In most states, partnerships formed without an express agreement are governed by
the UPA
A partner owes the partnership the fiduciary duty of
care
When one partner's relationship with a partnership comes to an end but the partnership continues to do business, it is known as
dissociation
The two categories of enterprises for which a limited liability partnership (LLP) is especially attractive are
professional services and family businesses
In order to form a valid limited partnership (LP), the partnership must
file a certificate of limited partnership
Eduardo and Larsen enter into a partnership agreement to sell gourmet dog biscuits. If they do not specify how long the general partnership will last, the partnership will end
whenever either partner wants to end it
Oksana and Sharon form a general partnership to operate a gourmet kitchen business. In most states, if they do not specify their respective management rights
both partners have equal management rights
When Kyle and Dora formed their general partnership, Kyle contributed 90 percent of the capital, and Dora contributed 10 percent. In the partnership agreement, they did not specify the percentage of the profits each partner would receive. In the first yea
$17,500
Frank is a dentist and a partner in a limited liability partnership (LLP). He negligently harms Dania while attempting to perform a root canal operation. With regard to the liability of the other partners in Frank's LLP, a court would most likely find tha
only a partner who was Frank's supervisor can be held liable
Jean is a limited partner in a limited partnership that owns a chain of beauty salons. The managing partner is having trouble finding qualified people to run the operation. Jean would like to undertake some management responsibilities to temporarily ease
will forfeit her limited liability and become subject to personal liability for all partnership obligations
One of the advantages of the sole proprietorship is
more flexibility than does a partnership or a corporation
The major disadvantage of the sole proprietorship is that, as sole owner, the proprietor
bears the burden of any losses or liabilities incurred by the business enterprise
A sole proprietor pays
only personal income taxes (including Social Security and Medicare taxes) on the business's profits.
A franchise is an arrangement in which the owner of a trademark, a trade name, or a copyright:
licenses others to use the trademark, trade name, or copyright in the selling of goods or services
The purchaser of a franchise is a
franchisee
The seller of the franchise is a
franchisor.
If a court perceives that a franchisor has arbitrarily or unfairly terminated a franchise, the franchisee will be provided with a remedy for
wrongful termination
At issue in the case, Chic Miller's Chevrolet, Inc. v. General Motors Corp. was whether
General Motors Corporation acted wrongfully in terminating its franchise with a motor vehicle dealer in Connecticut.
Partnerships are governed by
both common law concepts and by statutory law
A partnership is based on
competent persons voluntarily agreeing to place some or all of their funds or other assets, labor, and skills in a business with the understanding of sharing losses and profits
Joint ownership of property
does not in and of itself create a partnership
Partnership at will
allows any partner to dissolve the partnership without incurring liability for losses to other partners that result from the termination, allows any partner to dissolve the partnership at any time, does not have a fixed duration specified.
Partnership by estoppel
None of the above
The rights of partners in a partnership relate to such things as
compensation, accounting, inspection of books, and management
Decisions that apparently are not for carrying on the ordinary course of the partnership business
require the unanimous consent of the partners
Devoting time and energy to partnership business generally is
a partner's duty
Dissociation occurs when
a partner ceases to be associated in the carrying on of the partnership business
Dissociation
alters the liability of both parties to third parties, terminates some of the rights of the dissociated partner, creates a mandatory duty for the partnership
Under the UPA, a court may order dissolution
if the business can only be operated at a loss
Winding up
includes preserving partnership assets
A family limited liability partnership (FLLP) is a partnership
probably used most often in connection with agriculture
Limited partnerships
limit the liability of some owners
In a limited partnership
at least one general partner is necessary
Limited partners
are not totally free of restrictions in running the business.
The Uniform Limited Liability Company Act has been adopted by fewer than one
fifth of the states
Wyoming passed legislation authorizing the creation of a limited liability company (LLC) in
1977
In 1988, the Internal Revenue Service ruled that Wyoming LLCs would be taxed as
partnerships
In a member-managed limited liability company
all of the members participate in management and decisions are made by majority vote
In a manager-managed limited liability company, the members designate a(an)
group of persons to manage the firm
Dissociation in an LLC is the same as in a
partnership
When a member dissociates from an LLC, he or she loses the right to participate
as an agent for the LLC, in the management of the LLC, in the management of the LLC and the right to act as an agent for the LLC
A relationship in which two or more persons or business entities combine their efforts or their property for a single transaction or project or a related series of transactions or projects is a
joint venture
A relationship in which several individuals or firms join together to finance a particular project such as the construction of a shopping center is a
syndicate, or an investment group.
A true hybrid of a partnership and a corporation is a
joint stock company
The body of shareholders can change constantly
unlike the members in a partnership
A corporation whose shares are not publicly traded is called a(n)
closely held corporation
Public corporations are
formed to meet some political or governmental purpose
The procedures for incorporation
include securing the corporate name
The articles of incorporation
serve as a primary source of authority for its future organization and business functions, make up the primary document needed to incorporate a business, include the number of shares the corporation is authorized to issue
A company's bylaws
are adopted by the corporation at its first organizational meeting
In dealing with a conflict among various documents involving a corporation
state statutes would take priority over the bylaws of the corporation, the constitution of the state of incorporation would take priority over the firm's articles of incorporation, state statutes would take priority over the firm's articles of incorporati
A corporation does not have the implied power to
perform any act beyond the accomplishment of its corporate purposes
Shareholders can seek
damages from the directors who are responsible for an ultra vires act, an injunction from a court to stop the corporation from engaging in ultra vires acts, damages from the officers who are responsible for an ultra vires act
Courts will pierce the corporate veil
when the corporation and the controlling shareholder(s) are no longer separate entities
The alter-ego theory is applied by a court when
a corporation is so dominated and controlled by an individual or group that the separate identities of the person or group and the corporation are no longer distinct
Corporations are financed by
issuance and sale of corporate securities
Stocks
are offered for sale or issued by all corporations
Capital provided to new businesses by professional, outside investors is called
venture capital
The board of directors is
the ultimate authority in every corporation
An individual director can
not act as an agent to bind the corporation
Though many states permit fewer, historically the minimum number of directors has been
three
Generally, directors and officers are required to exercise
the fiduciary duties of care and loyalty
In performing their duties, directors and officers are expected to exercise
due care
Directors and officers are not expected to
be insurers of business success
The acquisition of a share of stock makes that person a(an)
owner of a corporation
Shareholders' meetings must occur at least
annually.
A corporation must notify its shareholders of the date, time, and place of an annual or special shareholder's meeting at least
ten days, but not more than sixty days, before the meeting date
A shareholder receives a preference over all other purchasers to subscribe to or purchase a prorated share of a new issue of stock with
preemptive rights
Shares that are authorized and issued but are not outstanding because they have been redeemed by the corporation are
treasury shares
Rights to buy stock at a stated price by a specified date that are given by the company are stock
warrants
In some instances, a majority shareholder is regarded as having a fiduciary duty to the corporation and to
the minority shareholders
Oppressive conduct is a
None of the above