Bus Law Exam 4

Question 1

specialized business relationship between one party known as the “principal” and another known as the “agent”.

Answer 1

AGENCY

Question 2

party who appoints a second party to serve as an agent (funeral home)

Answer 2

PRINCIPAL

Question 3

party appointed by a principal to enter into a contract with a third party (family) on the principal’s behalf (embalming service, cremation service, livery company, or answering service)

Answer 3

AGENT

Question 4

From principal to agent
Act in good faith of principal’s interest
Enter into contracts on principal’s behalf

Answer 4

DELEGATION OF POWERS:

Question 5

Authorized to carry out particular kind of business or all business at a location (FDIC)

Answer 5

GENERAL AGENT

Question 6

authorized to transact specified act or acts

Answer 6

SPECIAL AGENT

Question 6

Creation of Agent Authority

Answer 6

Express authority
Implied authority
Apparent authority

Question 7

stated in agreement creating agency; authority by appointment (written power of attorney)

Answer 7

EXPRESS AUTHORITY

Question 8

authority to do things in order to carryout express authority

Answer 8

IMPLIED AUTHORITY

Question 9

authority agent believed to have because of principal’s behavior

Answer 9

APPARENT AUTHORITY

Question 10

Person who undertakes to perform a specified task according to the terms of a contract where other contracting party has no control except as stated in the contract

Answer 10

INDEPENDENT CONTRACTOR

Question 11

party who hires employees to do certain work

Answer 11

EMPLOYER

Question 12

person hired to perform work

Answer 12

EMPLOYEE

Question 13

Employee performs work for employer
Employee under control of employer for work
and manner of completion
Employer liable for injuries to third parties caused by negligence of employees
Employer liable for torts committed by employee acting within scope of employment
Employer must comply with laws relating to employees
Social security deductions (FICA)
Workers compensation (FUTA & SUTA)
Federal and State income tax withholding

Answer 13

EMPLOYER AND EMPLOYEE RELATIONSHIP:

Question 14

AGENT DUTIES TO PRINCIPAL:

Answer 14

Loyalty and good faith 
 Obedience 
Reasonable skill and diligence 
Accounting 
Information sharing

Question 15

PRINCIPALS DUTIES TO AGENT:

Answer 15

 Compensation
 Wages
Reimbursement for expenses incurred during
course of employment
 Expenses incurred during employment
Indemnification or compensation for sustained
losses
Adherence to terms of employment contract

Question 16

TERMINATION OF AGENCY - BY ACT OF THE PARTIES (parties involved):

Answer 16

Original agreement
Subsequent agreement
Revocation
Renunciation by agent

Question 17

TERMINATION OF AGENCY - BY OPERATION OF LAW (death/bldg burn/corp dissolve/car flooded):

Answer 17

Subsequent illegality of subject matter 
Death of incapacity or either party 
Destruction of subject matter 
Bankruptcy of principal 
Dissolution of the corporation BY WAR

Question 18

Business owned by one person who is subject to claims of creditors
Simplest form of business organization
Proprietor receives all profits and assumes all
losses
Proprietor bears all risks and has personal
liability for all debts
Death of the proprietor terminates the business

Answer 18

PROPRIETORSHIP:

Question 19

Voluntary association of two or more people who have combined their resources to carry on as co-owners of a lawful enterprise for their joint profit

Answer 19

PARTNERSHIP

Question 20

Kinds of Partners

Answer 20

General partner
Silent partner
Limited partner

Question 21

individual activity and openly engaged in the business and held out to everyone as a partner

Answer 21

GENERAL PARTNER

Question 22

individual who takes no active part in management of a business, but has capital invested in the business

Answer 22

SILENT PARTNER

Question 23

partner who has liability for the firms debts limited to the amount of their investment

Answer 23

LIMITED PARTNER

Question 24

Operations of a Partner

Answer 24

Duties of a partner
Rights of a partner
Liabilities of a partner

Question 25

DUTIES OF PARTNER:

Answer 25

Exercise loyalty and good faith 
Use reasonable care and skill 
Conform to contract of partnership 
Maintain records 
Inform

Question 26

RIGHTS OF PARTNER:

Answer 26

Participate in management 
Inspect financial data 
Contribution 
Withdraw advances (business money for personal use) 
Withdraw profits

Question 27

LIABILITIES OF A PARTNER:

Answer 27

For contracts of the partnership

For torts

Question 28

By acts of the parties
By court of decree
By operation of law

Answer 28

DISSOLUTION OF A PARTNERSHIP:

Question 29

 By agreement
 By withdraw or alienation
 By expulsion

Answer 29

DISSOLUTION BY ACTS OF THE PARTIES:

Question 30

Insanity 
Incapacity 
Misconduct
Futility (hurricane or business not viable) 
Bankruptcy

Answer 30

DISSOLUTION BY COURT DECREE:

Question 31

Illegality (prohibition)

 Death

Answer 31

DISSOLUTION BY OPERATION OF LAW:

Question 32

an artificial being, invisible, intangible and existing only in contemplation of law.
An entity that is something that has a distinct existence separate and apart from the existence of its individual members

Answer 32

CORPORATION

Question 33

formed to carry out government functions (state university or public university)

Answer 33

PUBLIC CORPORATION

Question 34

formed by individuals to perform some non-government function. Can be for profit or non-profit/not-for-profit

Answer 34

PRIVATE CORPORATIONS

Question 35

FORMATION OF CORPORATION

Answer 35

Articles of incorporation
Written document setting forth facts about a
corporation prescribed by law for issuance of a charter and asserting the corporation has complied with legal requirements
Charter – grant of authority from a government to exist as a corporation

Question 36

grant of authority from a government to exist as a corporation

Answer 36

Charter

Question 37

Corporate Structure

Answer 37

Stockholders
Board of Directors
Officers

Question 38

Those having title to one or more shares of stock in a corporation
Represent combined ownership of the corporation
Conduct stockholders meetings

Answer 38

STOCKHOLDERS / SHAREHOLDERS

Question 39

RIGHTS OF STOCKHOLDERS

Answer 39

Receive properly executed stock certificates evidence of ownership
Attend corporate meetings and vote (unless denied by express agreement)
Receive proportion shares of profits when distributed as dividends
Double taxation

Question 40

Person authorized to vote for another or written authorization to vote for another

Answer 40

PROXY

Question 41

Body elected by stock holders to act on behalf of the corporation and carryout the board’s policies

Answer 41

BOARD OF DIRECTORS

Question 42

OFFICERS:

Answer 42

President 
Vice president 
Secretary 
Treasurer
Authorized by Board of Directors to carry out Board policies

Question 43

VOLUNTARY DISSOLUTION
INVOLUNTARY DISSOLUTION
MANNER OF DISSOLUTION

Answer 43

DISSOLUTION OF A CORPORATION:

Question 44

By vote of stockholders
Corporation pays debts
Distribute remaining assets to shareholders
Surrender articles of incorporation

Answer 44

VOLUNTARY DISSOLUTION

Question 45

Action of the court or state 
Due to forfeiture or abuse of corporate charter
Violation of state or federal law 
Fraud obtaining the charter 
Failure to pay specified taxes

Answer 45

INVOLUNTARY DISSOLUTION

Question 46

Existence terminated except to complete its
business
Cannot sue, own property or form contracts,
except to convert assets to cash

Answer 46

MANNER OF DISSOLUTION