Business Associations Flashcards

Under the Uniform Commercial Code Article 9 (secured transactions), which of the following is required to perfect a security interest in most tangible personal property?

Answer: Filing a financing statement (UCC-1) in the appropriate state office

For most tangible personal property collateral, perfection under UCC Article 9 requires filing a financing statement (UCC-1) with the Idaho Secretary of State's office.

Under corporate law, an officer of a corporation serves at the pleasure of the:

Answer: Board of directors

Corporate officers are appointed by and serve at the pleasure of the board of directors, which can remove officers with or without cause unless an employment agreement limits that power.

Under the duty of loyalty, a director who has a personal financial interest in a corporate transaction should:

Answer: Disclose the interest and recuse from the vote, or ensure independent ratification by disinterested directors or shareholders

The duty of loyalty requires an interested director to disclose the conflict, abstain from voting, and obtain approval from disinterested directors or shareholders to validate the transaction.

Under Idaho's LLC statute, which of the following is a default rule that may be overridden by the operating agreement?

Answer: The allocation of profits and losses equally among members

Idaho Code § 30-25-404 provides that profits and losses are allocated equally among members by default, but the operating agreement may specify a different allocation.

Under UCC Article 9, a 'purchase money security interest' (PMSI) in inventory has superpriority over a conflicting prior perfected security interest when:

Answer: The PMSI is perfected before or within 20 days after the debtor receives delivery, and prior secured parties receive authenticated notification

Under UCC § 9-324(b), a PMSI in inventory achieves superpriority if perfected before the debtor receives possession and the holder notifies prior secured parties with conflicting interests before delivery.

In Idaho, which of the following is the standard for imposing personal liability on a managing member of an LLC for the LLC's debts?

Answer: Fraud, misrepresentation, or failure to maintain the LLC as a separate entity (alter ego/veil piercing)

Like corporations, LLC members are generally shielded from personal liability for LLC debts, but veil piercing applies when the member uses the LLC to perpetrate fraud or completely disregards the LLC's separate existence.