Business Associations Flashcards

Which of the following is a characteristic of a general partnership under Washington law?

Answer: Equal management rights among partners unless otherwise agreed

In a general partnership under Washington law, partners typically have equal rights in the management and conduct of the partnership business. This is a default rule that applies unless the partners agree otherwise in their partnership agreement. Unlike corporations, general partnerships do not offer limited liability for all partners and do not require formal state filings for formation.

Under Washington law, which of the following is true regarding the liability of a partner in a limited partnership?

Answer: Limited partners are liable only to the extent of their capital contributions

Under Washington law, limited partners in a limited partnership enjoy limited liability, meaning their personal assets are protected from the partnership's debts and obligations. Their liability is restricted solely to the amount of capital they have contributed or agreed to contribute to the partnership. General partners, however, retain full personal liability.

What is required for the formation of a limited liability company (LLC) in Washington?

Answer: Filing Articles of Organization with the Secretary of State

The formation of a Limited Liability Company (LLC) in Washington, like in most states, is a statutory process that requires filing specific documents with the state. The primary document required for legal formation is the Articles of Organization, which must be filed with the Washington Secretary of State. This formal filing establishes the LLC as a distinct legal entity.

Under Washington law, which of the following is NOT a duty owed by a corporate director to the corporation?

Answer: Duty of obedience

Corporate directors in Washington owe fiduciary duties of care and loyalty to the corporation. The duty of care requires directors to act with the care that an ordinarily prudent person would exercise in a like position, while the duty of loyalty requires them to act in the best interests of the corporation and avoid conflicts of interest. The duty of obedience, while relevant in some agency contexts, is not typically enumerated as a distinct primary fiduciary duty for corporate directors.

Which of the following best describes the concept of "piercing the corporate veil" under Washington law?

Answer: Disregarding the corporate entity to hold shareholders personally liable for corporate debts in cases of fraud or injustice

Piercing the corporate veil is an equitable doctrine under Washington law that allows courts to disregard the separate legal existence of a corporation and hold its shareholders personally liable for corporate debts or obligations. This extraordinary remedy is typically applied in situations where the corporate form has been abused, such as to perpetrate fraud, injustice, or to evade legal duties, and upholding the corporate entity would sanction a wrong.