Exam 14: Business Forms and Arrangements

What is the legal outcome when one partner exceeds his or her authority and borrows money on behalf of a partnership without the consent of the fellow partners?

Which of the following may result in a loss of limited liability in a corporation?

Which form of business organization provides the most control but also the greatest liability risk for the owner?

Which of the following is an example of the implied rules contained in the Partnership Act ?

The Partnership Act provides for the following rule: "all partners are to share equally in the capital and profits of the business and must contribute equally to the losses." Which statement best exemplifies this rule?

The duration of existence of a proprietorship is limited by the life of the owner,whereas a partnership is terminated by agreement and a corporation is perpetual unless dissolved.

Which of the following is most likely to be indicated by a description that includes,among other things,the option to purchase a partner's interest and the valuation of interests?

A partnership is much like a sole proprietorship in that neither has a legal personality-or legal existence-separate from the people who comprise them.

Which of the following is a characteristic of a franchisor-franchisee relationship?

A court has been asked to resolve a matter involving the disputed interests of partners regarding partnership property and their respective rights and duties in relation to the partnership.Which of the following would immediately provide the court with a basis for a decision?

What type of liability would flow to the other partners in circumstances involving a wrongful act or omission by one partner acting within the course of employment?

Which of the following is a provision of the Partnership Act in matters relating to Sheps & Shaps Law Offices?

Which statement best describes how a partnership comes into existence?

It is almost always more expensive to organize a corporation than a sole proprietorship or partnership.

What are the most likely sources of regulation a partnership must be aware of as it conducts its business each day?

Identify the basic issues that should be expressly addressed in a partnership agreement,including the description of each respective clause.Lastly,indicate when a partnership agreement would have to be revisited.

The form of business that provides the most limited sources of capital is a sole proprietorship.

The potential for a board management base that exists in the corporation creates many levels of authority that can be an impediment to decision making.

What is a joint venture and what distinguishes it from the forms of business?

Len,Jill,and Mark own a partnership called Splats.Len's capital contribution to the partnership was $25 000,Jill's was $12 500,and Mark's was $20 000.Jill is duly registered as a limited partner and has acted solely as a financier.There is no agreement on sharing profits or losses among the partners,and none of them has drawn any income from Splats.The partnership borrowed $40 000 from the bank,but Splats eventually became insolvent and was unable to repay the loan.The bank sued Len and recovered the full $30 000 from him.When Len's lawyer gave him advice,what amount would he likely indicate Len is entitled to legally recover from Jill?