FBBE Business Entities & Partnerships Questions and Answers

Question 1

Two friends co-found a tech startup in Florida.
They agree orally to share profits and decision-making authority equally but do not sign a partnership agreement or file any documents with the state.
One founder, while acting on behalf of the business, negligently causes a significant data breach, leading to a large judgment against the business.
What is the most likely personal liability of the other, non-negligent founder for this judgment?

Accepted Answer

She is jointly and severally liable for the full amount of the judgment.

Answer

She is not personally liable because she was not the negligent actor.

Answer

Her liability is limited to her capital contribution to the business.

Answer

She is only liable for 50% of the judgment, reflecting her share of the partnership.

Question 2

Which of the following is an absolute prerequisite for creating a de jure corporation in the state of Florida?

Accepted Answer

Filing articles of incorporation with the Florida Department of State.

Answer

Adopting corporate bylaws.

Answer

Issuing stock certificates to shareholders.

Answer

Holding an initial organizational meeting of the directors.

Question 3

A member and manager of a Florida LLC consistently uses the LLC's bank account to pay for personal expenses, including vacations, groceries, and car payments, without documenting them as loans or distributions. A business creditor obtains a judgment against the LLC that the LLC cannot pay. The creditor sues the member personally. To prevail and 'pierce the veil,' what must the creditor prove?

Accepted Answer

That the member dominated the LLC to the point it was a mere alter ego, and that this was done for an improper purpose which caused the creditor's loss.

Answer

Only that the LLC was undercapitalized from its inception.

Answer

That the LLC failed to hold and document annual meetings.

Answer

Only that the member commingled personal and business funds.

Question 4

A partner in a Florida general partnership that was formed for an indefinite term (a 'partnership at will') provides written notice to the other partners of her express will to withdraw from the partnership, effective immediately. According to the Florida Revised Uniform Partnership Act (FRUPA), what is the direct legal consequence of this action?

Accepted Answer

The partner is 'dissociated' from the partnership, which does not automatically cause its dissolution.

Answer

The withdrawal is wrongful, and the partner is liable for any resulting damages.

Answer

The partnership is immediately and automatically dissolved and must begin the winding up process.

Answer

The withdrawal is ineffective until approved by a majority of the remaining partners.

Question 5

A limited partner in a Florida limited partnership (LP) is worried about the general partner's decisions. The limited partner begins attending weekly management meetings and frequently directs the general partner on how to negotiate contracts. A third-party supplier, who never dealt directly with the limited partner and was unaware of their involvement, is not paid by the LP and sues the limited partner personally. What is the limited partner's liability to the supplier?

Accepted Answer

The limited partner is not personally liable for the LP's obligation.

Answer

The limited partner is fully liable as a general partner because she participated in the control of the business.

Answer

The limited partner is liable only if the supplier reasonably believed she was a general partner based on her conduct.

Answer

The limited partner is liable, but only up to the amount of her capital contribution.

Question 6

A partner in a Florida general partnership that owns and operates a chain of coffee shops signs a contract to purchase a high-end commercial espresso machine from a vendor. The partnership agreement requires a unanimous vote for any purchase over $10,000, and this machine costs $15,000. The vendor was not aware of this internal restriction. Is the partnership bound by the contract?

Accepted Answer

Yes, because buying coffee equipment is apparently for carrying on in the ordinary course of the partnership's business.

Answer

No, because the partner lacked actual authority to make the purchase.

Answer

No, because the vendor had a duty to inquire about the partner's authority for such a large purchase.

Answer

Yes, but only if the other partners later ratify the contract.