that have specific corporate assets to support the corporation's obligation to repay

In order for a third party to sue an employer for a tort committed by the employer's agent, the third party must establish which of the following? - That the principal is a disclosed principal - That the agent has been employed by the employer for more than three business days - That the principal carries liability insurance - That the agent did not make a substantial departure from the course of the employer's business

- That the agent did not make a substantial departure from the course of the employer's business

While a principal's tort liability depends upon whether the employee/agent was acting within the scope of his or her authority, misrepresentation liability depends upon which of the following? - Whether the agency agreement is in writing - Whether the principal authorized the agent's act - Whether the principal is vicariously liable - Whether the agent discloses the existence of the agency

- Whether the principal authorized the agent's act

When a partnership rightfully dissolves, all the partners can do each of the following acts except: - unanimously agree to continue the business of the partnership. - demand the partnership be wound up. - immediately withdraw their shares of partnership property. - participate in the process of winding up.

- immediately withdraw their shares of partnership property.

A limited partner's limited personal liability depends on all but which of the following conditions? -The limited partner has education, skill, and experience in the nature of the limited partnership business. - The limited partner does not participate in the control of the business. - The limited partner's surname is not part of the partnership business. - The limited partner has complied in good faith with the requirement that a certificate of limited partnership is filed.

-The limited partner has education, skill, and experience in the nature of the limited partnership business.

What kind of notice must a third party who had business interactions with the agent be given? Notice in a newspaper Constructive notice No notice Actual notice

Actual notice Actual notice must be given to third parties who have had business interactions with the agent; it directly informs them, orally or in writing, that the agency agreement has terminated. When the agent's authority was granted in writing, actual notice also must be given in writing.

The most influential power of shareholders is to do which of the following? Appoint and supervise officers Make financial decisions for a corporation Authorize corporate policy decisions Elect and remove directors

Elect and remove directors

Agency laws are relevant to three types of business relationships. Which of the following is not one of those relationships? Employer-employee Employee-independent contractor Principal-agent Employer-independent contractor

Employee-independent contractor

________is perhaps the most important consideration a court makes when determining whether a worker is an employee or an independent contractor. Employer control Employee pay Tax law implied agency

Employer control

Which of the following terminations occurs by act of parties? Lapse of time Impossibility Disloyalty of agent Changed circumstances

Lapse of time - the others are terminations by law

Which of the following is not a requirement for a partnership under the Uniform Partnership Act (UPA)? Must make a profit An association of two or more persons As co-owners The intent to make a profit

Must make a profit According to UPA Section 6, a partnership is "an association of two or more persons to carry on as co-owners a business for profit." The partners must operate the business for a profit. This criterion is interpreted to mean that the partners must intend to make some kind of profit from the business.

Which of the following is not a characteristic of a corporation? Status as a "legal person" and "citizen" Creature of the state Separate legal entity Non-transferability of corporate shares

Non-transferability of corporate shares you can transfer ownership of shares.

________act as agents of the corporation, and thus the rules of agency apply to their work. Officers Lenders Stockholders Directors

Officers

How is a principal classified if the third party is aware of the principal's existence but not his or her identity? Identified Partially disclosed Undisclosed Fully disclosed

Partially disclosed

Directors have all but which of the following rights? Right to be notified of meetings Right to purchase unlimited stock Right to access and inspect books and records Right to participate

Right to purchase unlimited stock Directors have four rights: the rights of compensation, participation, inspection, and indemnification

A partner has implied authority to do all but which of the following? Sell partnership property. A partner cannot have implied authority. Purchase goods necessary to perpetuate the business. Enter into agreements to carry on partnership business.

Sell partnership property.

Which of the following is not a type of takeover? Beachhead acquisition Short-form merger Exchange offer Tender offer

Short-form merger

Courts are likely to pierce the corporate veil in all but which of the following situations? Shareholders attempt to commit fraud through a corporation. The corporation only has one shareholder. A corporation did not follow statutory mandates regarding corporate business. The corporation lacked adequate capital when it initially formed.

The corporation only has one shareholder.

A partner's personal creditor can obtain a(n) ________, which entitles a creditor to a partner's profits while the partner continues to act as a partner and engage in the partnership business. attachment of earnings order warrant of execution marshaling order charging order

charging order

When multiple shareholders have suffered damages caused by the same act of a corporation, the shareholders can bring a ________suit against the corporation. class action shareholders derivative declaratory preemptive

class action If multiple shareholders have suffered damages caused by the same act of the corporation, the shareholders may bring a class action suit against the corporation. A class action suit is brought by one shareholder on behalf of a group of shareholders to recover damages for the entire group.

Principal-agent relationships are most significant for issues that are included in the category of ______ law. wage contract tort discrimination

contract

Agency contracts do not need to be in writing unless an agent has been given power of authority or if the agent will be entering into a contract that the ________ requires to be in writing. statute of frauds expressed authority ratification agreement implied covenant

statute of frauds Agency agreements usually do not need to be in writing, with two important exceptions. First, the agreement must be in writing whenever an agent will enter into a contract that the statute of frauds requires to be in writing. Second, the agreement must be in writing whenever an agent is given power of attorney.

Which of the following is true for mergers and consolidations? The involved corporations must submit the merger plan, but not a consolidation plan, to the secretary of state. The state's legislature approves a resolution permitting the involved corporations to merge or consolidate. the shareholders of all involved corporations must approve the plan by a vote at a shareholder meeting. The boards of directors of only one of the involved corporations must approve the merger or consolidation pla

the shareholders of all involved corporations must approve the plan by a vote at a shareholder meeting.

A(n) ________dissolution occurs when a partner dissolves the partnership in violation of the partnership agreement. de jure illegal unfair wrongful

wrongful