RI Bar Business Associations

Question 1

Under agency law, which of the following best describes an agent acting with 'apparent authority'?

Accepted Answer

A third party reasonably believes the agent has authority based on the principal's conduct

Answer

The principal expressly authorized the agent to act on their behalf

Answer

The agent acts based on reasonable belief of authority granted by the principal

Answer

The agent acts without any authorization but the principal later ratifies the act

Question 2

A general partnership is formed when:

Accepted Answer

Two or more persons associate to carry on a business for profit, with or without a formal agreement

Answer

Two or more persons file articles of partnership with the state

Answer

Partners execute a written partnership agreement signed before a notary

Answer

At least one partner contributes capital and another contributes services

Question 3

In a general partnership, a partner's liability for partnership obligations is:

Accepted Answer

Joint and several for all partnership debts and obligations

Answer

Limited to the amount of capital the partner contributed

Answer

Proportional to the partner's ownership percentage

Answer

Limited to partnership assets unless the partner personally guaranteed the debt

Question 4

Under the Model Business Corporation Act, which of the following is required to pierce the corporate veil?

Accepted Answer

Fraud, injustice, or fundamentally unfair conduct, plus the corporate form was used as a mere instrumentality

Answer

The corporation was undercapitalized at the time of formation

Answer

The controlling shareholders failed to hold annual meetings

Answer

The corporation failed to pay dividends to shareholders

Question 5

A limited liability company (LLC) member's interest in the LLC is best described as:

Accepted Answer

A personal property interest consisting of a share of profits and losses and a right to receive distributions

Answer

Direct ownership of the LLC's assets

Answer

An equity security regulated under federal securities law

Answer

A partnership interest subject to all Uniform Partnership Act provisions

Question 6

Under the business judgment rule, a corporate director's decision is protected from judicial second-guessing if the director:

Accepted Answer

Acts in good faith, on an informed basis, and honestly believes the action is in the corporation's best interest

Answer

Obtains approval from a majority of shareholders before acting

Answer

Consults with outside legal counsel prior to making the decision

Answer

Acts unanimously with all other board members on the decision

Question 7

When a corporation's board of directors approves a merger, which of the following shareholder rights is typically triggered?

Accepted Answer

Appraisal rights, allowing dissenting shareholders to receive fair value for their shares

Answer

The right to inspect all corporate books and records

Answer

The right to demand dissolution of the corporation

Answer

The right to elect new directors before the merger is completed