Business Organizations & Corporate Law Flashcards
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Two friends begin selling furniture together and split profits, never signing any agreement or filing documents. Under RUPA, what have they created?
Answer: A general partnership
An association of two or more persons carrying on as co-owners a business for profit forms a partnership whether or not they intend to.
Under ULPA (2001), a limited partner who regularly participates in managing the limited partnership is:
Answer: Not personally liable for partnership obligations solely because of that participation
ULPA (2001) eliminated the 'control rule,' so a limited partner's management participation does not create personal liability.
A promoter signs a lease on behalf of a corporation that has not yet been formed. After incorporation, the corporation adopts the lease. Absent a novation, who is liable on the lease?
Answer: Both the corporation and the promoter
Adoption binds the corporation, but the promoter remains liable unless a novation releases them.
Which is NOT a traditional element of the de facto corporation doctrine?
Answer: Shareholder approval of the articles of incorporation
De facto status requires an applicable statute, a good-faith attempt to incorporate, and actual use of corporate privileges; shareholder approval of the articles is not an element.
Under modern corporate statutes such as the MBCA, the ultra vires doctrine may still be raised by:
Answer: A shareholder seeking to enjoin the corporation's act
The MBCA limits ultra vires challenges to shareholder injunction suits, corporate suits against directors or officers, and proceedings by the attorney general.
Under RUPA, a partner dissociates from a continuing partnership. For partnership obligations incurred before the dissociation, the dissociated partner:
Answer: Remains personally liable
Dissociation does not discharge a partner's liability for obligations incurred before dissociation.
In a member-managed LLC under the Revised Uniform LLC Act (RULLCA), a member's status alone:
Answer: Does not make the member an agent of the LLC
RULLCA provides that a member is not an agent of the LLC solely by reason of being a member; authority comes from ordinary agency law.
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