Exam 3

Question 1

A corporation must be formed by at least three people. (true or false)

Answer 1

False

Question 2

A limited liability company may not sue in its own name, but one, or more, of the members must file the law suit in their own name.

Answer 2

False

Question 3

A partnership can only be formed with the intent of the partners to form a partnership.

Answer 3

False

Question 4

The corporation comes into existence only after the board of directors is formed.

Answer 4

False

Question 5

“Apparent authority” is authority which a principal knowingly tolerates or permits, or which the principal, by its actions/inaction or words, holds the agent out as possessing.

Answer 5

True

Question 6

A “meeting of the minds” is relative to which element of a contract?

Answer 6

Acceptance

Question 7

The fact that a corporation is a “one person” corporation does not, standing alone, justify piercing the “corporate veil” nor does the fact that the corporate affairs have been poorly handled, without more, justify piercing the “corporate veil”.

Answer 7

True

Question 8

The failure of a limited liability company to observe formalities relating to the exercise of its powers or management of its activities and affairs is not a ground for imposing liability on a member or manager of the company for a debt, obligation or other liability of the company.

Answer 8

True

Question 9

A person may avoid performance of a contract if the contract was created:

Answer 9

while under duress

Question 10

A contract that is created through a course dealing, or usage of trade, or course of performance is known as:

Answer 10

contract implied in fact

Question 11

An implied contract, whether in law or in fact, is remedy based on equity and not a legal contract.

Answer 11

True

Question 12

The duty that requires a person to attempt to stop, lessen or avoid further damage to their interest due to a breach of a contract by the other party is called:

Answer 12

the duty to mitigate

Question 13

The president of the corporation is an agent of the corporation.

Answer 13

true

Question 14

The board of directors may be personally liable to the shareholders for their acts, or failure to act, if corporation goes bankrupt if they knowingly allowed the president of the corporation to buy boats, airplanes, and automobiles for himself with corporation money when the president was not authorized to spend money on those things and essentially committing theft from the corporation by doing so.

Answer 14

true

Question 15

The name of a corporation in Florida must be distinguishable from the names of all other entities or filings that are on file with the division of corporations

Answer 15

true

Question 16

A by-law is a self-imposed rule, resulting from an agreement, or contract, between the corporation and its members to conduct the corporate business in a particular way.

Answer 16

true

Question 17

Which of the following may direct the daily functions of an LLC?

Answer 17

the managing member

Question 18

List the elements of a contract, as discussed in class.

Answer 18

Offer, consideration and acceptance

Question 19

List the reasons, as discussed in the lecture, for forming a corporation.

Answer 19

Limitation of liability of shareholders, organization of purpose, authority and distribution of profits as well as perpetual life.

Question 20

A “meeting of the minds” is essential to the creation of a contract.

Answer 20

true

Question 21

Verbal contracts are not enforceable.

Answer 21

false

Question 22

An implied contract, whether at law or in fact:

Answer 22

Is created by a court, is not a contract at all and is based on equity.

Question 23

If Mr. Smith contracts with Mr. Jones to construct a pond on Mr. Smith’s property, and Mr. Jones constructs the pond but the pond will not hold water & stays dry year round, Mr. Smith may choose which of the following remedies from Mr. Jones:

Answer 23

The costs for making the property as close to the way it was before the pond construction began or the costs of property completing the job of building the pond.

Question 24

which of the following is an element in a cause of action for a contract implied in law:

Answer 24

the plaintiff has conferred a benefit on the defendant

Question 25

An acceptance of an offer for a contract must be only as close to matching the offer as is reasonable in the mind of the offeree

Answer 25

false

Question 26

Mr. Smith offers to pay Mr. Jones $1,000 per month, each month for 12 months even if Mr. Jones dies before the year is out…Question: Would Mr. Jones’ widow be able to enforce that contract and make Mr. Smith pay the $1,000 per month for $12 months? True if yes or False if no

Answer 26

false

Question 27

Each partner is an agent of the partnership for the purpose of its business.

Answer 27

true

Question 28

Which of the following most closely describes the elements of consideration regarding contracts:

Answer 28

The cause, motive, price or impelling influence which induces a contracting party to enter into a contract

Question 29

Relative to the materials and lecture on this subject, a defense to a claim of a breach of contract may be which of the following:

Answer 29

The plaintiff failed to file the law suit prior to the expiration of the statute of limitations for breach of contract

Question 30

The acceptance of an offer may be in writing, by parole, or by acts, but in whatever mode the assent is signified, it must be actually expressed in some overt manner, by some overt acts and a mere mental intention to accept an offer, however carefully formed, will not create a contract

Answer 30

true

Question 31

Shareholders of a corporation are liable for corporate debt, because they own the corporation

Answer 31

false

Question 32

Partners are jointly and severally liable for debts of the partnership

Answer 32

true

Question 33

A function of the “registered agent” for a corporation is to:

Answer 33

accept services of process for a law suit

Question 34

It is illegal for a corporation that operates a medical office, which employes physicians, to also operate a real estate sales business

Answer 34

false

Question 35

Generally, an employer will not be held liable for the intentional torts of its employee

Answer 35

true

Question 36

A person who is the sole shareholder, sole board member and sole officer of a corporation may be personally liable for debt or legal liability of the corporation if that person does such things as paying for personal expenses from the corporate bank account & failing to conduct and document annual shareholders meeting with himself for several years prior to incurring the debt or liability of the corporation

Answer 36

true

Question 37

A corporation’s by-laws are used to determine how the business will be governed and managed

Answer 37

true

Question 38

A corporation’s president may not serve as the secretary of the corporation because there is a statute that requires one officer to be responsible for the tasks normally associated with the traditional responsibilities of the secretary

Answer 38

false

Question 39

An LLC is different from a corporation in at least one of the following ways:

Answer 39

An LLC requires less internal structure and fewer official functions and positions

Question 40

Articles of Organization apply to what type of business:

Answer 40

LLC

Question 41

The name of a corporation in Florida must contain the word “corporation”, “company” or “incorporated” or the abbreviation of those words

Answer 41

true

Question 42

Which of the following is an element in a cause of action for a contract implied in law:

Answer 42

the plaintiff has conferred a benefit on the defendant.

Question 43

Acceptance of an offer for a contract can create a contract if it contains terms that are substantially the same as the offer.

Answer 43

false

Question 44

Partners are immune from liability for debts of the partnership only after the Articles of Partnership are filed with the Secretary of State.

Answer 44

This is FALSE because there is no requirement for Articles of Partnership to be filed and the law holds partners liable for partnership debt.

Question 45

“Apparent authority” of a purported agent can be found when the purported agent represents to a third party that he or she is the agent, even though the purported principal does not know of the representation.

Answer 45

false

Question 46

Because the Florida Statutes require at least one person to act as the “Secretary” of the corporation, at least two people are required to form a corporation in Florida.

Answer 46

false

Question 47

A president of a corporation will always be personally liable for the the obligations of the corporation if he signs a contract as “President” of the corporation.

Answer 47

false

Question 48

A president of a corporation will always be personally liable for the the obligations of the corporation if he signs a contract as “President” of the corporation.

Answer 48

false

Question 49

The term “Corporate Veil” refers to which of the following:

Answer 49

Limitation of liability for shareholders, board members and officers.

Question 50

If a neighbor works to remove a tree limb from his neighbor’s roof, then the next day, the neighbor from whose roof the limb was removed promises to pay for that work, a contract can be found based on that promise to pay.

Answer 50

false

Question 51

The Operating Agreement in an LLC is analogous to which if the following:

Answer 51

A written partnership agreement

Question 52

A Board Member or officer of a corporation has a fiduciary duty to the members of that corporation’s community and to various stake holders of the corporation.

Answer 52

false

Question 53

An Implied Contract is formed by the actions of the parties, such as a handshake.

Answer 53

false