LEGL 3000 Chapter 17 – Flashcards
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The simplest form of business is a sole proprietorship.
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A sole proprietor owns the entire business but does not receive all of the profit.
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A sole proprietorship lacks continuity on the death of the proprietor.
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An association cannot be a partnership without an express agreement.
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A sole proprietor has unlimited liability for all obligations that arise in doing business.
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In raising capital, a sole proprietor is limited to his or her personal funds—a personal loan is not possible.
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The Uniform Partnership Act governs the operation of partnerships.
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A sharing of profits from the ownership of property creates a presumption that a partnership exists.
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Federal law permits a partnership to be treated as an entity in suits in federal courts.
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A partner's profit from a partnership is taxed as income to the firm.
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Withdrawal from a partnership for a term prematurely does not constitute a breach of the partnership agreement.
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Under no circumstances can a non-partner be regarded as an agent whose acts are binding on the partnership.
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In a general partnership, all partners have equal rights in managing the partnership.
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A partner owes to the partnership and the other partners a duty of loyalty.
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A partner who pursues his or her own interests automatically violates the partner's fiduciary duties to the partnership.
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In a general partnership, the partners are personally liable for the debts of the partnership.
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A partner always has the power and the right to dissociate from the partnership.
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On a partner's dissociation, his or her duty of loyalty to the partnership ends.
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Any event that makes its unlawful for a partnership to continue its business will result in dissolution.
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A limited liability company can be taxed as a partnership.
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Limited liability companies (LLCs) are governed by state LLC statutes.
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A limited liability company (LLC) formed in one state but doing business in another state is referred to in the second state as a foreign LLC.
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A limited liability company is not a citizen of any state.
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The liability of the members of a limited liability company is limited to the amount of their investments.
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In many states, an operating agreement is not required for a limited liability company to exist.
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A limited liability company must be managed by non-member managers.
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Most limited liability company statutes have no provisions regarding members' meetings.
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Some states provide that in the absence of an agreement to the contrary each member of a limited liability company has one vote.
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When a member dissociates form a limited liability company, the member's duty of loyalty continues.
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Normally, a dissociated member of an limited liability company (LLC) has the right to force the LLC to dissolve.
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