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Commonwealth 2nd Quarter > Business Law Exam 4 > Flashcards

Business Law Exam 4 Flashcards

1
Q

Agency

A

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

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2
Q

Nature of Agency Relationship

A

Parties

Delegation of powers

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3
Q

Parties

A

Principal

Agent

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4
Q

Principal

A

Party who appoints a second party to serve as an agent

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5
Q

Agent

A

Party appointed by a principal to enter into a contract with a third party on the principal’s behalf

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6
Q

Delegation of Powers

A

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

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7
Q

Classification of Agents

A

General agent

Special agent

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8
Q

General Agent

A

Authorized to carry out particular kind of business or all business at a location
• FDIC
• Funeral Director in Charge

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9
Q

Special Agent

A

Authorized to transact specific act or act(s)

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10
Q

Creation of Agent’s Authority

A

Express authority
Implied authority
Apparent authority

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11
Q

Express authority

A

Stated in agreement creating agency
Authority by appointment
Example:
Written Power of Attorney

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12
Q

Implied authority

A

Authority to do things in order to carry out express authority

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13
Q

Apparent authority

A

Authority agent believed to have because of principal’s behavior

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14
Q

Other Employment Relationships

A

Independent contractor
Employer
Employee

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15
Q

Independent Contractor

A

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

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16
Q

Employer

A

Party who hires employees to do certain work

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17
Q

Employee

A

Person hired to perform work

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18
Q

Employer and Employee

A

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)
Worker’s compensation (FUTA and SUTA)
Federal and state income tax withholdings

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19
Q

Agent’s Duties to Principal

A 
Loyalty and good faith
Obedience
Reasonable skill and diligence
Accounting
Information
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20
Q

Principal’s Duties to Agent

A

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

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21
Q

Termination of Agency

A

By act of the parties

By operation of law

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22
Q

By Act of the Parties

A

Original agreement
Subsequent agreement
Revocation
Renunciation by agent

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23
Q

By Operation of Law

A 
Subsequent illegality of subject matter
Death or incapacity of either party
Destruction of subject matter
Bankruptcy of principal**
Dissolution of the corporation
24
Q

Termination of agency

A

by war

25
Q

Types of Business Organizations

A

Proprietorship
Partnership
Corporation

26
Q

Proprietorship

A

Business owned by one person who is subject to claims of creditors
Simple 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

27
Q

Partnership

A

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

28
Q

Kinds of Partners

A

General
Silent
Limited

29
Q

General Partner

A

Individual actively and openly engaged in the business and held out to everyone as a partner

30
Q

Silent Partner

A

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

31
Q

Limited Partner

A

Partner who has his/her liability for the firm’s debts limited to the amount of their investment

32
Q

Operations of a Partnership

A

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

33
Q

Duties of a Partner

A 
Exercise loyalty and good faith
Use reasonable care and skill
Conform to contract of partnership
Maintain records
Inform
34
Q

Rights of a Partner

A 
Participate in management
Inspect financial data
Contribution
Withdraw advances (business money for personal use)
Withdraw profits
35
Q

Liabilities of a Partner

A

For contracts of the partnership

For torts

36
Q

Dissolution of a Partner

A

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

37
Q

Dissolution by Acts of the Parties

A

By agreement
By withdrawal or alienation
By expulsion

38
Q

Dissolution by Court Decree

A 
Insanity
Incapacity
Misconduct
Futility
Bankruptcy
39
Q

Dissolution by Operation of Law

A

Illegality

Death

40
Q

Corporation

A

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

41
Q

Classifications of Corporations

A

Public

Private

42
Q

Public Corporations

A

Formed to carry out government functions
• State university
• Public hospital

43
Q

Private Corporations

A

Formed by individuals to perform some non-governmental function
• For profit
• Non-profit (not-for-profit)

44
Q

Formation of a Corporation

A

Articles of Incorporation

Charter

45
Q

Articles of Incorporation

A

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.

46
Q

Charter

A

grant of authority from a government to exist as a corporation

47
Q

Corporate Structure

A

Stock holders
Board of Directors
Officers

48
Q

Stock Holders

A

Those having title to one or more shares of stock in a corporation.
Represent combined ownership of the corporation.
Shareholders
Conduct stockholders meetings at least once a year.

49
Q

Rights of Stockholders

A

Receive properly executed stock certificates as evidence of ownership
Attend corporate meetings and vote (unless denied by express agreement).
Receive proportionate shares of profits when distributed as in dividends.

50
Q

Proxy

A

Person authorized to vote for another, written authorization to vote for another.

51
Q

Board of Directors

A

Body elected by stockholders to act on behalf of the corporation and carry out the board’s policies.

52
Q

Officers

A

(President / Vice-President / Secretary / Treasurer)

Authorized by Board of Directors to carry out board policies.

53
Q

Dissolution of a Corporation

A

Voluntary

Involuntary

54
Q

Voluntary Dissolution

A

By vote of the stockholders
Corporation pays debts,
Distributes remaining assets to stockholders as to number of stocks owned, and
Surrenders articles of incorporation

55
Q

Involuntary Dissolution

A 
Action of the court or state
Due to forfeiture or abuse of corporate charter,
Violation of state or federal law,
Fraud in obtaining the charter, or 
Failure to pay specified taxes.
56
Q

Manner of Dissolution

A

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

Commonwealth 2nd Quarter (22 decks)

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