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ACE Lesson 23: Legal Responsibilities and Business Strategies > Legal Guidelines and Professional Responsibilities > Flashcards

Legal Guidelines and Professional Responsibilities Flashcards

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1
Q

typical structures of for-profit business

A

1) sole proprietorship
2) partnership
3) corporation

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2
Q

the structure that the vast majority of for-profit business operate under

A

sole proprietorship

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3
Q

T/F: Creating a sole proprietorship doesn’t require any formal paperwork.

A

True

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4
Q

T/F: A partnership can be created without filing paperwork.

A

True

However, this is not recommended, and there should be legal documents that clearly establish rules of operation, partners’ rights, etc.

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5
Q

a type of general partnership that can be created by a contract between the parties (formal)

A

express partnership

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6
Q

a type of general partnership created and recognized by the judicial system if individuals act as partners (e.g., sharing a company checking account or jointly signing a business loan) [informal]

A

implied partnership

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7
Q

events that automatically terminate a partnership

A

1) a partner dies
2) a partner becomes bankrupt
3) partner(s) engage in illegal activity
4) courts can discontinue if one partner is deemed mentally incapacitated

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8
Q

most typical type of corporation used by personal-training businesses that do not operate as a sole proprietorship or partnership

A

S-corporation

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9
Q

requirements of an S-corp

A

1) must be based in the US
2) only up to 100 investors
3) all investors must be from the US
4) can only issue one form of stock

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10
Q

major benefit of LLCs/LLPs in comparison to S-corps

A

more simplified paperwork

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11
Q

T/F: There are not any national standards regarding the operation of LLCs or LLPs.

A

True

States govern these in a variety of ways

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12
Q

sole proprietorship advantages and disadvantages

A

Advantages:

  • easily created and managed
  • flow-through taxation

Disadvantages:

  • personal liability
  • raising capital
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13
Q

partnership advantages and disadvantages

A

Advantages:

  • easily created
  • flow-through taxation

Disadvantages:

  • potential management disputes
  • personal liability (except for LPs)
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14
Q

S-corps advantages and disadvantages

A

Advantages:

  • flow-through taxation
  • limited liability

Disadvantages:

  • limited number of potential investors
  • costs of formation and operation
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15
Q

LLC/LLP advantages and disadvantages

A

Advantages:

  • flow-through taxation
  • limited liability

Disadvantages:
- undefined operating standards in states

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16
Q

C-corps advantages and disadvantages

A

Advantages:

  • limited liability
  • unlimited number of investors

Disadvantages:

  • cost of formation and operation
  • double taxation
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17
Q

advantages of owning and operating a franchise

A

1) obtaining the rights to a recognized brand that will assist the PT in creating a strong presence in a specific market
2) access to the business and operating systems created by the franchiser (e.g., floor plans, equipment layouts, equipment discounts, operating plans, marketing information)
3) access to national advertising programs
4) ability to control the business as long as the needs and requirement of the parent franchise are met
5) franchisers will provide training and advice on all aspects of marketing and operating the business

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18
Q

disadvantages of owning and operating a franchise

A

1) upfront costs for the franchise fee and ongoing costs to maintain the association with the parent brand of the franchise
2) annual costs of maintaining the franchise
3) association with a particular brand if other franchisees perform poorly or are unethical
4) franchisee’s limited ability to adapt to changing market forces due to having to follow the franchise’s operating model

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19
Q

a personal trainer who is an independent contractor should be able to:

A

1) choose when and where to work
2) charge variable fees for different situations
3) begin working without extensive guidance
4) maintain autonomy in training decisions

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20
Q

elements that are necessary to create a binding contract

A

1) an offer and acceptance with a mutual agreement of terms
2) consideration (an exchange of valuable items, such as money for services)
3) legality (acceptable under the law)
4) ability of the parties to enter into a contract with respect to legal age and mental capacity

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21
Q

this is typically signed as a component of the initial contract

A

waiver

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22
Q

when the statute of frauds become applicable

A

1) agreement involves real estate or goods or services worth $500 or more, OR
2) requires more than one year to complete

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23
Q

what the statute of frauds requires

A

a written contract for the agreement to be valid

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24
Q

the 4 elements a plaintiff must establish to substantiate a charge of negligence in court

A

1) the defendant had a duty to protect the plaintiff from injury
2) the defendant failed to uphold the standard of care necessary to perform that duty
3) damage or injury to the plaintiff occurred
4) this damage or injury was caused by the defendant’s breach of duty (proximate causation)

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25
Q

failing to perform as a reasonable and prudent person would under similar circumstances

A

negligence

26
Q

two ways a negligent act can occur

A

1) trainer fails to act (act of omission)

2) trainer acts inappropriately (act of commission)

27
Q

example of an act of omission

A

failure to spot a client

28
Q

example of an act of commission

A

incorrect programming for a client who has known medical issues

29
Q

another name/term for vicarious liability

A

respondeat superior

30
Q

states that employers are responsible for the workplace conduct of their employees

A

vicarious liability (respondeat superior)

31
Q

clause in the waiver liability that bars the injured party from potential recovery

A

exculpatory clause

32
Q

T/F: A waiver that is valid in one state will be valid in other states.

A

False

33
Q

T/F: Waivers do not protect a personal trainer from injuries caused by gross negligence.

A

True

34
Q

an action that demonstrates recklessness or a willful disregard for the safety of others

A

gross negligence

35
Q

when gross negligence typically occurs

A

when someone deliberately acts in a manner that extends beyond the scope of employment or fails to meet the accepted standard of care (i.e., something that should never occur in normal course of employment/care)

36
Q

T/F: Contributory negligence laws may prevent a plaintiff from receiving any remuneration due to playing some role in the injury.

A

True

37
Q

instead of contributory negligence, the majority of states utilize this

A

comparative negligence

38
Q

governs when multiple parties are responsible for injury and the court apportions guilt and any subsequent award for damages

A

comparative negligence

39
Q

designed to protect the personal trainer from a client claiming to be unaware of the potential risks of physical activity

A

agreement to participate

40
Q

T/F: An agreement to participate is not typically considered a contract.

A

True

41
Q

when an agreement to participate is typically utilized

A

group/class settings

42
Q

details that should be outlined in an agreement to participate

A

1) nature of the activity
2) potential risks to be encountered
3) expected behaviors of the participant

43
Q

T/F: Typically, agreements to participate are incorporated into other documents like informed consent forms and waivers.

A

True

44
Q

utilized by a personal trainer to demonstrate that a client acknowledges that he or she has been specifically informed about the risks associated with the activity

A

informed consent

45
Q

issues that should be considered when inspecting facilities

A

1) different floor surfaces are used for different activities
2) sufficient free space available to protect the client from others and from hurting themselves on equipment
3) functional lighting must be sufficient
4) functional heating and A/C systems
5) proximity to drinking fountains and bathrooms

46
Q

T/F: A trainer can be held partially liable if the fitness club/facility does not correct an unsafe condition.

A

True

47
Q

T/F: Utilizing a fitness center for training sessions without notifying management is an unethical business practice and, in some areas, against the law.

A

True

48
Q

ACE recommended amount of personal liability insurance

A

at least $1 million

49
Q

a special addition to typical insurance policy provisions that is recommended for PTs using their own home or the client’s home for workouts, or for workouts outside

A

insurance rider

50
Q

insurance for PTs who also sell products

A

product liability insurance

51
Q

the insurance policy recommended by most agents for PTs

A

umbrella liability policy

52
Q

insurance policy that provides added coverage for all of the other insurance (e.g., home, auto, professional liability)

A

umbrella liability policy

53
Q

T/F: If a PT is sued and the judgment exceeded the professional liability coverage, the umbrella liability policy would cover the shortfall.

A

True

54
Q

insurance policy designed to compensate the business for the loss of a person who performs a unique and valuable function

A

keyman insurance

55
Q

if these certain words/phrases are not specified in the insurance policy, the policy only covers the trainer to the extent the services provided were inadequate or improper

A

“failure to render” or “omission”

56
Q

3 critical components of an insurance policy related to coverage

A

1) legal fees
2) settlements
3) defense charges

57
Q

these liabilities are often specifically excluded in fitness professional insurance policies

A

1) abuse
2) molestation
3) cancer (resulting from tanning)
4) libel
5) slander

58
Q

addendum to a policy that covers acts committed prior to the policy purchase

A

prior acts coverage

59
Q

addendum to a policy that covers claims made in the future after the policy has ended/been canceled for injuries during the policy period

A

extended reporting endorsement

60
Q

5 steps of risk management protocol

A

1) risk identification
2) risk evaluation
3) risk management approach selection (plan)
4) implementation
5) evaluation

61
Q

the different approaches for risk management

A

1) avoidance: remove the risk by eliminating the activity
2) transfer: move the risk to others through a waiver, insurance policy, etc.
3) reduction: modify the risk by removing part of the activity
4) retention

ACE Lesson 23: Legal Responsibilities and Business Strategies (2 decks)

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