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LEGL 2700 Test 4 Vocab Exam Questions and Answers
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LEGL 2700 Test 4 Vocab Exam Questions and Answers
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LEGL 2700 Test 4 Vocab ExamQuestions and Answers
Actual Authority - Answer-the authority a principal expressly or implicitly gives to an
agent in an agency relationship, this authority may be written, spoken, or derived from
the circumstances of the relationship
Agent - Answer-the person who on behalf of a principal deals with a third party
Alien Corporation - Answer-a corporation created under the authority of a foreign
country
Alter-Ego Theory - Answer-one method used by courts to pierce the corporate veil when
a shareholder fails to treat the corporate organization as a separate legal entity
Apparent Authority - Answer-the authority that a third party in an agency relationship
perceives to exist between the principal and the agent, in fact no actual authority does
exist
Articles of Incorporation - Answer-the legal document that forms the application for a
state charter of incorporation
Articles of Organization - Answer-the documents used to create a limited liability
company, its purpose corresponds to the purpose of the articles of partnership and the
articles of incorporation
Articles of Partnership - Answer-another name for a formally drafted partnership
agreement
Assumed-Name Statute - Answer-a state law that requires partners to make a public
filing of their identities if their partnership operates under a name that does not reveal
the partners' identities
Benefit Corporation - Answer-a corporate form that requires directors to ensure that the
corporation meets explicit social goals in addition to producing shareholder profits
Buy and Sell Agreement - Answer-A contract, usually among partners, but perhaps
among shareholders, wherein one party agrees to buy the ownership interest held by
another party or the first party agrees to sell such an interest to the other party, these
contractual provisions help provide for a transition of owners without harming the
business of the organization
Charter - Answer-the legal document issued by a state when creating a new corporation
, Closely Held - Answer-an organization that is owned by only a few people
Corporation - Answer-an artificial person created by law with most of the legal rights of a
real person, including the rights to start and operate a business, to buy or sell property,
to borrow money, to sue or be sued, and to enter into binding contracts
Derivative Suit - Answer-a lawsuit filed by one or more shareholders of a corporation
against that organization's management, this suit is brought to benefit the corporation
directly and its shareholders indirectly
Directors - Answer-those individuals who are elected by the shareholders to decide the
goals and objectives for the corporate organization
Dissolution - Answer-the cancellation of an agreement, thereby rescinding its binding
force, happens in a partnership anytime there's a change in partners, happens in
corporations when that business entity ceases to exist
Domestic Corporation - Answer-a business organization created by the issuance of a
state charter that operates in the state that issued the charter
Double Tax - Answer-a disadvantage of a corporate form of organization in that the
corporation must pay a tax on the money earned and the shareholder pays a second
tax on the dividends distributed
Foreign Corporation - Answer-a business organization, created by the issuance of a
state charter, that operates in states other than the one issuing the charter
Frolic and Detour - Answer-the activity of an agent or an employee who has departed
from the scope of the agency and is not, therefore, a representative of his or her
employer
General Partner - Answer-the owner of a limited partnership that enjoys the control of
the partnership's operation, this type of partner is personally liable for the debts of the
limited partnership
Implied Authority - Answer-actual authority that is incidental to express authority
Incorporator - Answer-those individuals who are responsible for bringing a corporation
into being
Independent Contractor - Answer-a person who contracts to do work for another person
or entity who is not considered to be an employee
Jointly and Severally Liable - Answer-the legal principle that makes two or more people,
usually partners, liable for an entire debt as individuals or in any proportional
combination
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