BLAW 300 Final Exam Questions and Answers
Types of Business Entities
1. Sole Proprietorship
2. Partnership
3. Limited Partnership
4. Corporation
Sole Proprietorship
The simplest form of business organization, in which the owner of the is the main operator and is liable for the business...
Types of Business Entities - answer 1. Sole Proprietorship
2. Partnership
3. Limited Partnership
4. Corporation
Sole Proprietorship - answer The simplest form of business organization, in which
the owner of the is the main operator and is liable for the business's debts
Partnership - answer An agreement between two or more persons which choose to
operate a business as co-owners. They are all held to the same amount when it comes
to debt and liability
Limited Partnership - answer Organization made up of a GENERAL PARTNER, who
manages a project, and limited partners, who invest money but have limited liability, are
not involved in day-to-day management, and usually cannot lose more than their capital
contribution
Corporation - answer A type of business entity owned by shareholders with board of
directors controlling
Fiduciary Duty - answer Partner must act in good faith for the benefit for the
partnership, even ahead of personal belief
Steps to Dissolving a Business Entity - answer 1. Dissolution - Partnership
discontinued but continues to proceed
2. Winding Up - No more liability incurred, complete transactions that were yet to be
finished, collect and preserve assets, pay debts and prepare accounting.
3. Termination - Assets distributed following the end of the business
Dissolution, winding up, termination - answer Steps to dissolving a business entity
Steps to Incorporation - answer Steps:
1. Articles of Incorporation (Submitted to the Secretary of State)
2. Bylaws (tells how the business will be run, amount of shares, etc.)
Documents used to Incorporate - answer Articles of Incorporation
Ratification - answer When principal accepts responsibility for an agent's act
(expressed or implied)
, Principal - answer The person that hires an agent to work for him, this person has
the authority to set the rules for those who work for him or with him
Agent - answer Person who works on behalf of the principal
How Agency Relationships are formed - answer Are consensual.
Require no consideration.
Require principal to have contractual capacity (agent does not).
Can be created for any legal purpose
Types of Agencies - answer Agency by Agreement
Agency by Ratification
Agency by Estoppel
Agency by Operation of Law
Agency by Agreement - answer formed through express consent (oral or written) or
implied by conduct. thorough. ex: steve owns drive in, john agrees to work for steve
when steve offers
Agency by Ratification - answer The principal either by act or by agreement ratifies
conduct of a person who is not in fact an agent. ex: If you have a real estate agent and
instead of buying you a house she buys you a car, if you choose to buy the car you
confirm the agreement with the real estate agent to sell you a car
Agency by Estoppel - answer Principal causes a third person to believe that another
person ins the Principal's Agent, and the third person acts to her detriment in
reasonable reliance on that behalf
Agency by Operation of Law - answer Agency based on social duty is formed in
certain situations when the agent is unable to contract the principal, ex: buying plywood
to board up business before hurricane shows up and charging it to the business owner
without his consent
Gratuitous Agent - answer A person who represents a person without being paid for
it, this person is only liable for torts
Duties of Agency - answer Duties include: performance, notification, loyalty,
obedience, and accounting
Duties of Principal - answer Duties include: Compensation, reimbursement,
cooperation, and safe working conditions
Equal Dignity Rule - answer If law requires written contract, agent's authority must be
in writing, or contract voidable. ex: Sport agents must get written contract from the
athlete
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