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BLAW 3310 TEST 3 SCHWEMER
QUESTIONS AND ANSWER S WITH
VERIFIED SOLUTIONS GRADED
A+
Question : LLC and Personal Liability
CORRECT ANSWER : No member or manager is
personally liable for all debts.
Question : Piercing the corporate veil
CORRECT ANSWER : A situation in which courts put
aside limited liability and hold shareholders or directors personally liable for a corporation's actions or debts.
Question : Forming a partnership
CORRECT ANSWER : Either an oral or written
agreement must be made between partners. Written is the most formal and may include terms such as finances, management, and terms for dissolution.
Question : General Partnership
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CORRECT ANSWER : No state filing needed; is created
when two or more partners agree to form. Low startup cost.
Question : Limited Partnership
CORRECT ANSWER : Only general partners have
management capabilities; other partners have limited liability.
Question : Limited Liability Partnership
CORRECT ANSWER : LP created by professional
businesses such as dentists or attorneys.
Question : Things that shareholders vote on
CORRECT ANSWER : Matters that change the
corporation's structure or existence (such as a merger with another firm or an amendment to the corporation's articles of incorporation). Shareholders also vote for the board of directors.
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Question : Negative of Sole Proprietorships and
Partnerships
CORRECT ANSWER : Unlimited Liability
Question : Things partners have to agree on
CORRECT ANSWER: Mergers, dissolution, adding
new partners, major business decisions
Question : Business judgement rule
CORRECT ANSWER : Makes directors and managers
of corporations immune from liability when problems result from honest mistakes in judgement, so long as there is a reasonable basis for the decisions.
Question : Proxy
CORRECT ANSWER : A written authorization by
shareholders to cast their votes, so that they do not have to show up in person.
Question : The party that is paid is the _______
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CORRECT ANSWER : Payee
Question : How many parties are on promissory notes?
CORRECT ANSWER : Two: The maker and the payee
Question : Bill of Exchange
CORRECT ANSWER : International Draft
Question : Sight Draft
CORRECT ANSWER : Draft that requires immediate
payment
Question : Suretyship
CORRECT ANSWER : A guarantee that debts will be
paid, often given by a third party. The third party (surety) agrees to pay if the debtor will not. A guarantor is a third party that may only be obligated to pay under certain circumstances.