Business Law Flashcards

Under the UCC, a merchant's firm offer to buy or sell goods is irrevocable for up to how long without consideration?

Answer: 90 days

UCC §2-205 makes a merchant's signed, written firm offer irrevocable for the stated period or up to 3 months (90 days).

Which doctrine allows a court to refuse enforcement of a contract that is excessively one-sided or oppressive?

Answer: Unconscionability

Unconscionability allows courts to refuse enforcement of contracts with unfair terms (procedural or substantive), especially against weaker parties.

A limited liability company (LLC) that fails to elect a tax classification is treated by the IRS as which of the following by default if it has two or more members?

Answer: Partnership

By default, a multi-member LLC is taxed as a partnership unless it elects otherwise on Form 8832.

Which element distinguishes a general partnership from a joint venture?

Answer: Joint ventures are limited to a single project or transaction

A joint venture differs from a general partnership primarily in that it is organized for a single specific project or transaction rather than an ongoing business.

Under agency law, which type of authority arises when a principal's conduct leads a third party to reasonably believe the agent has authority?

Answer: Apparent authority

Apparent authority is created by the principal's words or conduct that cause a third party to reasonably believe the agent is authorized to act.

A debtor files for Chapter 7 bankruptcy. Which type of debt is LEAST likely to be discharged?

Answer: Student loans

Student loans are generally non-dischargeable in bankruptcy unless the debtor can prove undue hardship under a strict legal standard.

Which of the following best describes the 'business judgment rule' in corporate law?

Answer: Courts will not second-guess good-faith business decisions by directors

The business judgment rule protects directors from liability for honest mistakes in good-faith decisions made on an informed basis.