CHAPTER THIRTYSEVEN

1.Explain the characteristics and advantages of a Limited Liability Company (LLC).

2-3. Beginning at the bottom of page 737 read Reviewing: Limited Liability Companies and Special Business Forms and answer questions 1-4 that follow the facts. Explain the law in full that supports your answers. If you are using the digital text, this section is at the end of the chapter right before the back of the chapter questions.

4.Sweet Selections is a general partnership that sells candy, cards and flowers. Sweet Selections has ten partners. Jill and Amy each have a 25 percent interest in the partnership. All the other members have a 10 percent interest. To pass a management decision

a.a majority of the partners must agree to the decision.

5. Carl, a partner in Doctors and Nurses Clinic, applies for a loan with Evertt Bank allegedly on the firm's behalf but without the authorization of the other partners. Evertt knows that Carl is not authorized to take out the loan. If Carl defaults on the loan, liability for its unpaid amount will be imposed on

b.Carl only.

6.Olga is a partner in Plentiful Foods. In the majority of states, with respect to any partnership obligations that Olga does not participate in, know about, or ratify, Olga would be liable for

b.all of the obligations, jointly and severally.

Fact Pattern 37-1B (Questions 7and 8 apply)

Ben, Carlos, and Dave are general partners in Home and Country Merchandise, a distributor of home products. Their agreement states that it is a breach of the agreement for any partner to assign his or her interest to a creditor without the consent of the other partners.

7.Refer to Fact Pattern 37-1B. Ben, Carlos, and Dave decide to admit Grace as a new partner in Home and Country. Grace's liability for partnership debts incurred before her admission is

a.limited to her capital contribution to the firm.

8.Refer to Fact Pattern 37-1B. Carlos' assignment of his interest in Home and Country to Bradshaw Products Corporation results in

d.Carlos' wrongful dissociation and liability for any damages.

9. Leeann is considering forms of business organization for her concessions businessLeeann's Cakes. Most states require that a limited liability company have

b.at least one member.

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10. Jazzie's Hair Salon, LLC, is a limited liability company. Unless indicated otherwise on the Jazzie's federal tax form, the firm will be taxed as

a.a cooperative.

b.a corporation.

c.a joint venture.

d.a partnership.

11. Rolling Hills Lawn Services, LLC is a limited liability company. Like other LLCs, for federal jurisdictional purposes, Rolling Hills is most likely a citizen of

a.all states.

b.every state in which its members are citizens.

c.no state.

d.only the state in which it was formed.

12. Coco is considering forms of business organization for her concessions businessCoco's Cakes. Most states require that a limited liability company have

a.no minimum number of members.

b.at least one member.

c.at least two members.

d.at least three members, including one general partner.

13.Bee Hive Honey, LLC's members include Chad, Dolores, and others. For purposes of suing and being sued, Bee Hive Honey is

a.an aggregate of Chad, Dolores, and the other members.

b.a natural person in the members' "family."

c.a legal entity apart from the owners.

d.a non-participating third party.

14.Otto is considering forms of business organization for Pro Tree Service, his landscaping firm. Like most states, Otto's state requires that to form a limited liability company, he must file with a central state agency

a.articles of certification.

b.articles of formation.

c.articles of organization.

d.no specific documents.

15.Custom Auto Body & Detailing, LLC, is a limited liability company. Unless indicated otherwise on the Custom Auto's federal tax form, the firm will be taxed as

a.a cooperative.

b.a corporation.

c.a joint venture.

d.a partnership.

16.Location! Realty LLC is a limited liability company. Like other LLCs, for federal jurisdictional purposes, Location! Realty is most likely a citizen of

a.all states.

b.every state in which its members are citizens.

c.no state.

d.only the state in which it was formed.

17.Business Enterprise Company agrees to sell a commercial office building and parking garage to City Investments, Inc., which assigns the rights to the realty to Downtown Properties, LLC. Downtown Properties does not yet exist, but once it is created and comes into existence, the contract on novation will most likely be

a.quasi.

b.voidable.

c.void.

d.enforceable.

18.Qatar Global Investments is a foreign entitya firm owned and operated by investors in a foreign country. With respect to a limited liability company in the United States, Qatar Global can

a.act as a creditor, but cannot otherwise invest or participate.

b.become a member.

c.not become a member, but can participate in its operations.

d.not become a member or otherwise participate in its operations.

19.Arnie is a member of Bowling & Billiards, LLC, a limited liability company. Arnie can participate in the firm's management

a.only to the extent that he assumes liability for the firm's debts.

b.only to the extent of his investment in the firm.

c.to any extent.

d.to no extent.

20.StartUp Investors, LLC, is a limited liability company without a written operating agreement. Among the members, a dispute arises concerning the division of profits. Under most LLC statutes, the profits will be

a.distributed according to the members' proportionate shares of ownership in the firm.

b.divided equally among the members.

c.forfeited to the state.

d.reinvested in the business until the dispute is resolved.

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21.Neci and Olwen want to form and do business as a corporationPastries & Pies Inc. A corporation is a legal entity created and recognized by

a.a central federal administrative agency.

b.a city or county clerk's office.

c.an artificial legal person.

d.state law.

22.Demario and Evander want to form and do business as a corporationFarm-2-Fork Restaurant Inc. A corporation is

a.a natural being.

b.a tangible thing.

c.an artificial person.

d.ultra vires.

23.The shares of Home Mortgage Corporation are publicly traded in securities markets. Home Mortgage Corporation is

a.a close corporation.

b.a privately held corporation.

c.a public corporation.

d.a publicly held corporation.

24.Like the bylaws of other corporations, the bylaws of Equipment Leasing, Inc.,

a.establish the operating name of the corporation.

b.establish the value and classes of corporate stock.

c.were adopted at its first organizational meeting.

d.were submitted for approval to the public official in charge.

25. Explain two advantages of incorporating a business and two disadvantages of incorporating a business.

26. -28. Select a corporation and look up its Website and state the following:

a. the name of the corporation and the state of incorporation,

b. location of the corporation's headquarters,

c. type of business,

d. organizational structure,

e. purpose of organization,

f. mission and goals,

g. name of the President of the corporation,

h. name the CEO of the corporation, and

i. the corporation's Web site address.