Chapter 15

Question 0

Uniform Limited Liability Company Act (ULLCA)

Answer 0

A model act that provides comprehensive and uniform laws for the formation operation, and dissolution of LLCs.

Question 1

Limited Liability Company (LLC)

Answer 1

An unincorporated business entity that combines the most favorable attributes of general partnerships, limited partnerships, and corporations.

Question 2

Articles of Organization

Answer 2

The formal documents that must be filed at the secretary of state’s office of the state of organization of an LLC to form the LLC.

Question 3

Operating Agreement

Answer 3

An agreement entered into by members that governs the affairs and business of an LLC and the relations among members, managers, and the LLC.

Question 4

Certificate of Interest

Answer 4

A document that evidences a member’s ownership interest in an LLC.

Question 5

Member

Answer 5

An owner of an LLC.

Question 6

Limited Liability of Members of an LLC

Answer 6

The liability of LLC members for the LLC’s debts, obligations, and liabilities only to the extent of their capital contributions.

Question 7

Tortfeasor

Answer 7

A person who intentionally or unintentionally (negligently) causes injury or death to another person.

Question 8

Member-managed LLC

Answer 8

An LLC that has not designated in its articles of organization that it is a manager-managed LLC and that is managed by its member.

Question 9

Manager-managed LLC

Answer 9

An LLC that has designated in its articles of organization that it is a manager-managed LLC and whose nonmanger members give their management rights over to designated managers.

Question 10

Member-managed LLC Authority to Bind

Answer 10

All members have agency authority to bind the LLC to contracts.

Question 11

Manager-managed LLC Authority to Bind

Answer 11

The managers have authority to bind the LLC to contracts; the nonmanger members cannot bind the LLC to contracts.

Question 12

Duty to Loyalty

Answer 12

A duty owed by a member of a member-managed LLC and a manger of a manager-managed LLC to be honest in his or her dealings with the LLC and to not act adversely to the interest of the LLC.

Question 13

Wrongful Disassociation

Answer 13

Dissolution that occurs when a member withdraws from (1) a term LLC prior to the expiration of the term or (2) an at-will LLC when the operating agreement eliminates a member’s power to withdraw.

Question 14

Limited Liability Partnership (LLP)

Answer 14

A special form of partnership in which all partners are limited partners, and there are no general partners.

Question 15

Articles of Partnership

Answer 15

The formal documents that must be filed at the secretary of state’s office of the state of organization of an LLP in order to form the LLP.

Question 16

Franchise

Answer 16

An arrangement that is established when one party (the franchisor) licenses another party (the franchisee) to use the franchisor’s trade name, trademarks, commercial symbols, patents, copyrights, and other property in the distribution and selling of goods and services.

Question 17

Distributorship Franchise

Answer 17

The franchisor manufactures a product and licenses a retail dealer to distribute the product to the public.

Question 18

Processing Plant Franchise

Answer 18

The franchisor provides a secret formula or the like to the franchisee. The franchisee then manufactures the product at its own location and distributes it to retail dealers.

Question 19

Chain-Style Franchise

Answer 19

The franchisor licenses the franchisee to make and sell its products or services to the public from a retail outlet serving an exclusive geographical territory. The product is made or the service is provided by the franchisee.

Question 20

Area Franchise

Answer 20

The franchisor authorizes the franchisee to negotiate and sell franchises on behalf of the franchisor. This area franchisee is called subfranchisor.

Question 21

Franchise Agreement

Answer 21

An agreement that a franchisor and franchisee enter into that sets forth the terms and conditions of a franchise.

Question 22

License

Answer 22

A business arrangement that occurs when the owner of intellectual property (the licensor) contracts to permit another party (the licensee) to use the intellectual property.

Question 23

Joint Venture

Answer 23

An arrangement in which two or more business entities combine their resources to pursue a single project or transaction.

Question 24

Joint Venture Corporation

Answer 24

A corporation owned by two or more joint venturers that is created to operate a joint venture.

Question 25

Strategic Alliance

Answer 25

An arrangement between two or more companies in which they agree to ally themselves to accomplish a designated objective.