Exam 19: Forms of business organizations

The ________ set forth the steps that must be taken to establish a corporation in a state.

The _______ is the simplest and most prevalent form of business enterprise in the U.S.

Which of the following refers to a merger in which some shareholders are required to surrender their shares in the disappearing corporation for cash?

The term "appraisal rights" when used in regard to a corporate merger refers to the right of dissenting shareholders to have corporate property independently appraised.

A ________ is created when two or more persons agree to place their money,labor,or skills in a business and to share the profits and losses.

Fact Pattern 19-1 Joan decides to enter into a franchise agreement with XYZ Burgers to sell their burgers in her town. The franchise agreement did not prohibit XYZ Burgers from granting other franchises in the area, but that did not concern Joan because she thought XYZ Burgers would treat her fairly. She did not bother to read the franchise papers, contracts, and disclosures she was provided. Joan's business went very well for the six months. Then, however, another XYZ Burgers franchise opened just down the street from Joan's restaurant. She was very upset and called XYZ Burgers to complain. The CEO brushed off her concerns and told her that there was enough business for everyone. Joan, however, is interested in suing XYZ Burgers. -Refer to fact pattern 19-1. Which of the following is the term used when a franchisor sells a franchisee an outlet in a certain location,and then a few months later,sells another outlet a few blocks away to someone else?

If a sole proprietorship operates under a fictitious business name,then that name must be registered with the state.

Fact Pattern 19-2 Maxine and Vince verbally agree to form a dog grooming partnership called "XYZ Grooming." They file nothing with the state. Maxine puts up 80% of the capital needed for the partnership, and Vince supplies 20%. Maxine assumed that Vince would do extra work to account for the small amount of capital contributed by him, but that did not occur. Maxine found herself grooming more than 90% of the animals on her own. Maxine told Vince that he was only entitled to 10% of the profits because he was only doing 10% of the work. Vince disagreed, and a heated argument occurred. Not surprisingly, Maxine and Vince decided to end the partnership. While winding up affairs, Maxine discovered that Vince paid an excessive amount for some dog shampoo. She thought he bought it from a certain supplier just so he could flirt with the receptionist there. She told him that paying for the shampoo was entirely his responsibility because she had not agreed to the purchase. Maxine and Vince also became aware of a lawsuit filed by the owner of a Welsh Pembroke Corgi complaining that the dog developed a skin rash following bathing by Vince in the expensive shampoo he had purchased, and that the owner lost money because the dog could not be entered into shows. Maxine told Vince that the litigation was entirely his responsibility and that she disavowed any liability to the plaintiff. -Refer to fact pattern 19-2. Which of the following is true regarding Vince's entitlement,if any,to share in profits of the business?

Fact Pattern 19-2 Maxine and Vince verbally agree to form a dog grooming partnership called "XYZ Grooming." They file nothing with the state. Maxine puts up 80% of the capital needed for the partnership, and Vince supplies 20%. Maxine assumed that Vince would do extra work to account for the small amount of capital contributed by him, but that did not occur. Maxine found herself grooming more than 90% of the animals on her own. Maxine told Vince that he was only entitled to 10% of the profits because he was only doing 10% of the work. Vince disagreed, and a heated argument occurred. Not surprisingly, Maxine and Vince decided to end the partnership. While winding up affairs, Maxine discovered that Vince paid an excessive amount for some dog shampoo. She thought he bought it from a certain supplier just so he could flirt with the receptionist there. She told him that paying for the shampoo was entirely his responsibility because she had not agreed to the purchase. Maxine and Vince also became aware of a lawsuit filed by the owner of a Welsh Pembroke Corgi complaining that the dog developed a skin rash following bathing by Vince in the expensive shampoo he had purchased, and that the owner lost money because the dog could not be entered into shows. Maxine told Vince that the litigation was entirely his responsibility and that she disavowed any liability to the plaintiff. -Refer to fact pattern 19-2. Which of the following is true regarding liability on the lawsuit brought by the Corgi owner?

Any corporation not meeting the requirements for an S corporation is automatically a C corporation.

Define a joint venture and list the elements necessary for a finding of a joint venture.

States may not impose a higher fiduciary duty upon partners than that set forth in the Revised Uniform Partnership Act.

A _______ is a for-profit corporation that uses the power of business to solve social and environmental problems.

A corporation can conduct business as a ________ in states other than its state of incorporation.

_______ refers to a method by which courts hold shareholders individually liable for claims against a corporation.

The _______ theory applies to the situation in which owners of a corporation have so mingled their own affairs with those of the corporation that the corporation does not exist as a distinct entity.

In what five categories does the Franchise Rule require a franchisor to make material disclosures to prospective franchisees?

Which of the following is false regarding limited partnerships?

Sarah Smith works as a laser technician for a local dermatology center consisting of physicians operating under a partnership agreement. Sarah purchased supplies through the mail from a medical supply facility totaling $5,000. She signed the contract agreeing to pay for the supplies in her name,Sarah Smith. A few weeks later the dermatologists became embroiled in a bitter dispute regarding profits and terminated the partnership. Unfortunately,the partners were not aware of the debt owed to the medical supply facility; and the bill remained unpaid. Sarah received a bill from the supply company for $5,000. Is she liable to the medical supply company,and why or why not?

Which of the following is false regarding decision making in a partnership?