Business Associations Flashcards
6 cards from real ID BAR practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Business Associations flashcards as text
Under Idaho's Uniform Limited Liability Company Act, which of the following is the default rule for management of an LLC?
Answer: Member-managed, with each member having equal rights in management
Idaho Code § 30-25-407 provides that an LLC is member-managed by default — all members share equal management rights unless the operating agreement specifies manager management.
Under agency law, which of the following best describes actual authority?
Answer: Authority that the principal has expressly granted or impliedly granted to the agent
Actual authority — both express and implied — arises from the principal's manifestation to the agent, either explicitly or by reasonable implication from the circumstances.
In a general partnership under Idaho's Uniform Partnership Act, partners are personally liable for partnership debts:
Answer: Jointly and severally for all partnership obligations
Idaho Code § 30-23-306 adopts the UPA (2013) rule that partners are personally liable for partnership obligations jointly and severally.
Which of the following best describes 'piercing the corporate veil' in Idaho?
Answer: A court disregards the corporate entity to hold shareholders personally liable when corporate form is abused
Piercing the corporate veil is an equitable doctrine allowing courts to hold shareholders personally liable when the corporate form is used to commit fraud or when the corporation is the alter ego of its shareholders.
Under Idaho corporate law, directors owe which of the following duties to the corporation?
Answer: A duty of profitability and a duty to maximize shareholder value
Idaho corporate directors owe a duty of care (act as a reasonably prudent person would), a duty of loyalty (no self-dealing), and a duty of good faith in all corporate decision-making.
Under the business judgment rule, a court will generally defer to a board's business decision unless:
Answer: The directors were not informed, acted in bad faith, or had a conflict of interest
The business judgment rule presumes directors acted on an informed basis, in good faith, and in the honest belief the action was in the corporation's best interests — the presumption falls when directors were uninformed, acted in bad faith, or had a conflict.