2nd QUARTER- BUSINESS LAW Exam 4

Question 1

specialized business relationship between one party known as the “principal” and another known as the “agent.”

Answer 1

agency

Question 2

Party who appoints a second party to serve as an agent

Answer 2

principal

Question 3

Party appointed by a principal to enter into a contract with a third party on the principal’s behalf.

Answer 3

agent

Question 4

From principal to agent. Act in good faith on behalf of principal’s interest. Enter into contracts on principal’s behalf

Answer 4

delegation of powers

Question 5

authorized to carry out particular kind of business or all business at a location.
Example: FDIC funeral Director in charge. Responsible for the funeral home

Answer 5

general agent

Question 6

authorized to transact specific act or act(s).

Answer 6

special agent

Question 7

three types of agent’s authority

Answer 7

Express authority
Implied authority
Apparent authority

Question 8

Stated in agreement creating agency. Authority by appointment. Example: Written power of attorney

Answer 8

express authority

Question 9

Authority to do things in order to carry out expressed authority.
How to remember: You hire commercial embalmer, they believe they have authority to determine injection site, chemicals, etc.

Answer 9

implied authority

Question 10

Authority agent believed to have because of principal’s behavior

Answer 10

apparent authority

Question 11

Person who undertakes to perform a specified task according to the terms of a contract. Other contracting party has no control except as stated in the contract.

Think of trade embalmer

Answer 11

independent contractor

Question 12

Party who hires employees to do certain work

Answer 12

employer

Question 13

Person hired to perform work

Answer 13

employee

Question 14

Need to know information for employer and employee relationships

Answer 14

 Employee performs work for employer.
 Employee under control of employer for work and manner of completion.
 Employer liable for injuries to third party caused by negligence of employee.
 Employer liable for torts committed by employee acting within scope of employment.
 Employer must comply with laws relating to employees.
 Social Security deductions (FICA).
 Worker’s compensation (FUTA & SUTA).
 Federal and state income tax withholdings.

Question 15

agent’s duty to principal

Answer 15

Loyalty and good faith
Obedience		
Reasonable skill and diligence
Accounting		
Information

Question 16

principal’s duty to agent

Answer 16

Compensation
Wages
Reimbursement of expenses incurred during course of employment.

Question 17

compensation for sustained losses. Adherence to terms of employment contract.

Answer 17

indemnification

Question 18

Termination of agency by act of the parties

Answer 18

Original agreement
Subsequent agreement
Revocation
Renunciation by agent

Question 19

Termination of agency by operation of law

Answer 19

Subsequent illegality of subject matter
Death or incapacity of either party
Destruction of subject matter
Bankruptcy of principal
Dissolution of the corporation

Question 20

Types of business organization

Answer 20

1. Proprietorship (sole proprietorship)
   
   2. Partnership
   3. Corporation

Question 21

Business owned by one person who is subject to claims of creditors. No separation of personal and business assets

Answer 21

Proprietorship

Question 22

 Simplest form of business organization.
 receives all profits and assumes all losses.
 bears all risks and has personal liability for all debts.
 Death terminates the business.

Answer 22

Proprietorship

Question 23

Voluntary association of two or more people who have combined their resources to carry on as co-owners of a lawful enterprise for their joint profit

Answer 23

partnership

Question 24

Kinds of partners

Answer 24

general, silent, and limited

Question 25

individual actively and openly engaged in the business and held out to everyone as a partner

Answer 25

general partner

Question 26

- individual who takes no active part in management of a business, but has capital invested in the business

Answer 26

silent partner

Question 27

partner who has his/her liability for the firm’s debts limited to the amount of their investment

Answer 27

limited partner

Question 28

Duties of a partner

Answer 28

```  Exercise loyalty and good faith  Use reasonable care and skill  Conform to contract of partnership  Maintain records  Inform one another ```

Question 29

Rights of a partner

Answer 29

 Participate in management  Inspect financial data  Contribution- input as to how business is managed  Withdraw advances (business money for personal use)  Withdraw(share) profits

Question 30

Liabilities of a partner

Answer 30

 For contracts of the partnership |  For torts

Question 31

three types of dissolutions of a partnership

Answer 31

By acts of the parties By court decree By operation of law

Question 32

Dissolution of a partnership by acts of the parties

Answer 32

 By agreement  By withdrawal or alienation  By expulsion (one may kick or buy the other out)

Question 33

Dissolution of a partnership by court decree

Answer 33

```  Insanity  Incapacity  Misconduct  Futility - not making money  Bankruptcy ```

Question 34

Dissolution of a partnership by operation of law -

Answer 34

 Illegality / Death

Question 35

an artificial being, invisible, intangible, and existing only in contemplation of law. An entity that is something that has a distinct existence separated and apart from the existence of its individual members.

Answer 35

corporation

Question 36

Formed to carry out government functions

Answer 36

public corporation

Question 37

Formed by individual to perform some non-governmental function for profit.

Answer 37

private corporation

Question 38

types of public corporations

Answer 38

 State university  Public hospitals  Public utilities

Question 39

types of private corporations

Answer 39

 For profit or |  Non-profit (not-for-profit)

Question 40

written document setting forth facts about a corporation prescribed by law for issuance of a charter and asserting the corporation has complied with legal requirements.

Answer 40

articles of incorporation

Question 41

grant of authority from a government to exist as a corporation

Answer 41

charter

Question 42

corporate structure

Answer 42

Stock holders / Board of Directors / Officers

Question 43

 Those having title to one or more shares of stock in a corporation.  Represent combined ownership of the corporation.  Shareholders  Conduct meetings at least once a year.

Answer 43

stockholders

Question 44

rights of the stockholders

Answer 44

 Receive properly executed stock certificates as evidence of ownership  Attend corporate meetings and vote (unless denied by express agreement).  Receive proportionate shares of profits when distributed as in dividends.

Question 45

Person authorized to vote for another, written authorization to vote for another.

Answer 45

proxy

Question 46

 Body elected by stockholders to act on behalf of the corporation and carry out the board’s policies.

Answer 46

board of directors

Question 47

 Authorized by Board of Directors to carry out board policies. (President / Vice-President / Secretary / Treasurer)

Answer 47

officers

Question 48

types of dissolution of corporations

Answer 48

voluntary | involuntary

Question 49

voluntary dissolution of corporation

Answer 49

By vote of the stockholders  Corporation pays debts,  Distributes remaining assets to stockholders as to number of stocks owned, and  Surrenders articles of incorporation.

Question 50

involuntary dissolution of corporation

Answer 50

``` Action of the court or state  Due to forfeiture or abuse of corporate charter,  Violation of state or federal law,  Fraud in obtaining the charter, or  Failure to pay specified taxes. ```

Question 51

manner of dissolution of a corporation

Answer 51

 Existence terminated except to complete its business.  Cannot sue, own property, or form contracts.  Except to convert assets to cash.

Question 52

What are some examples of how funeral homes enter into agency agreements?

Answer 52

answering service, embalming agency, livery company

Question 53

What is unique about independent contractors?

Answer 53

They have more freedom | for example Trade embalmer sets schedule, has own keys; you have less control over them

Question 54

Are county hospitals usually corporated or incorporated?

Answer 54

incorporated