OH Bar Business Associations 3

Question 1

Under Ohio law, an LLC may be managed by:

Accepted Answer

Either its members (member-managed) or by designated managers (manager-managed), as specified in the operating agreement

Answer

Only its members, since outside managers are prohibited by statute

Answer

A board of directors analogous to a corporation's governance structure

Answer

Only licensed professionals when providing professional services

Question 2

For federal income tax purposes, a single-member LLC that has not elected to be treated as a corporation is taxed as:

Accepted Answer

A disregarded entity, meaning the LLC's income and losses flow directly to the sole member's individual return

Answer

An S corporation, with income allocated proportionally to the member

Answer

A partnership, requiring a separate partnership tax return

Answer

A C corporation, with taxes paid at the entity level before distribution

Question 3

An agent has 'actual authority' to act on behalf of a principal when:

Accepted Answer

The principal has expressly or impliedly authorized the agent to perform the act in question

Answer

A third party reasonably believes the agent is authorized based on the principal's conduct

Answer

The agent acts consistently with the usual custom for agents in that industry or position

Answer

The principal subsequently ratifies the agent's unauthorized actions after the fact

Question 4

Under respondeat superior, a principal (employer) is vicariously liable for an employee's tort when the tort is committed:

Accepted Answer

Within the scope of the employee's employment in furtherance of the employer's business

Answer

At any time during regular working hours, regardless of the activity

Answer

Only when the employer specifically directed or authorized the tortious conduct

Answer

Only when the employee committed an intentional tort, not mere negligence

Question 5

A member of an Ohio LLC generally:

Accepted Answer

Is not personally liable for the debts and obligations of the LLC

Answer

Is jointly and severally liable for all LLC debts, just as a general partner would be

Answer

Is personally liable for LLC debts up to the amount of their capital contribution

Answer

Loses limited liability protection if the LLC elects to be treated as a corporation for tax purposes

Question 6

Under Ohio law, an LLC operating agreement:

Accepted Answer

May be oral or written and governs the internal affairs of the LLC without needing to be filed with the state

Answer

Must be filed with the Ohio Secretary of State to be legally enforceable

Answer

Cannot modify or override the default rules set forth in the Ohio LLC Act

Answer

Is only valid if signed by all members and notarized before the LLC is formed

Question 7

'Apparent authority' of an agent to bind a principal arises when:

Accepted Answer

A third party reasonably believes the agent is authorized based on representations made by the principal

Answer

The principal explicitly grants the agent authority through a signed power of attorney

Answer

The agent's conduct falls within the usual custom for agents in that role or industry

Answer

The agent's authority is implied from the specific nature of the task the principal assigned