Test one

Question 1

Sources of Law

Answer 1

Common Law (from England)
Regulation
Constitutuion

Question 2

stare decisis

Answer 2

precedent - to abide by decided cases

Question 3

Teleogical theory

Answer 3

based on consequences - where ethical good is judged by the effect of the action on others

Question 4

Deontological theory

Answer 4

focuses on motivation behind action

Question 5

Kantian theory

Answer 5

looks to the form of the action rather than the intended result. (Deontological)

Question 6

Error of Commission

Answer 6

Omission (What you did not do - but you should have done)
Example: in regards to Ford case - where something like a disclosure could have been helpful but Ford chose not to do since it may decrease profits

Question 7

Error of Omission

Answer 7

(What you did not do - but you should have done)
Example: in regards to Ford case - where something like a disclosure could have been helpful but Ford chose not to do since it may decrease profits

Question 8

corporate opportunity doctrine

Answer 8

officers and directors may not take personal advantage of a business opportunity that rightfully belongs to the corporation

Question 9

preemptive rights

Answer 9

When shareholders, usually a majority shareholder or a shareholder committing large amounts of capital to a start up company, purchase shares, they want to ensure they have as much voting power in the future as they did when they initially invested in the company. By getting preemptive rights in its shareholder’s agreement, the shareholder can ensure that any seasoned offerings will not dilute his/her ownership percentage.

Question 10

cumulative voting

Answer 10

he procedure of voting for a company’s directors; each shareholder is entitled one vote per share times the number of directors to be elected
For example, if you owned 100 shares and there were three directors to be elected, you would have 300 votes. This is advantageous for individual investors because they can apply all of their votes toward one person.

Question 11

Officers & BOD

Answer 11

Officers of a corporation are hired and fired by Board of directions
BOD are hired by shareholders

Question 12

Merger

Answer 12

combination of two or more corporations into one
A + B = A. disappearing company no longer exists and the surviving company continues. the surviving company assumes the assets and liabilities of the disappearing company

Question 13

Sale of Asets

Answer 13

where a company acquirs the assets of another company but not its liabitits (w/ out merging) the sale of majority of a companies assets must be approved by BOD and shareholders

Question 14

Business Judgement Rule

Answer 14

where a court will presume that the directors have acted in good faith and in best interest of the corporation - and court will not question whether action was wise of whether bod had error of judgment

Question 15

Piercing corporate Veil

Answer 15

Alter Ego theory - applies when owners of corp have so mingled their own affairs with those of the corp that the corp does not exist as a seperate entity - instead is an alter ego of its owner
Undercapitalization theory
applies when the corp. is a separate entity but its deliberate lack of adequate capital allows it to skirt potential liabilities

Question 16

Bylaws

Answer 16

after the certificate of incop is files, the incorprorators adopt bylaws that are the rules governing the cop including the number of authorized BOD

Question 17

Ending of Partnership Agreement

Answer 17

Dissolution - occurs when partners no longer carry on the business together
Winding up - settliing the accounts and liquidating the assets
Termination ccurs when all the partnership affairs are settled and the partners’ authority to act for the partnership is extinguished

Question 18

articles of incorporation

Answer 18

name of entity
nature/purpose of entity
registered agent
place of businss
at minimum one owner

Question 19

Limited liability company

Answer 19

•combines pass-through tax advantage and limited liability to investment
•creature of state law
•give at the founders and investors flexibility to shape their duties and responsibilities by contract
•owners are called members general with operating agreement
•general partners and investors can limit their liability to their investment
•assets protected
•full participation of all members
all partners can participate is control of partnership

Question 20

Close corporations

Answer 20

cannot sell shares
no more than 30 shareholders
must elect to be close corporation
must annually register w/ state secretary
usually operated like partnership

Question 21

S Corp

Answer 21

flow through taxation
must elect to be s-corp
cannot have more than 100 shareholder
if s-corp election not made…the corp is automatically a C Corp

Question 22

LLLP (limited liability limited partnership

Answer 22

general and limited partners
all partners have limited liability but not all partners participate in management or operation of business
general partners manage partnership

Question 23

Limited partnership

Answer 23

General and limited partners
limited partners cannot participate in the control or management of organization
General partners have full liabitlity and control of organization
harder to form

Question 24

Liability of Principle for Intentional Torts of Agent

Answer 24

• the employer may be liable for the employees action if
• employer intended employees action/conduct
• employee’s high rank in the company make her the company’s alter ego
• employees action can be attributed to employers negligence
• employee uses apparent authority
• the employer aided the employee when committing tort

Question 25

Coming & Going Rule

Answer 25

Going to work or coming from work - employer is not responsible unless marketing for company’s advantage

Question 26

Equal Dignity Rule

Answer 26

where the agency relationship is evidenced in writing (such as a written signed contract) as required for sale of property or land; the agents signature binds the principle

Question 27

agency by ratification

Answer 27

relationship is evidenced in writing…such as signed contract…required for sale of property or land…agent signature binds principle

Question 28

14 amendment

Answer 28

Brings most Bill of Rights to state level
provides that no state shall deprive a person of property, life, or liberty (freedom) without DUE PROCESS
Racial discrimination was a major target for this amendment
Brown vs Wade - ruled against segregation

Question 29

10 amendment

Answer 29

powers not delegated to the Federal US goverment designated by Constitution are reserved for the state

Question 30

5 amendment

Answer 30

Provides that the FEDERAL government cannot deprive a person from life, liberty, or property without DUE PROCESS

Question 31

2 Amendment

Answer 31

Right to bear Arms (carry guns)

Question 32

1 amendment

Answer 32

freedom of speech, religion, press, association

Question 33

Establishment Clause

Answer 33

Prohibits the Federal or state government from the establishment of a religion and the

Question 34

4 amendment

Answer 34

Freedom of privacy

prohibits unreasonable searches and seizures and provides that warrants shall be issued only upon probable cause

Question 35

Bill of Rights

Answer 35

Fist 10 amendments of constitution

first 8 amendments eal with individual liberties

Question 36

Dominate Commerce clause

Answer 36

grant of power to Congress under the commerce clause implies a negative converse that restricts states from passing laws the improperly discriminate against interstate commerce

Question 37

police powers

Answer 37

• State governments have general powers not specified in the constitution
• these general powers are sometime referred to as the police powers which include the power to protect the health, safety, welfare, and morals of state residents

Question 38

Commerce clause

Answer 38

• gives Congress the power to regulate commerce with other nations, with Indian tribes, and between states
• Source of federal authority and a restraint on state action

Question 39

US Constitution

Answer 39

• The US constitution gives the federal and state governments the power to regulate many business activities.
• It also provides that certain rights cannot be taken away from individuals and organizations
• Responsibility for regulating business at the federal level is allocated to 3 branches of government (also known as the separation of powers)
• Legislative (congress - House of Rep and Senate)
• Executive - President
• Judicial - US Supreme Court
• Constitution became effective in 1789
• First 10 amendment are called BILL OF RIGHTS