Business Associations

Question 1

What is the formation requirement for a General Partnership (GP)?

Answer 1

2 or more people, intent to carry on business, for profit as co-owners

Question 2

Is a formal contract required for a General Partnership?

Answer 2

No formal K required; look to intent of parties

Question 3

What is required for the admission of new partners in a General Partnership?

Answer 3

Requires unanimous approval

Question 4

How is property treated in a General Partnership?

Answer 4

If purchased with GP funds, it is GP property, not individual; not freely transferable

Question 5

What is the rule regarding titled property in a General Partnership?

Answer 5

If used for partnership purposes, it is GP property, even if bought with separate funds

Question 6

What rights do partners have regarding management in a General Partnership?

Answer 6

All partners have equal right to participate in management/control of partnership, absent agreement

Question 7

What is required for ordinary course of business decisions in a General Partnership?

Answer 7

Require majority approval.

If outside course of ordinary business decisions requires unanimous consent

Question 8

How are profits and losses shared among partners in a General Partnership?

Answer 8

Each GP entitled to share profits equally and must contribute towards losses in proportion

Question 9

Can an interest in a General Partnership be transferred?

Answer 9

Yes, it can be transferred without dissolving GP; however, transferee has no rights to manage/duties

Question 10

What can a partner seek in terms of indemnification?

Answer 10

A partner may seek repayment for CONTRIBUTIONS to GP incurred in carrying on business

Question 11

What right does a partner have regarding the partnership books?

Answer 11

Partner may inspect and copy the partnership books

Question 12

Can a partner sue another partner in a General Partnership?

Answer 12

Yes, for breach of agreement/duty or to enforce rights

Question 13

What are the duties of partners in a General Partnership?

Answer 13

Duty of Care, Duty of Loyalty, Duty of Good Faith/Fair Dealing, Duty To Account

Question 14

What does the Duty of Care entail?

Answer 14

Not to engage in negligent, reckless, or unlawful conduct or intentional misconduct

Question 15

What does the Duty of Loyalty require?

Answer 15

To act in best interest of partnership; avoid COI, no self-dealing, duty of confidentiality, no commingling, full disclosure

Question 16

What is the Duty of Good Faith/Fair Dealing?

Answer 16

To act honestly and fairly in all partnership dealings

Question 17

What is the role of partners in terms of authority in a General Partnership?

Answer 17

Each partner is an agent of the general partnership; agency principles apply

Question 18

What is Express Authority in a General Partnership?

Answer 18

Written within the K of partnership

Question 19

What is Implied Authority in a General Partnership?

Answer 19

Reasonable belief based on custom, prior dealing, or emergency

Question 20

What is Apparent Authority in a General Partnership?

Answer 20

Partner acting in ordinary course of GP business binds GP unless certain conditions are met

Question 21

What is the liability structure for partners in a General Partnership?

Answer 21

GPs have unlimited personal liability

Question 22

How is contract liability determined for “all partners” in a General Partnership?

Answer 22

If within scope of partnership, all partners are liable

Question 23

What is tort liability for partners in a General Partnership?

Answer 23

All partners are liable for torts committed by partner or employee during ordinary course of business with authority

Question 24

In terms of civil liability, what does joint and several liability mean?

Answer 24

Each partner is personally liable for the entire amount of partnership obligations

Question 25

What is the liability of new partners in a General Partnership?

Answer 25

Only liable for obligations arising after becoming a partner

Question 26

What is the liability of ex-partners in a General Partnership?

Answer 26

Liable for obligations arising while they were partners unless novation, release, or payment occurs

Question 27

What is the criminal liability of partners in a General Partnership?

Answer 27

Partners are liable only for their own crimes or participation

Question 28

What are the methods by which a partner can dissociate from a General Partnership?

Answer 28

Express K, agreed event, expulsion, bankruptcy, death or incapacity, judicial order

Question 29

What is wrongful dissociation?

Answer 29

Breach of express provision or withdrawal before finishing a definite term

Question 30

What does dissolution require in a General Partnership?

Answer 30

Partnership must be wound up, selling and settling GP affairs before termination

Question 31

What is lingering authority in a General Partnership?

Answer 31

Apparent authority continues until proper notice is given

Question 32

What is the order of distribution upon dissolution?

Answer 32

Creditors > partner creditors > non-creditor partners accounts > settlement

Question 33

What are the types of other partnerships mentioned?

Answer 33

Limited Partnership, Limited Liability Partnership

Question 34

What is the structure of a Limited Partnership?

Answer 34

Includes 1+ general partners and 1+ limited partners; only general partners are personally liable

Question 35

What is a Limited Liability Partnership?

Answer 35

Partners are not personally liable for LLP’s obligations, only for personal wrongful acts

Question 36

What is the Approach for Partnerships?

Answer 36

FuR DAL Dissaster "Think partnership for Fur Dolly's Dissaster, because it should have been a corporations to hit it big" FORMATION (INTENT "TWO" PROFIT) RIGHTS (Manage, Distribute Transfer, Inspection, Settlement) "Make Decisions... To....Increase.... Sales" "Managing Business, Distributing Income, Transferring Interest, Inspecting Records, Recovering Funds from Settlement" DUTIES (Care, Loyalty, Good Faith/Fair Dealing) "Care, Loyalty, and Good Faith" Peace Ya'll AUTHORITY (Partners are agents... entering into contracts!) LIABILITIES (Contract Liabilities; ordinary course of business, Tort Liability; SAME or authority... Civil Liability; Joint/Several, Criminal; Yes, if participated) DISSOLUTION/DISSOCIATION (Winding Up/Lingering Authority/Settlement)

Question 37

What is par value stock?

Answer 37

Par value stock is a type of stock that has a nominal value assigned to it, which is often set at a minimal amount, such as $0.01 per share.

Question 38

True or False: Watered stock refers to shares that are issued for more than their par value.

Answer 38

False: Watered stock refers to shares that are issued for less than their par value.

Question 39

Fill in the blank: In corporate law, par value is important because it establishes the ________ of a company's shares.

Answer 39

minimum legal capital

Question 40

What are the legal implications of issuing watered stock?

Answer 40

Issuing watered stock can lead to legal issues, including potential liability for the company and its directors if shareholders are misled about the value of the shares.

Question 41

Multiple Choice: Which of the following is a key characteristic of par value stock? A) It has no assigned value. B) It has a fixed nominal value. C) It can only be sold at a premium.

Answer 41

B) It has a fixed nominal value.