Exam 19: Forms of Business Organizations.

A creditor of a sole proprietorship may seek recovery only from business assets of the sole proprietorship,not from personal assets of the sole proprietor.

Which of the following statements is NOT true regarding the advantages and disadvantages of a sole proprietorship?

A __________ is a public offer to all the shareholders of a corporation to buy their shares at a stated price.

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?

Corporations must incorporate in the state where their headquarters are located.

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

Which of the following is NOT true regarding limited partnerships?

A(n)__________ 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.

In CASE 19.2Holmes v.Lerner(1999),Lerner (a wealthy entrepreneur)talked to Holmes about setting up a cosmetics business called Urban Decay.Holmes received assurances from Lerner about finances and setting up the business.Later Lerner negotiated a separate deal for Urban Decay without including Holmes,and drafted articles of incorporation which gave Holmes only a one percent interest in Urban Decay.Holmes sued,insisting that even though they had no written agreement,she should have been a full and equal partner.How did the court rule and why??

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.

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.Is Maxine,XYZ Grooming,or Vince responsible for payment of the shampoo purchased by Vince?

In CASE 19.1 Gatz Properties,LLC v.Auriga Capital Corporation (2012),Gatz Properties was the managing member of Peconic Bay,LLC,controlled by the Gatz family.After failing to dislose material offers for assets of the LLC,Gatz bought out the minority members' interests in Gatz Properties LLC for $20,89.The minority members sued,winning over $800,000 based on Gatz's breach of fiduciary duties.Gatz appealed.How did the court rule on appeal on why?

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

In most jurisdictions,there is no quorum unless the holders of at least _____ of the outstanding shares are present in person or by proxy.

In a __________ merger,the shares in the disappearing corporation are automatically converted into shares in the surviving corporation.

A shareholder who cannot be present at a meeting can vote by __________,that is,by a written authorization for another person to vote on his or her behalf.

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

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.

Partners owe each other a duty of care but not a duty of loyalty.

Which of the following is generally true regarding the liability of members of a limited liability partnership for malpractice?