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Business Law > Final Exam > Flashcards

Final Exam Flashcards

0
Q

Type of business that is easy and inexpensive to form, and the proprietor receives all the profits.

A

Sole proprietorship

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1
Q

A business owned by one person or family, and is responsible for all debts and obligations of the business.

A

Sole proprietor

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2
Q

Disadvantage of a sole proprietorship

A

Unlimited liability for any losses or liabilities
Business will not survive the owners death
Owner may only raise capital out of personal funds and personal loans.

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3
Q

An agreement by two or more persons to carry on as co-owners, a business for profit.

A

Partnership

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4
Q

How do courts determine whether two or more persons are partners?

A

A. The sharing of profits and losses
B. joint ownership of the business, and
C. Equal rights in the management of the business.

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5
Q

Advantages of partnerships

A
  • Partnerships are easy and inexpensive to form
  • The partners share all of the profits
  • The partners may raise capital for the business out of their collective or individual liability; and
  • The partnership pays no income taxes, instead, a partner’s profit share is taxed as her individual income
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6
Q

Disadvantages of Partnerships

A
  • Partners are personally liable for partnership debt and obligations
  • Partners are jointly and severally liable for torts or breaches of trust committed by or on behalf of the partnership, and
  • The partnership will not survive the death, disability, retirement, or disassociation of any partner.
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7
Q

Limited Partnerships

A

A partnership consisting of one or more general partners, who manages the business, and one or more limited partners, who contribute only capital and other assets and do not participate I managing the business.

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8
Q

Liabilities of Limited Partnerships

A

A limited partner’s liability is limited to the amount of his capital contribution as long as he does not participate in amazement. A limited partner who actively participates in management is subject to the same liability as a general partner.

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9
Q

Limited Liability Companies (LLCs)

A

A hybrid form of business, which is taxed like a partnership, while offering the owners the limited liability of a corporation.

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10
Q

Ownership of an LLC

A

An LLC is composed on one or more owner(s), called member(s), who must file articles of organization with the appropriate state authority.

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11
Q

Operating Agreement of LLCs

A

An agreement, usually in writing, among the members of an LLC, addressing management, profit sharing, transfer of ownership, dissolution, and other important issues.

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12
Q

Management of LLCs

A

LLCs are either member managed, where all the owners participate in management, or manager managed, where a group of members, even nonmembers, manage the LLC.

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13
Q

Advantages of LLCs

A
  • Members enjoy limited personal liability
  • LLCs with two or more members may elect to be taxed as a corporation or partnership
  • Flexibility in management and operations
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14
Q

Disadvantages of LLCs

A
  • Non-uniform state LLC law creates uncertainty as to personal liability
  • Lack of of case law addressing LLC creates uncertainty
  • Raising capital
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15
Q

Joint Ventures

A

A business venture where two or more persons or entities combine their interests in a particular enterprise and agree to share in the losses or profits equally or in proportion to their capital and asset contributions.

-A joint venture resembles a partnership and is taxed like a partnership.

The death of a joint venturer generally does NOT terminate the joint venture.

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16
Q

Franchises

A

A relationship where the owner of a trademark, trade name, or copyright allows another person or entity to use that trademark, trade name, or copyright, under specified conditions or subject to particular Iimitations, in selling goods or services.

Franchisors and franchisees are liable for their own contracts and torts.

Franchisees are usually independent contractors.

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17
Q

Corporations

A

A corporation is a legal entity that is formed in companies with the statutory requirements of its state of incorporation, owned by shareholders whose liability is limited to their investment in the corporation, and is managed by a board of directors elected by the shareholders and officers employed by the board of directors.

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18
Q

Constitutional Rights in a Corporation

A

A corporation is a “person” for purposes of most rights guaranteed by the US Constitution.

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19
Q

Tort Liability

A

A corporation is liable, under the doctrine of respondent superior, for the torts committed by its agents or employees within the course and scope of their duties.

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20
Q

Criminal Liability

A

A corporation may be liable for criminal acts of it’s agents or employees, as long as the criminal sanctions can be applied to the corporation (ie. fines)

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21
Q

Corporate Taxation

A

Corporate profits are taxable to the corporation when they are distributed in the form of dividends, but not when they are “reinvested” in the corporation as retained earnings.

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22
Q

Dividends

A

Corporate profits distributed to shareholders in proportion to their shares held.

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23
Q

Retained Earnings

A

Corporate profits not distributed to shareholders

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24
Q

Domestic Corporation

A

A corporation incorporated in a given state and doing business in that same state.

25
Q

Foreign Corporation

A

A corporation doing business in a given state, but incorporated in another state.

26
Q

Alien Corporation

A

A corporation doing business in a given state, but incorporated in a foreign country.

27
Q

Chartering

A

Choose State of incorporation

28
Q

Articles of Incorporation

A

The primary document needed to incorporate.

29
Q

Directors

A
  • Govern corporation
  • Elected by the corporation’s shareholders
  • Serve for a period of time as agents of corporation
  • Declare and pay corporate dividends
  • Authorize major corporate decisions
  • Appoint, supervise, and remove corporate officers and managerial employees
  • Decide whether to issue stock or bonds
30
Q

Persons hired by the board of directors to supervise the day to day operations of the corporation

A

Officers

31
Q

Who oversees the officers

A

Board of directors, and indirectly shareholders

32
Q

Officers are authorized agents of the corporation

True or false?

A

True

But authority of a particular officer may be limited

33
Q

Duty of care of directors and officers includes . . .

A

Act in good faith when performing their duties
Exercise the care that an ordinarily prudent person would
Act in the best interest of the company

34
Q

Directors and officers must do what is necessary to become and stay informed on important corporate matters.
What else is expected of them?

A

Make reasonable decisions
Exercise reasonable supervision
Attend and participate in board mtgs and clearly indicate their disagreement with any decision of the board.

35
Q

Failure to exercise the requisite care may result in what?

A

Personal liability for any harm suffered by the corporation

36
Q

What defines if something is a gift?

A

Intent
Delivery
Acceptance

37
Q

The right to use a portion of another’s land for ease and convenience is what?

A

Easement

38
Q

What are the rights and duties of a landlord?

A

Right to collect rent

Duty to provide habitable housing

39
Q

Rights and duties of a tenant

A

Duty to pay rent
Duty to not commit waste
Right of exclusive quiet possession
Various remedies if premises not habitable

40
Q

Relationship created by lease

A

Landlord-tenant relationship

41
Q

Tenancy for yrs
Periodic tenancy
Tenancy at will
Tenancy at sufferance

A

Types of tenancies

42
Q

Mislaid, lost, and abandoned property

A

Characterization depends on whether finder obtains title
If mislaid, Finder never obtains title
If lost, finder obtains title against world but not true owner
If abandoned, finder obtains title against world, including owner

43
Q

Bailments

A

Delivery of property to another person for specific purpose
Purpose of delivery determines duty of care of recipient
Bailments for sole benefit of bailer; slight duty
Bailments for sole benefit of bailee; high duty
Mutual bailment; ordinary care

Bailee must know what he or she is receiving, and can only be held to duty of care for those items.

44
Q

What directors and officers are not allowed to do

A

Use corporate funds or confidential information for their own personal gain
Engage in self-dealing (vote or act for personal benefit)
Compete with the corporation
Have a conflict of interest with the corporation
Engage in inside training
Authorize corporate transactions detrimental to minority shareholders
Use corporate facilities for personal business

45
Q

Business judgement rule

A

Directors and officers are immune from personal liability for actions that result in harm to the corporation as long as:
They act in good faith
In the best interest of the corporation
With the care of the ordinarily prudent person

46
Q

Shareholders

A

Owners of the corporation in proportion to their ownership of corporate stock outstanding.
Generally not personally liable for the obligations of the corporation

47
Q

Piercing the Corporate Veil

Kinney Shoe v. Polan

A

Look up

48
Q

A process by which one corporation (the surviving corp) acquires all of the asserts and liabilities of another corporation (merged corporation) causing the merged corporation to become defunct

A

Merger and consolidation

49
Q

Fiduciary relationship between Principal and Agent

A

Agency

50
Q

Agents duties

A 
Performance 
Notification
Loyalty
Obedience
Accounting
51
Q

Principals duties

A 
Compensation 
Reimbursement 
Indemnification 
Cooperation 
Safe working conditions
52
Q

Degree of control Principal has over Agent’s work

A

Employee v. Independent contractor

53
Q

Liability - contracts

A

Principal generally bound by contracts entered into by agent.

54
Q

Liability -torts

A

Agent is liable for his or her own torts. Principal may also be liable for its agents torts if the agents torts resulted from:
Principals own tortious conduct
Tortious act authorized by the principal
The agents unauthorized tort committed within the scope and course of the agency (respondent superior)
Principal usually not responsible for an Independent contractor’s torts
Principal is generally not liable for an agents criminal acts

55
Q

Fair labor standards act (FLSA)

A

Federal law, applicable to the employees of all employers engaged in interstate commerce. Aiming its provisions are:
Child labor
Maximum hours/overtime
Minimum wage

56
Q

Occupational Safety Health and Wellness (OSHA)

A

Employers must promptly report any workplace accident as a result of which an employee was killed or at least 5 employees were hospitalized
Failure to comply with OSHA standards or failure to promptly report incidents may result in severe fines for the employer and possible imprisonment for culpable supervisory personnel.

57
Q

Workers compensation laws

A

Exclusive remedy

Benefits may be reduced by 50% if accident due to drugs or alcohol

58
Q

Family and Medical Leave (FMLA)

A

Up to 12 weeks of family or medical leave during any 12-mth period
Employer must continue to provide benefits to the employee
Employer must also guarantee that the worker may return to her prior job or to a comparable job unless the employee is a “key employee” - someone whose income is in the top 10% of the firms workforce.

59
Q

Strikes

A

Generally legal, with exceptions

60
Q

Different types of strikes

A

Look up

Business Law (1 decks)

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