FL Bar Business Entities 2 — Questions and Answers
Question 1: A limited partner in a Florida limited partnership risks losing limited liability protection if they:
- Receive distributions
- Actively participate in control of the partnership's business (Correct answer)
- Assign their partnership interest
- Attend annual meetings
Correct answer: Actively participate in control of the partnership's business
Under FLPA, a limited partner who participates in the control of the limited partnership's business may be held liable to third parties who reasonably believed the limited partner was a general partner.
Question 2: When a corporation is merged into another, the surviving corporation automatically:
- Creates a new entity with new liabilities only
- Acquires all assets and assumes all liabilities of the merged entity by operation of law (Correct answer)
- Must re-register all contracts
- Has no liability for debts of the absorbed corporation
Correct answer: Acquires all assets and assumes all liabilities of the merged entity by operation of law
In a statutory merger under Florida law, the surviving entity automatically acquires all property, rights, and liabilities of the merged entity by operation of law — no assignment is needed.
Question 3: A promoter who contracts on behalf of a corporation not yet formed is personally liable on those contracts unless:
- The corporation later ratifies the contract
- The other party agrees to look only to the corporation and releases the promoter (novation) (Correct answer)
- The corporation is formed within 90 days
- The promoter discloses the corporation's anticipated name
Correct answer: The other party agrees to look only to the corporation and releases the promoter (novation)
A promoter remains liable on pre-incorporation contracts even after the corporation adopts them — release of the promoter requires a novation where the other party expressly agrees to substitute the corporation for the promoter.
Question 4: Under Florida's Revised Limited Liability Company Act, an LLC's operating agreement may NOT:
- Eliminate a member's right to inspect records
- Restrict transferability of membership interests
- Eliminate fiduciary duties of loyalty entirely (Correct answer)
- Provide for different classes of membership interests
Correct answer: Eliminate fiduciary duties of loyalty entirely
Florida § 605.0105 permits the operating agreement to modify or restrict fiduciary duties but not eliminate them entirely — good faith and fair dealing obligations cannot be waived.
Question 5: A shareholder derivative suit is brought by a shareholder to enforce a right belonging to:
- The shareholder individually
- The corporation (Correct answer)
- All shareholders jointly
- The board of directors
Correct answer: The corporation
A derivative suit is filed by a shareholder on behalf of the corporation to enforce the corporation's own cause of action — any recovery goes to the corporation, not the suing shareholder.
Question 6: Under Florida law, the duty of an officer or director of a nonprofit corporation is governed by a standard that generally requires:
- The same fiduciary duty as for-profit directors
- Acting in good faith and in a manner reasonably believed to be in the organization's best interests (Correct answer)
- Absolute loyalty to donors over the organization
- Personal financial investment in the organization
Correct answer: Acting in good faith and in a manner reasonably believed to be in the organization's best interests
Florida § 617.0830 applies the same business judgment rule framework to nonprofit directors — good faith, reasonable belief the action is in the organization's best interest, and appropriate care.
FL Bar Business Entities 2
A limited partner in a Florida limited partnership risks losing limited liability protection if they: