R8 - Business Law 3 Flashcards
What type of surety is not compensated for his promise to the creditor?
Gratuitous surety
Generally for a gratuitous surety, a suretyship promise made ______ the loan contract has been made will not bind the gratuitous surety due to lack of consideration.
After
Give a typical example of a compensated surety.
A bonding company
In order to discharge a compensated surety, a creditor must make what type of change?
Material change
Can minors be agents?
YES
What is a written authorization of agency called?
Power of attorney
If you have the power to do something, but not the right, what does that constitute?
Breach of contract
Can a principal terminate an agency coupled with an interest?
NO
The principal can be bound to the third party in what three instances even though no consensual agency relationship was created?
1) A grant of actual authority
2) Apparent authority or estoppel, OR
3) Ratification
What is express actual authority?
Oral/written instruction
Apparent authority is based on the ___ ____ reasonable belief that the agent has the power to bind the principal.
3rd party’s
Disclosed principal’s can be liable if the agent had actual authority, ______ authority, or ______.
- apparent
- ratified
True or false.
An undisclosed principal is only liable to the third party if the agent has actual authority.
True
Steve and Becky decide to operate a hot dog cart together. Steve agrees to pay for the cart, and Becky agrees to make and sell hot dogs. The two also agree to split the profits. Has a partnership has been formed even though Steve and Becky never expressly agreed to form a partnership?
Yes
What is the key difference b/w a joint venture and a general partnership?
- JV is formed for a single transaction or project
- GP implies an ongoing business for profit
A general partnership is generally an entity, except for what purposes?
Federal income tax purposes
True or false.
In a general partnership, a dissolution can be done by just one partner.
True
Can a creditor of an individual partner obtain from a court a charging order against an individual partner’s share of profits?
Yes
EXPLANATION: Called a charging order.
True or false.
Each partner is personally liable for all partnership obligations.
True
EXPLANATION: The partners’ liability is joint and several. This means each partner is personally and individually liable for the entire amount of all partnership obligations.
To become an LLP, what must you do?
File with the state
How are profits and losses allocated in an LP?
According to capital contributions absent other agreement
How are profits and losses allocated in an LLC?
According to contributions
Cumulative voting for directors helps who gain representation on the board?
Minority shareholders
Once the BOD declares a distribution, the shareholders are treated as _____ _____.
Unsecured creditors
