R8 Concepts

Question 1

Ultra Vires

Answer 1

Beyond powers—An action that goes beyond the power or the authority of the corporation. Such actions violate the fiduciary duty of obedience.

Question 2

When does a general partnership agreement need to be in writing?

Answer 2

If they want to be able to enforce it longer than 1 year (Y in MYLEGS) Ex: “Made in advance”

-Even if the partnership agreement is for land, it doesn’t have to be written.

Question 3

What is the Revised Uniform Partnership act

Answer 3

Look to this when the partnership agreement doesn’t specifically state the relevant provisions.

Partnership agreement supersedes the RUPA.

Question 4

What is a dissociation in a general partnership?

Answer 4

Change in partners–business may continue. Doesn’t necessarily mean a dissolution and winding up of the business.

Question 5

What is a novation?

Answer 5

When the parties to a contract agree to replace one party to the contract with a new party. The parties agree to release or discharge the old party and look only to the new party for performance.

-It releases the prior liabilities of the dissociated partner in a general partnership.

Question 6

What is a hold harmless agreement?

Answer 6

It is a release by the partners of a dissociated partner, it doesn’t relieve the dissociating partner from prior liabilities in a general partnership.

Question 7

In a general partnership, what is meant by a partner’s interest

Answer 7

It’s the owners equity in the partnership, not the PP&E (partnership property)

Question 8

What are the rules for determining the profit/loss allocations in a general partnership and in an LLP?

Answer 8

Unless otherwise specified, the profits are shared equally by the number of partners and it doesn’t matter how much each contributed. Unless otherwise agreed upon, the losses are shared in the same way that the profits are shared.

Question 9

For debts incurred after dissociation in a general partnership, how long can you be liable for debts if the other party reasonably believed you were still a partner?

Answer 9

2 years. The dissociated partner needs to file a notice of dissociation with the state. Third parties are considered to have notice of dissociation 90 days after the filing

Question 10

What is meant by a judicial decree

Answer 10

A court order

Question 11

What is foreign limited partnership

Answer 11

One doing business in a given state but was formed in another state. Foreign limited partnership must register with secretary of state before doing business in state.

Question 12

What is the difference between the Revised Uniform Limited Partnership Act and the Uniform Limited Partnership act?

Answer 12

Revised Uniform Limited Partnership Act: LP will personally be liable to anyone who thinks they are acting as a GP. The names of the limited partners names cannot identified with the business or the LPs might be thought of as a GP and will again be liable as a GP.
-If not acting as a general partner, then their debts are limited to the capital contributions

Uniform Limited Partnership act: LP will not be personally liable acting as management of an LP. Even if their names are disclosed, they will still have their Limited liability status and won’t be liable as a GP.

Question 13

What is a joint venture most similar to?

Answer 13

A general partnership.

It is an association of persons engaged as co-owners in a single (special transaction) undertaking for profit. A joint venture is treated as a partnership for most important legal respects.

Question 14

Is a partnership a separate legal entity?

Answer 14

Yes

Question 15

What does a de jure corporation insinuate

Answer 15

that the corporation was properly incorporated

Question 16

What is the Ultra Vires Act in regards to a corporation?

Answer 16

Under the RMBCA, there is an optional purpose clause that the corporation may include in its articles stating the purpose of why it was formed.

“Ultra vires” - beyond powers. They commit this act when they undertake a business that is outside of the narrow purpose clause.

Question 17

What is a debenture? it is secured or unsecured?

Answer 17

Unsecured bond. Not an owner, but a lender of a corporation

Question 18

What is the Corporate Opportunity Doctrine?

Answer 18

Under the corporate opportunity doctrine, if a director is presented with a business opportunity that is of interest to his corporation (ex: he is told that land the corporation is interested in buying has just been put on the market), generally the duty of loyalty prohibits the director from taking the opportunity for himself. He must present the opportunity to the corporation and can take the opportunity for himself only if the corporation decides not to take it.

Question 19

How much can an employer deduct for FUTA benefits?

Answer 19

Unemployment benefits 5.4% of first $7,000 of employee income. Note: The employee can only get a total benefit of 6.0% of first $7,000, even if this was more than the employer contributed to their account.

Question 20

Which companies have to follow the Age discrimination act?

Answer 20

20 or more employees

-Employers can use the “bona fide occupational qualification or seniority system (public safety)” as a defense.

Question 21

which companies have to follow FICA?

Answer 21

Mostly all employees/employers–both contribute. Part time employees are included as well. SE if net profit > $400/year. Exempt are certain gov’t workers and ministers.

Question 22

Which companies have to follow FUTA?

Answer 22

As long as there is at least one employee who worked for more than 20 weekS OR payroll expense is greater than $1,500/quarter

Question 23

Which companies have to pay workers comp.

Answer 23

Mostly all, except for independent contractors or temporary workers.

Question 24

Which companies have to pay for ADA?

Answer 24

Americans with disabilities Act
15 or more employees
-Keeps from discriminating against them because of physical or mental disability. Also gives them access to buildings open to the public, mass transportation etc (even if privately owned)

Question 25

Which companies must comply with OSHA?

Answer 25

all businesses affecting INTERSTATE commerce.

Occupational Safety & health Act

Question 26

What are the possible fines for inadequate findings under OSHA?

Answer 26

Fines of $1,000/day and civil penalties up to $10,000/willful or repeated violation

Criminal penalties: Violations resulting in death. Fined $10,000 & jail for 6 months

Question 27

What is the federal minimum wage?

Answer 27

$7.25/hour

Question 28

What provisions under the FLSA don’t pertain to newspaper delivery

Answer 28

Fair labor standards act

Except from minimum wage, overtime pay, equal pay & child labor provisions (can be under 14)

Question 29

What provisions under the FLSA do not pertain to cab drivers

Answer 29

Fair labor standards act

Overtime pay only. Still have to be paid minimum wage of at least $7.25

Question 30

What provisions under the FLSA don’t pertain to white collar workers

Answer 30

White collar workers make more than $455/week OR $27.63/ hour (for computer professionals)
-Except from minimum wage, overtime pay

Question 31

How can you qualify to be an executive?

How can you qualify to be an administrator?

Answer 31

Executive: Must direct the work of at LEAST two full-time employees & have WEIGHTY input on decisions to hire & fire.

Administrator: Employee’s work must be NONMANUAL directly related to management.

Both are considered white collar workers and under the FLSA, they are excluded from the minimum wage & overtime provisisions.

Question 32

How can you qualify to be a professional under the FLSA

Answer 32

Federal labor standards act

Question 33

What is LMRA (Labor management relations Act?

Answer 33

AKA Taft-Hartley Act. Labor unions are prohibited from charging excessive union fees, forcing employers to pay for unperformed services or calling an improper strike

-Subset of the National Labor Relations Act (NLRA) AKA “Wagner” to bargain collectively.

Question 34

What is COBRA and what employers must comply with this?

Answer 34

Gives employees who were terminated, the option doing group HEALTH insurance benefits for 18 months at the employee’s expense
20 or more employees

Question 35

How long can an employee entitled to COBRA take advantage of the benefits?

Answer 35

18 months after fired.

Question 36

What are Tertiary-line injury and under which antitrust regulation do they fall under?

Answer 36

Robinson Patman Act, which is the amendment of the Section 2 Act in the Clayton Act regarding Price Discrimination.
Occurs when the recipient of a favored price passes the benefits of the lower price on to the next level of distribution. The ones that don’t receive the additional benefits from buying under the Secondary-line sellers, are affected.

Question 37

What are Secondary-line injury and under which antitrust regulation do they fall under?

Answer 37

Robinson Patman Act, which is the amendment of the Section 2 Act in the Clayton Act regarding Price Discrimination.

Injuries to a seller’s customers
Protects small buyers. Injuries to a seller’s customers who aren’t buying in bulk. Plaintiff must show substantial & sustained price differentials in a market (makes it easier to prove than primary-line injuries) or actual harm to competition.

Question 38

What are Primary-line injury and under which antitrust regulation do they fall under?

Answer 38

Robinson Patman Act, which is the amendment of the Section 2 Act in the Clayton Act regarding Price Discrimination.

Injuries to a seller’s competitors. Show how the price discrimination intended harm or actual harm. Courts can rely on a significant period of below-cost or unprofitable pricing.

Question 39

What is the Federal Trade Commission Act responsible for?

Answer 39

-Responsible for stopping fraudulent sales techniques, “unfair and deceptive” trade practices and advertising and to enforce antitrust acts.

Question 40

When determining market share, what do you need to know?

Answer 40

What other products compete with the product, Where the product is sold and How much of the product is sold

Question 41

What does the National Cooperative Research Act of 1984 provide and what antitrust regulation is it under?

Answer 41

Section 1 of the Sherman Act.
-Provides that joint ventures in the R & D of new technology are to be judged under the rule of reason test, even though it’s usually a combined effort by two or more businesses (horizontal merger)

Question 42

Under what Title is the Fiancial Stability Oversight Council created under the Dodd Frank Act and what does it do?

Answer 42

Title I - The financial Stability Act.

Question 43

What does Title VII–Wall Street Transparency & Accountability Act involve under the Dodd-Frank Act?

Answer 43

No longer can have “private OTC” transactions”. All OTC transactions, even ones with nonfinancial end users are under this.

• It requires swaps and security-based swaps to mandatory clearing through exchanges or clearinghouses.
• Also, swap participants must meet minimum capital & margin requirements.

Question 44

What does Title IX- Investor Protection & Securities Reform Act of 2010 involv under the Dodd-Frank Act?

Answer 44

Requires broker/dealers recommendations to investors to be suitable to the needs of their customers and in their customers’ best interest.

Question 45

What constitutes a principal stockholder?

Answer 45

A stockholder that owns greater than 10% of stock in a corproation. Under Title IV in SOX, these must be disclosed in the footnotes of the FS. Also, any changes in the amount that they own, must be FILED within 2 days of the change