REG 8 Flashcards
REG 8
REG 8-1 General Partnership - What are the elements of forming a general partnership?
- Two or more persons; 2. Who agree expressly or impliedly; 3. To carry on as co-owners of a business for profit
REG 8-2 General Partnership - Is a writing generally necessary to create a general partnership?; What if the partnership is to own real property?
A general partnership can be formed whenever two or more persons agree to enter into a business for profit as co-owners. The agreement need not be in writing; indeed it need not even be oral. It can be implied from condct. The fact that the partnership will own property does not change this.
REG 8-3 General Partnership - If the partnership agreement is silent, how are profits and losses divided in a partnership?
If the partnership agrement is silent, profits and losses are divided equally, regardless of the contribution of each partner.
REG 8-4 General Partnership - For what servicess is a partner entitled to compensation if the partnership agreement is silent on the issue?
If the agreement is silent on the issue, a partner generally is not entitled to any compensation. There is an exception for the last surviving partner for services rendered to wind up the partnership’s affairs.
REG 8-5 General Partnership - A partner’s interest in partnership properly is subject to attachment to satisfy the partner’s alimony obligation. True or false?
False. A partner has no right to possess partnership property other than for partnership purposes, and a partner’s creditors cannot get any greater rights than the partner’s in such property.
REG 8-6 General Partnership - What is the liability of each partner for the partnership obligations?
Partners are personally liable for all contracts entered into and all torts committed by other partners within the scope of the partnership business or which are otherwise authorized.
REG 8-7 Limited Partnership - Can a limited partnership be formed with limited liability for all partners?
No. A limited partnership must have at least one general partner who will be personally liable for all partnership debts.
REG 8-8 Limited Partnership - Is a limited partner personally liable for the debts of the partnership?
No. A limited partner is not personally liable for the debts of the partnership unless the limited partner is also a general partner, allows his name to be used in the partnership agreement, or takes control of the partnership and a creditor reasonably believes the limited partner is a general partner.
REG 8-9 Limited Partnership - A limited partner has apparent authority to bind his limited partnership on contracts apparently within the scope of the partnership business. True or False?
False. Limited partners are like shareholders of a corporation and have no apparent authority to bind their partnership in contract.
REG 8-10 Limited Liability Company - Can a limited liability company be formed with limited liability for all members?
Yes. Members of a limited liability company are not personally liable for obligations of the company.
REG 8-11 Limited Liability Company - A member of a limited liability company has apparent authority to bind the company on contracts apparently within the scope of the company’s business unless the company’s articles of organization provide otherwise. True or False?
True. Generally, unless the articles of organization provide otherwise, limited liability companies are member-managed, and the members have apparent authority to bind the company on contracts apparently within the scope of the company’s business.
REG 8-12 Limited Liability Company - If the articles of organization and operating agreement are silent, how are profits and losses divided in a limited liablity company?
Under most state laws, if the articles of organization and operating are silent, profits and losses are divided in proportion to contributions.
REG 8-13 Limited Liability Company - When does a member of an LLC have a right to a distribution?
A member of an LLC has a right to a distribution when the articles of organizastion, an operating agreement, or an agreement of the members so provides.
REG 8-14 Limited Liability Company - Is a member of an LLC personally liable for the debts of the LLC? What if the member is also a manager of the LLC?
No. A member of an LLC is like a limited partner or shareholder and is not personally liable for the LLC’s obligations. If the member is also a manager, the member is treated as an officer or director of a corporation rather than as a general partner of a limited partnership and is not personally liable for the obligations of the LLC.
REG 8-15 Corporation - A promoter, like a shareholder, officer, or director, is not liable on contracts the promoter makes on behalf of the corporations. True or False?
False. Generally, promoters are personally liable on contracts that they enter into on behalf of the corporation to be formed.
REG 8-16 Corporation - What must be included in the articles of incorporation of a corporation?
Name of the corporation, Names and addresses of the corporation’s registered agent (on whom process may be served if the corporation is sued), Names and addresses of each of the incorporators, Number of shares authorized to be issued, a clause entitling one or more classes of stock to voting rights.
REG 8-17 Corporation - For what reasons do courts typically disregard the corporate entity (ie. “pierce the corporate veil”)? Who is held liable?
Shareholders, officers, or directors commingle personal funds with corporate funds or otherwise ignore most corporate formalities (alter ego theory), The corporation is inadequately capitalized at the time of formation, The corporation was formed to defraud creditors, If the corporate entity is disregarded (the corp. veil is pierced) courts can reach the responsible shareholders, officers, and/or directors.
REG 8-18 Corporation - What is the minimum number of directors for a corporation?
Under RMBCA, a corporation needs only one director, but the articles of incorporation or bylaws may require as many directors as desired, without limitation.