Question 1

A limited liability partnership allows professionals to avoid personal liability for the malpractice of other partners.

Accepted Answer

A) True 
 B)False

Question 2

Beri owns and operates City Delivery Service as a sole proprietorship.When she dies,the business will automatically

Accepted Answer

A)  dissolve. 
B)  transfer to Bev's heirs. 
C)  reform with its employees as the owners. 
D)  transfer to its creditors. 
A)  dissolve. 
B)  transfer to Bev's heirs. 
C)  reform with its employees as the owners. 
D)  transfer to its creditors.

Question 3

Sebastian was the manager of Thai Bistro,a restaurant specializing in Southeast Asian foods.Sebastian opened a bank account in Thai Bistro's name,signing the account signature card as "owner." Umeko,who was often at Thai Bistro and had free access to its office,told others that she was "an owner" and "a partner." She also opened a bank account in Thai Bistro's name,and signed the account signature card as "owner." Sebastian told Vijay,the owner of Wong Noodles,Inc. ,that Umeko was a member of a partnership that owned Thai Bistro.On this basis,Wong Noodles delivered its goods to Thai Bistro on credit.In fact,Thai Bistro was owned by a corporation.When the unpaid account totaled more than $10,000,Wong Noodles filed a suit against Umeko to collect.On what basis might Umeko be liable for the debt?

Accepted Answer

The theory under which Umeko would most

Question 4

Sam buys a franchise from Taco Loco Inc.This relationship,like all other franchise relationships,is governed by

Accepted Answer

A)  contract law. 
B)  all of the choices. 
C)  the federal Franchise Rule. 
D)  applicable state law. 
A)  contract law. 
B)  all of the choices. 
C)  the federal Franchise Rule. 
D)  applicable state law.

Question 5

In most states,in a dispute on a partnership matter,a third party cannot sue an individual partner but must file an action against the entire firm.

Accepted Answer

A) True 
 B)False

Question 6

Limited legal liability can be an advantage for a small business wishing to raise capital.

Accepted Answer

A) True 
 B)False

Question 7

If a limited liability company is not meeting the economic purpose for which it was established,a court may order the dissolution of the firm.

Accepted Answer

A) True 
 B)False

Question 8

Bob buys a Club Fitness,Inc. ,franchise,which the franchisor later terminates.In determining whether the termination was proper,a court will generally

Accepted Answer

A)  balance the rights of both parties. 
B)  emphasize the right of Club to its business operation. 
C)  focus on the right of Bob to be dealt with fairly. 
D)  underscore the interest of consumers in affordability. 
A)  balance the rights of both parties. 
B)  emphasize the right of Club to its business operation. 
C)  focus on the right of Bob to be dealt with fairly. 
D)  underscore the interest of consumers in affordability.

Question 9

Unlike a sole proprietorship or a partnership,a limited liability company cannot be held liable for a loss caused by the wrongful acts of its members.

Accepted Answer

A) True 
 B)False

Question 10

Otto is a general partner in Port Exports,a limited partnership.By participating in the firm's management,Otto is liable for its obligations

Accepted Answer

A)  in proportion to the number of partners in the firm. 
B)  to no extent. 
C)  to the extent of his capital contribution to the firm. 
D)  to the full extent. 
A)  in proportion to the number of partners in the firm. 
B)  to no extent. 
C)  to the extent of his capital contribution to the firm. 
D)  to the full extent.

Question 11

Because each type of franchise relationship is similar,franchise contracts tend to be similar.

Accepted Answer

A) True 
 B)False

Question 12

Without creating a separate business organization,Rey starts up Street Cruisers,a pre-owned auto sales enterprise.This enterprise is

Accepted Answer

A)  none of the choices. 
B)  a corporation. 
C)  a franchisee. 
D)  a sole proprietorship. 
A)  none of the choices. 
B)  a corporation. 
C)  a franchisee. 
D)  a sole proprietorship.

Question 13

In a limited partnership,every partner has full responsibility for the management of the partnership.

Accepted Answer

A) True 
 B)False

Question 14

Dissociation terminates some of the rights of the dissociated partner,requires the firm to buy his or her interest,and alters the parties' liability to third parties.

Accepted Answer

A) True 
 B)False

Question 15

Accounting LLC is a member-managed limited liability company.Unless the members have agreed otherwise,all decisions with respect to the firm's business are made by

Accepted Answer

A)  majority vote. 
B)  the firm's board. 
C)  the senior members. 
D)  the firm's chief executive officer. 
A)  majority vote. 
B)  the firm's board. 
C)  the senior members. 
D)  the firm's chief executive officer.

Question 16

Because a franchisor's termination of a franchise can adversely affect a franchisee,much franchise litigation involves claims of wrongful termination.

Accepted Answer

A) True 
 B)False

Question 17

In a limited partnership,a general partner assumes no liability for partnership debts beyond the amount of capital contributed.

Accepted Answer

A) True 
 B)False

Question 18

Among three partners,unless they agree otherwise,unanimous consent is required to manage the business of the partnership.

Accepted Answer

A) True 
 B)False

Question 19

As the promoter of Glassworks LLC,Hans enters into a contract with Interstate Transport Company.Once formed,Glassworks can

Accepted Answer

A)  forego an adoption process and simply enforce the contract. 
B)  adopt the contract through a novation. 
C)  obtain the benefits of the deal without obligation. 
D)  pierce Interstate's "corporate veil" to hold Hans liable on the contract. 
A)  forego an adoption process and simply enforce the contract. 
B)  adopt the contract through a novation. 
C)  obtain the benefits of the deal without obligation. 
D)  pierce Interstate's "corporate veil" to hold Hans liable on the contract.

Question 20

The proprietor pays only personal income taxes on a sole proprietorship's profits.

Accepted Answer

A) True 
 B)False

Exam 17: Business Organizations

A limited liability partnership allows professionals to avoid personal liability for the malpractice of other partners.

Beri owns and operates City Delivery Service as a sole proprietorship.When she dies,the business will automatically

Sam buys a franchise from Taco Loco Inc.This relationship,like all other franchise relationships,is governed by

In most states,in a dispute on a partnership matter,a third party cannot sue an individual partner but must file an action against the entire firm.

Limited legal liability can be an advantage for a small business wishing to raise capital.

If a limited liability company is not meeting the economic purpose for which it was established,a court may order the dissolution of the firm.

Bob buys a Club Fitness,Inc. ,franchise,which the franchisor later terminates.In determining whether the termination was proper,a court will generally

Unlike a sole proprietorship or a partnership,a limited liability company cannot be held liable for a loss caused by the wrongful acts of its members.

Otto is a general partner in Port Exports,a limited partnership.By participating in the firm's management,Otto is liable for its obligations

Because each type of franchise relationship is similar,franchise contracts tend to be similar.

Without creating a separate business organization,Rey starts up Street Cruisers,a pre-owned auto sales enterprise.This enterprise is

In a limited partnership,every partner has full responsibility for the management of the partnership.

Dissociation terminates some of the rights of the dissociated partner,requires the firm to buy his or her interest,and alters the parties' liability to third parties.

Accounting LLC is a member-managed limited liability company.Unless the members have agreed otherwise,all decisions with respect to the firm's business are made by

Because a franchisor's termination of a franchise can adversely affect a franchisee,much franchise litigation involves claims of wrongful termination.

In a limited partnership,a general partner assumes no liability for partnership debts beyond the amount of capital contributed.

Among three partners,unless they agree otherwise,unanimous consent is required to manage the business of the partnership.

As the promoter of Glassworks LLC,Hans enters into a contract with Interstate Transport Company.Once formed,Glassworks can

The proprietor pays only personal income taxes on a sole proprietorship's profits.

Law and Legal Reasoning

Courts and Alternative Dispute Resolution

Ethics in Business

Business and the Constitution

Torts and Product Liability

Criminal Law and Cyber Crime

International and Space Law

Intellectual Property Rights

Internet Law, social Media, and Privacy

The Formation of Traditional and E-Contracts

Contract Performance, breach, and Remedies

Sales and Lease Law

Creditor-Debtor Relations and Bankruptcy

Agency Relationships

Employment, immigration, and Labor Law

Employment Discrimination

Corporations

Investor Protection and Corporate Governance

Administrative Law

Consumer Protection

Environmental Law

Real and Personal Property

Antitrust Law and Promoting Competition

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