Bus Law chapter 19 – Flashcards
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In most states, a general partner is jointly and severally liable for all partnership obligations.
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True
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A limited liability company is operated in compliance with state law.
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True
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A cooperative may take the form of a corporation.
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True
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Sabin and Tyler agree while talking on the phone to form a partnership. Their partnership agreement is legally binding
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without more.
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The Uniform Partnership Act governs the operation of partnerships.
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True
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Vela and other farmers in Washington County form a business organization to provide, without profit, an economic service to its members. This is
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a cooperative.
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A syndicate may exist in the form of a partnership but not a corporation.
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False
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China Bank is a foreign entitya firm owned and operated by investors in a foreign country. With respect to an LLC in the United States, China Bank can
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become a member.
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In some states, business trusts pay corporate taxes. Question options:
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True
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Dunn and Etta are limited partners in Fancee Fashion Stores, a limited partnership. In terms of the firm's books, Dunn and Etta are entitled to
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total access.
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Most franchise agreements provide that termination must be "for cause."
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True
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The owners of a joint stock company are personally liable for its obligations.
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True
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The owners of an incorporated cooperative are personally liable for its obligations.
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False
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Jack buys a Kitchens, Inc., franchise, which the franchisor later terminates. In determining whether the termination was proper, a court will generally
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balance the rights of both parties.
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Guy and Hanna do business as G-H Associates. If G-H is a partnership, it is governed by the Uniform Partnership Act
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in the absence of an express agreement.
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Omega Corporation and Precision Coding, Inc., two software firms, wish to combine their research and development capabilities to make a special, limited edition computer game. The most appropriate legal entity for this project might be
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a joint venture.
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Star Resorts Corporation wants to terminate its franchise arrangement with Tony. Their contract does not provide for notice of termination or set a time for winding up the business. This means that to wind up, Tony
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has a reasonable time, with notice
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Jim organized, and owns and operates, Jim's Landscaping Service in the simplest form of business organization. This is
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a sole proprietorship
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A partner may compete with the partnership without violating the fiduciary duties that he or she owes to the firm.
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False
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A limited partner has a right to participate in the management or operation of the partnership.
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False
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A joint venture is taxed like a partnership.
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True
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Loni, Michel, and Nita are investors in Oceanic Exploration, a business trust. A business trust is managed by its
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trustees.
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Cal sells "DownSize," a weight-reduction program, from a Web site, in competition with Eat-Less Inc.'s product "Fit 'n Trim." Eat-Less files a suit against Cal, alleging in part that he is a sole proprietor, but his enterprise should be deemed a different form of business. Cal's enterprise should most likely be considered
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a sole proprietorship because Cal is a sole proprietor.
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As the beneficiary of a business trust, Kevin's liability for trust debts and obligations is
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nothing.
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Tundi is a partner in WooHoo! Amusement, a new partnership. A WooHoo! debt comes due. Tundi is
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personally liable to the full extent of the debt.
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A limited liability company cannot be taxed as a partnership.
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False
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Leigh wants to go into the business of construction contracting. Among the reasons that would probably convince Leigh to set up his business as a sole proprietorship would be
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its greater organizational flexibility.
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A limited liability company is required to have an operating agreement.
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False
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Pricey Auto Corporation gives notice to Quint that Pricey is terminating their franchise arrangement. Winding up the business requires
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returning Pricey's property.
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In a limited liability partnership, a partner's personal liability can be limited.
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True
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A partner may use partnership property for any purpose without accounting to the partnership.
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False
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A limited liability partnership can be formed in virtually any state.
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True
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In a limited liability company, members must participate in the management of the company.
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False
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A sole proprietor may own and manage any type of business.
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True
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A sole proprietorship is a separate legal entity for tax purposes.
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False
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Riley is interested in buying a franchise from Soft Shoe Corporation. Soft Shoe must disclose material facts that Riley needs to make an informed decision concerning this purchase, according to
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the Federal Trade Commission's Franchise Rule.
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Mabel and Nicol do business as One World Realty. In acting on the firm's behalf in a deal with Property Acquisition Company, Mabel fails to account for the profit. To her firm, Mabel is
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liable for breach of the duty of loyalty.
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In a limited liability company, members do not have to participate in its management.
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True
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Carl sells Direct Marketing Enterprises, a sole proprietorship, to Erv. This is a transfer of
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the ownership of the business.
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One of the disadvantages of a sole proprietorship is that the owner is liable for the losses of the business.
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True
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General principles of agency law are the basis for a partner's duties and liabilities.
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True
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A group of individuals getting together to finance a particular project may form a syndicate.
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True
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Only a limited partnership's limited partners have a fiduciary obligation to the other partners.
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False
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Pat enters into an agreement with Ole! Food, Inc., to operate a franchise in Region City. Later, Ole! grants franchises to others within the city, Pat files a suit to close them. This suit will likely
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fail if Ole! did not give Pat exclusive rights to Region City.
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Bret buys a franchise from Comida Mexicano Ltd. If their agreement is like most franchise agreements, it will specify that Comida can terminate the franchise
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for cause only
