ID Bar Business Associations

Question 1

Under Idaho's Uniform Limited Liability Company Act, which of the following is the default rule for management of an LLC?

Accepted Answer

Member-managed, with each member having equal rights in management

Answer

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.

Question 2

Under agency law, which of the following best describes actual authority?

Accepted Answer

Authority that the principal has expressly granted or impliedly granted to the agent

Answer

Actual authority — both express and implied — arises from the principal's manifestation to the agent, either explicitly or by reasonable implication from the circumstances.

Question 3

In a general partnership under Idaho's Uniform Partnership Act, partners are personally liable for partnership debts:

Accepted Answer

Jointly and severally for all partnership obligations

Answer

Idaho Code § 30-23-306 adopts the UPA (2013) rule that partners are personally liable for partnership obligations jointly and severally.

Question 4

Which of the following best describes 'piercing the corporate veil' in Idaho?

Accepted Answer

A court disregards the corporate entity to hold shareholders personally liable when corporate form is abused

Answer

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.

Question 5

Under Idaho corporate law, directors owe which of the following duties to the corporation?

Accepted Answer

A duty of profitability and a duty to maximize shareholder value

Answer

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.

ID Bar - Idaho Bar Exam Practice Test

ID Bar - Idaho Bar Exam Practice Test

ID Bar Business Associations