NYLE Business Relationships 3

Question 1

A New York corporation's board of directors wants to approve a transaction in which the CEO has a personal financial interest. Under BCL § 713, the transaction may be approved without voidability if:

Accepted Answer

The CEO recuses herself and the remaining disinterested directors approve after full disclosure.

Answer

BCL § 713 protects interested director transactions from voidability when the material facts are disclosed and a majority of disinterested directors approve, or disinterested shareholders ratify.

Question 2

Under New York partnership law, a third party extends credit to a partnership in good faith, believing that a person named in old letterhead is still a general partner. That person actually withdrew six months ago but no public notice was filed. Who bears the loss?

Accepted Answer

The withdrawn partner, personally, under the theory of apparent authority.

Answer

A withdrawn partner who fails to file a statement of dissociation or give actual notice remains liable to creditors who in good faith continue to deal with the partnership in reliance on apparent authority.

Question 3

A New York LLC operating agreement specifies that amendments require unanimous written consent. A majority of members attempt to amend the agreement without one member's consent. The attempted amendment is:

Accepted Answer

Invalid because the operating agreement's supermajority requirement controls.

Answer

NY LLC Law permits operating agreements to require unanimous consent for amendments, and such provisions are fully enforceable against attempts to amend by a lesser vote.

Question 4

A shareholder holding 10% of a New York close corporation's shares seeks access to its books and records. Under BCL § 624, the shareholder must:

Accepted Answer

Give five days' written demand stating a proper purpose.

Answer

BCL § 624 grants shareholders the right to inspect books and records upon five days' written demand stating a purpose reasonably related to their interest as a shareholder.

Question 5

Under New York law, which of the following acts by a New York general partnership partner does NOT require unanimous consent of all partners?

Accepted Answer

Making decisions in the ordinary course of the partnership's business.

Answer

Ordinary course business decisions require only a majority vote under NY Partnership Law, while extraordinary acts—like admitting partners or disposing of all assets—require unanimity.

NYLE - New York Law Exam Practice Test

NYLE - New York Law Exam Practice Test

NYLE Business Relationships 3