Questions and Answers of Business Law Today

What is the difference between the articles of organization and the operating agreement of a limited liability company?
What is the objective of piercing the corporate veil?
Dr. Steven A. Pottschmidt was employed by Dr.Thomas J. Klosterman , who was doing business as a corporation named Thomas J. Klosterman , M.D., Inc. Once Pottschmidt’s original employment agreement
The Aerenthal Financial Loan Corporation lent$578,000 to Raymond Viviani and secured the loan with a mortgage on Viviani’s ski lodge, which was located south of Burlington, Vermont. Vermont decided
General Housing Assistance was incorporated as a nonprofit organization that provides low-cost housing for families who have been economically dislocated because of the downsizing of a company or the
Through Langham Engineering, Michael Langham marketed his invention, the cross-slope monitor (CSM), as an accessory to John Deere equipment.He had a plan to expand his business to include the CSM as
Harry and Kay Robinson of New York purchased a new Audi automobile from Worldwide Volkswagen (WWV) in New York. After having an accident in Oklahoma, they brought a product liability action against
Spence was a promoter in the incorporation of a new business. The new corporation had not yet been formed when he bought Huffman’s employment agency to serve as the nucleus of that
MBI filed its original articles of incorporation under the name Montana Public Employees Benefit Services Co., Inc. After filing the articles, the corporation entered a contract with the Montana
Lamas Company, Inc., was incorporated in Georgia.Baldwin negotiated with Lamas, sole owner of Lamas Company, Inc., to finish some electrical work on a construction site. When Baldwin was dissatisfied
Boafo was allegedly injured while giving birth at Parkway Regional Hospital. Boafo sued both Parkway Regional and Hospital Corporation of America(HCA), asking the court to pierce the corporate veil
The Northeastern Corporate Institute of Technology (NCIT), a profit-oriented corporation engaged in nuclear research projects, owned and operated an experimental station in a remote region of Alaska.
The story of the alter ego with an alter ego, begins in 2001 when the financial giant Lehman Brothers used $7 million to purchase an existing corporation named Ibex Capital Markets. Almost
Corporations are interesting legal constructs. They are totally artificial; they do not have any type of corporal existence. There is no way to see a corporation, talk to one, or watch one in action.
Frank Klesner served as a promoter for the formation of a corporation that eventually came to be known as Aerospin , Inc. The board of directors of Aerospin , Inc., held an initial organization mee
The business affairs of a corporation are managed by a board of directors elected by the shareholders. True/false
Membership on a board of directors can never be extended to aliens, minors, or Non shareholders. True/false
Directors have authority to appoint officers and agents to run the day-to-day affairs of the corporation. True/false
Under the original concept of the corporation, the shareholders are the primary reason that a corporation exists. True/false
Pooling agreements have been outlawed in all states. True/false
A controlled company is one that has more than half its voting power concentrated in one pe r son, or a small group of persons, who always vote together. True/false
The business judgment rule states that a manager’s decision will stand as long as it was legal, was made with due care and in good faith, and was made in the best interests of the corporation.
The fairness rule states that a decision made by a manager will stand if it is fair to the corporation. True/false
The business judgment rule is used by the courts when the manager is disinterested, that is, he or she does not personally gain from the decision. True/false
Assuming a request by a shareholder to inspect the corporate books is a proper one, the courts will enforce that request. True/false
Today the courts will readily substitute their own judgment and declare a dividend on corporate stock, even when the directors of the corporation have voted against such a move. True/false
Preemptive rights are more common in large, publicly held corporations than in small, closely held corporations. True/false
The members of an LLC have no choice in the matter of who will manage their firm. True/false
An operating agreement established by the LLC is not permitted to alter statutory pr o visions regarding governance in any way. True/false
Regardless of whether the members or the managers ultimately run the LLC, fiduciary d u ties have been suspended by provisions outlined in the latest version of the Uniform Limited Liability Company
What is the central dilemma of corporate governance?
What are the functions of directors, officers, and shareholders?
What are the five theories of corporate governance?
What is the difference between cumulative voting and proxy solicitation?
What is a shareholder proposal?
What is the difference between a voting trust and a pooling agreement?
What is the difference between a shareholder direct suit and a shareholder derivative suit?
What is the difference between the business judgment rule and the fairness rule?
How does the management of a limited liability company operate?
United Missionary Baptist Church, a not-for-profit corporation, held an election for the new church pastor. Several members of the church were dissatisfied with the results of the election and with
The bylaws of Jameson Enterprises, Inc., required a 70 percent supermajority to establish a qu o rum sufficient to hold a meeting to remove a director from the board. The bylaws also de s i g nated a
Smith, a shareholder, filed suit against the board of directors of a corporation in which he had owned stock. Smith claimed that he and other shareholders had not received top dollar for their shares
Donald Lewis was a shareholder in S.L.&E., Inc., a corporation that owned land and a complex of buildings in Rochester, New York. The land and buildings were leased to LGT, a tire
Jackson set up a trust for his seven children. Most of the assets in the trust consisted of stock in the two newspapers owned and run by Jackson. Over the course of 18 years, Jackson transferred all
Klinicki and Lundgren incorporated to form an air taxi service known as Berlinair , Inc. Each of them owned one-third interest in the corporation. The final third was owned by Lelco , Inc., a company
Naquin, Dubois, and Hoffpauir incorporated to form Air Engineered Systems and Services, Inc. Dubois became president and Hoffpauir became secretary-treasurer. Naquin was employed by the company.
Snodgrass, a minority shareholder in the 21st Century Broadcasting Network, Inc., was dissatisfied with management’s decision to cancel several long-running news shows and r e place them with
Keith Harris, a shareholder of Fastway Airlines, Inc., discovered that Donald Fleure, chief executive officer of Fastway, had sold some of his own land to the corporation at what Harris believed to
The story of the Great Gulf Oil Spill is the stuff of epic movies, television specials, and congressional hearings. It is also the stuff of lawsuits and financial disasters.Part of this great epic is
The Sarbanes-Oxley Act ( SarbOx ) includes a long list of regulations that outlaw actions and procedures that most people would see as ethical problems rather than legal issues. For instance, SarbOx
In the 21st century, it has become increasingly popular for shareholders to press their corporate demands through the use of shareholder proposals. Many of these proposals are filed by large
The world of the law and the world of economics often interact in such a way that the two become, at times, one single system, the judicial–economic system. True/False
Police power is the state’s authority to restrict private rights to promote and maintain public health, safety, welfare, and morals. True/False
The Contracts Clause is found in Article I, Section 8, Clause 3, of the Constitution. True/False
The Securities and Exchange Commission regulates the issuance of securities by corporations and partnerships. True/False
The Securities Exchange Act of 1934 actually established the Securities and E x change Commission. True/False
Under the Securities Exchange Act of 1934, majority shareholders are exempt from proxy solicitation reporting requirements. True/False
Price fixing is an example of a rule-of-reason practice under the Sherman Antitrust Act. True/False
Per se violations must involve actual harm to be actionable under the Sherman Ant i trust Act. True/False
The Robinson- Patman Act has been repealed by the United States Antitrust Modernization Committee. True/False
Most antifraud provisions of the Securities and Exchange Commission apply to the merger process. True/False
Greenmail is the least effective anti-hostile takeover technique. True/False
The Hart-Scott- Rodino Act is designed to police any expansion attempts that might harm competition in the marketplace. True/False
If a corporation has repeatedly conducted business in an unlawful manner, the secretary of state can require the Federal Justice Department to revoke its charter. True/False
Courts no longer have any power to liquidate the assets of a corporation when an action is brought by a shareholder. True/False
Corporations are no longer permitted to engage in voluntary dissolution. True/False
The dissolution of an LLC is regulated by the federal government only. True/False
Once an LLC has engaged in a dissolution procedure, the business does not stop immediately. True/False
If all the remaining members of an LLC want to continue the LLC, they may do so. True/False
How did the federal government’s power to regulate business develop?
What is the source of state power to regulate business?
How does the Securities and Exchange Commission prevent unfair practices?
What is a per se antitrust violation of antitrust law?
What is the rule-of-reason standard in antitrust law?
What are the general provisions of the post-Sherman antitrust laws?
What are the various techniques of corporate expansion?
How do the interests of the Securities and Exchange Commission differ from those of the Federal Trade Commission in corporate expansion?
What are the two ways that a corporation may undergo dissolution?
Under what circumstances might a limited liability company undergo dissolution?
The following lead paragraph was published in an article entitled, “Why the Times Could Go Private,” in the December 11, 2006 issue of Business- Week : “Even before restive shareholders began
Filburn, a farm owner in Ohio, raised winter wheat primarily to feed his livestock and poultry and to make flour for home use. Under the provisions of the Agricultural Adjustment Act, Fi l burn was
The W.J. Howey Co. owned a large citrus grove in Florida. The citrus grove was serviced by Howey - in-the-Hills, Inc., a corporation owned and operated by the same people who ran the Howey Co.When
Topco Associates, Inc., is a cooperative association of small and medium-sized regional supermarket chains. Each of its member chains operates independently.All members are required to operate under
Enstrom purchased an aircraft from the Interceptor Corporation. When the aircraft crashed due to a design defect, Enstrom sued Interceptor. However, when Enstrom found out that Interceptor’s assets
C.E. Stumpf & Sons, Inc., was formed to conduct a masonry and general contracting business. The corporation was owned in equal shares by Stumpf and his two sons, who had previously operated the same
Image Technical Services, Inc. (ITS), an independent service organization (ISO), provides ser v ices for companies with copying machines made by the Eastman Kodak Co. In response to such competition,
One of the primary money-making operations that that the NFL has engaged in over the years has been the merchandising of goods, such as ball caps, jerseys, t-shirts, and so on, all of which bear the
In his treatise, Overcoming Law, the legal scholar Richard Posner spends a great deal of time exploring the relationship between economics and the law. In doing so, he focuses on the ideas of two
Arthur Modell, president, CEO, and a director of the Cleveland Browns Football Co., Inc., (Browns) owned 53 percent of that corporation. Other members of the board at that time included Pat Modell,
The Framers of the U.S. Constitution clearly wanted to limit the legislative power of the national government.They made this desire quite clear by enumerating the powers that Congress would possess
According to the law of sales contracts, all parties must act in good faith, which means they must act honestly. True/False
Tender of performance is the offering by the parties to do what they have agreed to do under the terms of the contract. True/False
Buyers have no right to inspect goods before paying for them when they are shipped c.o.d. True/False
If the goods have not been delivered, the seller has a right to keep them upon learning of the buyer’s breach. True/False
The seller may sue the buyer for the price of any lost or damaged goods after the risk of their loss has passed to the buyer. True/False
When the goods are unique or rare, the buyer may ask the court to order the seller to do what he or she agreed to do under the contract terms. True/False
An express warranty is an oral or written statement, promise, or other representation about the quality of a product. True/False
An implied warranty is a warranty that is imposed by law rather than by statements, descriptions, or samples given by the seller. True/False
A warranty of title mans that the seller warrants that the title for the goods being sold is good and that the transfer is rightful. True/False
What is meant by tender of performance?

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