Business law sole proprietor, partnerships, and corporations quiz

John and Jason form a general partnership. After opening the business, Jason signs a supply agreement on behalf of the partnership with Sam. Later, the partnership breaches the contract. Select all of the following who Sam may sue.

The partnership

John

Jason

Put the following steps in the order required to form a corporation

1. Name Reservation

2. File Articles of Incorporation with the Secretary of State

3. Hold Organizational Meeting

4. Shareholders Subscribe to Shares

Which of the following legal concepts from class was applied in the Citizens United v. Federal Election Commission case?

Corporate Personhood

Select all of the following that are requirements to form a General Partnership

Seeking to make a profit

Association of 2 or more persons

To form a corporation, the Articles of Incorporation must be filed with _________.

The secretary of state

The owners of a corporation are referred to as __________.

Shareholders

A "close corporation" typically has a small number of owners who usually know each other or have a relationship of some kind

True

Owning stock in a corporation typically entitles the shareholder to rights, which may include (assuming no other limitations under the bylaws):

The right to elect board members

The right to receive dividends

The right to inspect relevant corporate records

Frank is the President of ABC Corporation. After careful thought, he decides it would be in the best interests of the Company to fire ABC's long-time Financial Advisor, Bill, and to hire Steve to replace him. It ends up being a terrible decision. Steve does a horrible job, costing the Corporation several million dollars. In a derivative suit brought by some of the shareholders, would a judge likely hold Frank accountable for the poor decision to fire Steve?

No, a judge would likely refrain from imposing liability because under the Business Judgement Rule, a court will not look to whether a business decision was good or bad, unless the conduct was egregious.

Amy and Aharon form a general partnership, but they don't enter into a written partnership agreement and they never discuss how the profits will be divided. Amy manages the company and spends an average of six hours every day devoted to company business. Aharon only spends an average of three hours every day devoted to company business - half as much time as Amy. In the first year, the company earns $90,000 of net profits which may be distributed to the partners. Under the law, how should Amy and Aharon split the profits?

Amy is entitled to $45,000 and Aharon is entitled to $45,000

The most common facts leading a plaintiff to "pierce the corporate veil" is when the corporation has comingled its assets with those of others.

True

Bob's Bar, Inc. is a corporation with three shareholders: Brandon, Maria, and Carlos.

• Brandon owns 150 shares

• Maria owns 270 shares

• Carlos owns 410 shares

The net profits of the corporation that will be distributed this year are $15,400. How much will Carlos receive from this divided?

7,605.50

Select all of the following that are duties of partners in a general partnership

Duty of loyalty

Duty to account

Duty of care

Duty to inform

Duty of good faith

A Corporation has issued a total of 135,000 Shares of Stock to its Shareholders (excluding Treasury Shares). You own 23,450 shares. If the company is sold for a price of $550,000, how much will you receive?

95,541.30

Select all of the following that Corporations and other legal entities have the right to do under the doctrine of Corporate Personhood.

Be sued

File a lawsuit

Enter into contracts

Unless otherwise agreed, in a general partnership, how many partners must vote on to make binding decisions of the partnership?

A unanimous vote is required for decisions outside the ordinary course of business; a majority vote is required for decisions in the ordinary course of business

What is “Corporate Personhood?”

The legal notion that a corporations and other legal entites have at least some of the legal rights and responsibilities enjoyed by natural persons

What does ultra vires mean?

Beyond the powers" - it occurs when a shareholder, director, or officer exceeds the authority of the corporation given to her or him

What is "treasury stock?

Outstanding stock that is held (or has been repurchased) by issuing company and not by a shareholder

Select all of the following that are abbreviations for legally recognized types of Partnerships

LLLP, LLP, GP, LP

A Corporation is authorized to issue 1,620 shares to all of its shareholders, all of which are in the form of common stock. Out of all the 1,620 authorized shares, the Corporation currently holds 250 shares as Treasury Shares and shareholders have subscribed to the remaining shares. You own 349 shares. The board of directors of the corporation votes to issue a dividend of $22,100 among the shareholders. How much will you receive?

5,629.85

Sam decides to start selling widgets, so he writes up a business plan, gets a bank loan, and starts renting a storefront in the Dalton Mall. He puts up a sign at the front of the store and runs some ads in the newspaper. Sam is operating his business as a __________

Sole Proprietorship

The hands-on, day-to-day management of a corporation is handled by the __________.

Officers

Match the corporate roles below with the corresponding duties, powers, and responsibilities:

Shareholder

Elects directors

Receives dividends

Match the corporate roles below with the corresponding duties, powers, and responsibilities:

Director

Elects officers

Determines when to pay dividends

Establishes the price of stock

Match the corporate roles below with the corresponding duties, powers, and responsibilities:

Officer

Manages day-to-day business