Q&A Hero

Q: Newt is considering forms of business organization for Newton Design, an ar­chitectural firm. An advantage of a limited liability partnership is that partners can avoid personal liability for a. their own wrongful acts. b. only other partner' malpractice. c. only partnership obligations that exceed capital contributions. d. only partnership obligations that fall within capital contributions.

Q: Ace Earth Movers, Inc., uses dynamite to prepare land for highway projects. Strict liability is imposed on this activity because a. Ace is a corporation. b. the activity is inherently negligent. c. the activity is of a dangerous nature. d. the government pays for highway construction.

Q: Build-Rite Construction Corporation and Deals-R-Us, Inc., combine their efforts to build an office and retail complex. Their form of business organization is a. a business trust. b. a joint stock company. c. a joint venture. d. a syndicate.

Q: Flip is a member of Great States Trucking LLC. Flip's relationship to Great States ends, but the firm continues to do business. This is a. dissociation. b. dissolution. c. winding up. d. wrongful.

Q: Kelly, Lars, and Mona agree to be partners in Neighborhood Delivery Service (NDS), splitting the profits equally. Kelly contributes 67 percent of the capital. When NDS is dissolved, its liabilities are greater than its assets. The losses are paid by a. all of the partners in proportion to their capital contributions. b. all of the partners in proportion to their shares of the profits. c. Kelly because she contributed most of the capital. d. Lars and Mona because they contributed the least of the capital.

Q: In an emergency situation, Lori renders aid to Mike, who needs help. Mike would most likely be prohibited from suing Lori for negligence under a. any circumstances. b. a Good Samaritan statute. c. a social host statute. d. no circumstances.

Q: An Iowa state statute requires amusement parks to maintain equipment in specific condition for the protection of patrons. Jack's Fun Park fails to maintain its equipment. Kay, a patron, is injured. Jack's has committed a. a dram shop act. b. contributory negligence. c. negligence per se. d. res ipsa loquitur.

Q: Cookie Kiosk LLC's members and managers are Dwight, Emma, and Fawn. After Dwight's relationship to Cookie Kiosk ends, Emma and Fawn agree to discontinue the firm's business. This is most likely a. advisable. b. optional. c. required. d. wrongful.

Q: Mead, Nero, and Olen do business as Pipe & Plumbing Services. After Mead's relationship to the firm ends, Nero and Olen agree to discontinue the business. This is a. dissociation. b. dissolution. c. gross negligence. d. simple misconduct.

Q: Jim and Kyle are partners in J&K Sales, which exports technical equip­ment under a three-year partnership agreement. The U.S. gov­ernment declares that the equipment can no longer be ex­ported. J&K a. dissolves as soon as the stated term expires. b. dissolves as soon as the partners agree to dissolve it. c. dissolves immediately unless the partners change its business. d. does not dissolve.

Q: Beth is injured in a car accident and sues Carl, alleging negligence. Carl claims that Beth was driving more carelessly than he was. Comparative negligence may reduce Beth's recovery a. even if Beth was only slightly at fault. b. only if Beth was as equally at fault as Carl. c. only if Beth was less at fault than Carl. d. only if Beth was more at fault than Carl.

Q: Waste Management Services, LLC, is a member-managed limited liability company. If the law in Waste's state is like the law in most states, unless the members have agreed otherwise, voting rights are apportioned according to a. capital contributions. b. participation in management. c. seniority. d. transactions with the firm.

Q: Will enters the Xtreme Decathlon, an athletic competition. Regarding the risk of injury, Will assumes a. all of the risks associated with the event. b. only the risks different from those normally associated with the event. c. only the risks greater than those normally associated with the event. d. only the risks normally associated with the event.

Q: Edgar, Jon and Phoebe do business as Reliable Movers. Phoebe develops a debilitating illness and can no longer work. Phoebe a. may dissociate from the partnership. b. may not dissociate from the partnership without Edgar and Jon's consent. c. must pay damages to Edgar and Jon for the loss of her work. d. may terminate the partnership.

Q: Kristal is a member of Laboratory CSI Services, LLC, a limited liability company. Kristal can participate in the firm's management a. only to the extent that she assumes liability for the firm's debts. b. only to the extent of her investment in the firm. c. to any extent. d. to no extent.

Q: Doral, Esteban, and Fiona are general partners in Centreville Dentistry, a dental clinic. Their agreement states it is a breach of the agreement for any partner to assign his or her interest to a creditor without the consent of the other partners. Doral's assignment of his interest in the clinic to Hometown Lenders results in a. nothing with respect to Doral or the clinic. b. the automatic termination of the clinic's legal existence. c. Doral's liability for all of the clinic's debts. d. Doral's wrongful dissociation and liability for any damages.

Q: Paula enters Qualifying Triathlon, an athletic competition. Regarding the risk of injury, Paula assumes those risks a. normally associated with this event. b. greater than the risks normally associated with this event. c. different from the risks normally associated with this event. d. attributable to the event in any way.

Q: CPA Accounting, LLC, is a limited liability company. If the law in CPA's state is like the law in most states, unless the members have agreed other­wise, participants in the firm's management will be considered to include a. all members. b. no member. c. one member. d. two members, including at least one general partner.

Q: In Case 7.2, Palsgraf v. Long Island Railroad Co., the court decided that the railroad employee's conduct was not wrong in relation to Palsgraf but did not decide whether the conduct was negligent toward the man with the package (that led to Palsgraf's injury). If the court determined that the railroad employee was negligent with regard to the man with the package, would the railroad have been liable for the injury to Palsgraf? a. Yes, because negligence to one party creates negligence to all other parties injured as a result. b. No, because Palsgraf's injury was still not foreseeable. c. Yes, because of the doctrine of assumption of risk. d. No, because Palsgraf was also negligent.

Q: Clu, Dolf, and Elton do business as Fertile Valley Farm. Clu's relationship to the firm ends, but it continues to do business. This is a. dissociation. b. dissolution. c. winding up. d. wrongful.

Q: Serious Gamers, LLC, is a limited liability company. Among the mem­bers, a dispute arises that their operating agreement does not cover. No statute applies. The dispute is governed by the principles of a. corporate law. b. partnership law. c. sole proprietorship law. d. syndicate law.

Q: Fact Pattern 27-1Brad, Carlos, and Dora are general partners in Eastside Physicians, a medical clinic.Refer to Fact Pattern 27-1. The partners decide to dissolve Eastside. Dora collects and distributes the firm's assets. This results ina. nothing with respect to the firm's existence.b. the continuation of the firm's business.c. the termination of the firm's legal existence.d. the temporary suspension of the firm's business.

Q: Ralph, a van driver for Standard Delivery Company, causes a multi-vehicle accident on a city street. Ralph and Standard are liable to a. all those who were injured. b. only those who were uninsured. c. only those whose injuries could have been reasonably foreseen. d. only those whose vehicles were closest to Rod's van.

Q: QuizBooks LLC is a limited liability company. Like any other LLC, unless QuizBooks chooses otherwise, the firm will be taxed as a. a corporation. b. a joint venture. c. a partnership. d. a sole proprietorship.

Q: China Bank is a foreign entitya firm owned and operated by investors in a foreign country. With respect to an LLC in the United States, China Bank can a. act as a creditor, but cannot otherwise invest or participate. b. become a member. c. not become a member, but can participate in its operations. d. not become a member or otherwise participate in its operations.

Q: Fact Pattern 27-1Brad, Carlos, and Dora are general partners in Eastside Physicians, a medical clinic.Refer to Fact Pattern 27-1. Brad's dissociation from the firm results ina. the automatic termination of the firm's legal existence.b. the partnership's buyout of Brad's interest in the firm.c. the immediate maturity of all partnership debts.d. the temporary suspension of the partnership's business.

Q: Fact Pattern 27-1Brad, Carlos, and Dora are general partners in Eastside Physicians, a medical clinic.Refer to Fact Pattern 27-1. Brad, Carlos, and Dora decide to admit Faisal as a new partner in Eastside Physicians. Faisal's liability for partnership debts incurred before his admission isa. limited to his capital contribution to the firm.b. limited to his personal assets.c. nothing.d. unlimited.

Q: Kay carelessly bumps into Lyle, knocking him to the ground. Kay has committed the tort of negligence a. only if Lyle is injured. b. only if Lyle is not injured. c. under any circumstances. d. under no circumstances.

Q: Energy Resources, LLC, is a limited liability company. Rather than dis­tribute its profits to its members, Energy wants to reinvest the profits in its business. For this reason, Energy may prefer to be taxed as a. a corporation. b. a partnership. c. a sole proprietorship. d. a syndicate.

Q: Driving his sport utility vehicle negligently, Bart crashes into a streetlight. The streetlight falls, smashing through the roof of a house, killing Chris. But for Bart's negligence, Chris would not have died. Regarding the death, the crash is the a. cause in fact. b intervening cause. c. proximate cause. d. superseding cause.

Q: Fay is admitted to Global Associates, an existing partnership. A partnership debt incurred before the date of her admission comes due. Fay is a. not liable for the debt. b. only liable for the debt up to the amount of his capital contribution. c. personally liable only to the extent the other partners do not pay. d. personally liable to the full extent of the debt.

Q: Jay is a member of Kappa, LLC, a limited liability company. Jay is liable for Kappa's debts a. in proportion to the total number of members. b. to the extent of his capital contribution. c. to the extent that the other members do not pay the debts. d. to the full extent.

Q: John sees that Kris is about to step into the path of an oncoming bus. If John does not warn Kris of the danger, John is liable a. only if Kris is injured. b. only if Kris is not injured. c. regardless of the consequences to Kris. d. under no circumstances.

Q: Nick sees Opal, a stranger, in peril, but does not attempt to rescue her. Opal could successfully sue Nick for a. negligence per se. b nothing. c. a violation of the "danger invites" rescue doctrine. d. a violation of a Good Samaritan statute.

Q: Tundi is a partner in YooHoo! Amusement, a new partnership. A YooHoo! debt comes due. Tundi is a. not liable for the debt. b. only liable for the debt up to the amount of his capital contribution. c. personally liable only to the extent the other partners do not pay. d. personally liable to the full extent of the debt.

Q: Mit-E Mart LLC was formed in New Jersey. Mit-E Mart's members are Odel, who is a citizen of New Jersey, and Pola, who is a citizen of New York. For federal diversity jurisdictional purposes, Mit-E is a citizen of a. all states. b. New Jersey and New York. c. New Jersey only. d. no state.

Q: Corbin, a partner in Doctors Medical Clinic, applies for a loan with Evermore Bank allegedly on Doctor' behalf but without the authorization of the other partners. Evermore knows that Corbin is not authorized to take out the loan. Corbin defaults on the loan. Liability for its unpaid amount is imposed on a. Corbin and Doctors, jointly. b. Corbin only. c. Doctors only. d. Evermore only.

Q: Sam, an engineer, supervises the construction of a new bridge. When the bridge collapses due to faulty construction, Sam is sued by those injured in the collapse. As a professional, Sam is held to the same standard of care as a. ordinary persons. b. other engineers. c. other professionals, including doctors, dentists, and lawyers. d. those injured in the collapse of the bridge.

Q: Location! Realty LLC is a limited liability company. Like other LLCs, for federal jurisdictional purposes, Location! Realty is most likely a citizen of a. all states. b. every state in which its members are citizens. c. no state. d. only the state in which it was formed.

Q: Mabel and Nicol do business as One World Realty. In acting on the firm's behalf in a deal with Property Acquisition Company, Mabel fails to account for the profit. To her firm, Mabel is a. liable for breach of the duty of care. b. liable for breach of the duty of economic sense. c. liable for breach of the duty of loyalty. d. not liable.

Q: Lola files a suit against Mac, a medical doctor, alleging negligence. As a physician, Mac is held to the standard of a. an average human being. b. a reasonable person. c. a reasonable physician. b a typical professional.

Q: Dani is considering forms of business organization for her financial advisory firm. Like most states, Dani's state requires that to form a limited liabil­ity company, she must file with a central state agency a. articles of certification. b. articles of formation. c. articles of organization. d. no specific documents.

Q: Greta is a member of Hovercraft LLC. As a member, Greta is a. a manager or officer, but not an owner. b. an investor, but not a manager, officer, or owner. c. an owner. d. a participant, but not an investor, manager, officer, or owner.

Q: Ryder and Sergei are partners in Timberline Gear, which sells mountain- and rock-climbing equipment. Ryder manages the business. Unless the partnership agreement states otherwise, Ryder is a. entitled to compensation in proportion to his effect on the business. b. entitled to compensation in proportion to his effort. c. entitled to compensation in proportion to his capital contribution. d. not entitled to compensation.

Q: Eve, an architect, hires Frank, an accountant, to handle her accounts. Dissatisfied with Frank's work, Eve sues him, alleging negligence. Frank may successfully defend against the suit by proving that he a. did not injure Eve in any way. b. does not know every principle of accounting. c. performed as well as an ordinary person could have. d. performed as well as Eve could have.

Q: Cody is a partner in Delta Accounting Service. Cody can inspect a. all of Delta's books and records. b. Delta's books and records only as the firm's management permits. c. Delta's books and records only for a reasonable purpose. d. Delta's books and records relating to Cody's capital contribution only.

Q: When reaching for a bottle of lemonade from a display of lemonade bottles inside a Target store, Russell slipped and fell on the floor where a very small puddle of lemonade had spilled next to the display. In the fall, Russell broke his ankle and leg and required months of treatment for his injuries. None of the Target store employees were aware of the lemonade on the floor before Russell slipped on it. Based on the court's reasoning in Case 7.1, Martin v. Wal-Mart Stores, Inc., if Russell sues Target for damages, he will most likely a. win, because it was foreseeable that some of the lemonade from the display would end up on the floor. b. win, because the thing speaks for itself c. lose, because Target cannot be held liable for a hazard if its employees were not aware of it. d. lose, because he should have been more careful.

Q: Bee Hive Honey, LLC's members include Chad. For purposes of suing and being sued, Bee Hive Honey is a. an aggregate of Chad and the other members. b. a natural person in the members' "family." c. a legal entity apart from the owners. d. a non-participating third party.

Q: Sweet Selections is a general partnership that sells candy, cards and flowers. Sweet Selections has ten partners. Jill and Amy each have a 25 percent interest in the partnership. All the other members have a 10 percent interest. To pass a management decision a. a majority of the partners must agree to the decision. b. both Jill and Amy must agree to the decision. c. Jill or Amy must agree to the decision. d. 30 percent of the partners must agree to the decision.

Q: Multiple Dwellings Corporation (MDC) owns an apartment building. MDC must use reasonable care to ensure that its tenants are not injured a. anywhere on the premises. b. in common areas. c. inside each occupied apartment only. d. inside each vacant apartment only.

Q: High Pointe LLC's members include Irvin. For purposes of holding title to property, High Pointe is a. an aggregate of Irvin and the other members. b. a natural person in the members' "family." c. a legal entity apart from the owners. d. a non-participating third party.

Q: Fay is a member of Garden Groves LLC. Like other members of limited liability companies, Fay's liability for Garden Groves's obligations resembles the liability of a. a member of a joint venture. b. an owner of a sole proprietorship. c. a partner of a partnership. d. a shareholder of a corporation.

Q: Tom and Bill are partners in Tough Trucks Towing. James is not a partner. In dealing with Fred, James holds himself out to be a partner in Tough Trucks Towing and Fred contracts to have Tough Trucks Towing tow some vehicles for him. If Tough Trucks fails to tow the vehicles, a court may conclude that a. a partnership by estoppel exists and James is liable to Fred. b. no partnership exists and James is not liable to Fred. c. a partnership by estoppel exists and Fred has all partnership rights. d. no partnership exists, but Tom and Bill are liable to Fred.

Q: Parker and Oscar sign a partnership agreement to do business as "Parker's Plumbing" without specifying a duration. This partnership is terminable a. at any time by either partner. b. only after a reasonable term. c. only if Parker dissociates from the firm. d. only if Oscar dissociates from the firm.

Q: RP Properties, Inc., owns an apartment building. RP must use reasonable care to ensure that the tenants are not injured a. in a common stairway. b. inside each occupied apartment. c. inside each vacant apartment. d. within any part of the property.

Q: A business trust is created by a written trust agreement.

Q: Jay drops a bowling ball on Kyla's foot. Jay is liable for negligence if he acted a. unrealistically. b unreasonably. c. unrecognizably. d. unreliably.

Q: Hollister and Gladys do business as partners in Frothy Confections. For federal income tax purposes, Frothy Confections would be treated as a. a pass-through entity. b. a natural person. c. a tax-paying entity. d. a partnership by estoppel.

Q: The owners of an unincorporated cooperative have joint liability for its obligations.

Q: Sable and Rex agree while talking on the phone to form a partner­ship to deal in transfers of real property. Their partnership agreement is legally binding a. only if a copy of the agreement is filed in the appropriate state office. b. only if the agreement is reduced to writing. c. only if the parties exchange valid consideration. d. without more.

Q: A person who keeps a wild animal is always strictly liable for any harm that the animal inflicts.

Q: Like a corporation, the ownership of a joint stock company is represented by shares of stock.

Q: The doctrine of strict liability applies only to abnormally dangerous activities.

Q: Denise and Elke do business as Final Curtain Decorators. In most states, for purposes of holding title to property, this partnership would be treated as a. an aggregate of the individual partners. b. a natural person. c. an entity. d. a non-existent party.

Q: The beneficiaries of a business trust are personally liable for its obligations.

Q: A syndicate may be organized as a corporation but not as a partnership.

Q: Bo and Clancy decide to do business as Marketing & Promotion Services. To be a partnership, this association can result from an agreement that is a. express, but not from an agreement that is implied. b. implied, but not from an agreement that is express. c. oral, written, or implied by conduct. d. written, but not from an agreement that is oral or implied.

Q: One of the requirements for a suit based on strict liability is a failure to exercise due care.

Q: The owners of an incorporated cooperative are personally liable for its obligations.

Q: Under the doctrine of strict liability, a defendant is liable for the results of his or her acts only if he or she intended those results.

Q: Kathy and John decide to form a partnership to sell fish food to local fish farms for the next five years. To be enforceable under the Statute of Frauds, the partnership agreement a. must be signed by a notary public. b. must be in writing. c. must be oral. d. cannot involve a third party.

Q: Will and Jay form Northwest Air Express, a general partnership. The essential elements of this partnership do not include a. a sharing of profits and losses. b. a joint ownership of the business. c. an equal right to management in the business. d. goodwill.

Q: In some states, business trusts pay corporate taxes.

Q: The extreme risk of an activity is a primary basis for imposing strict liability.

Q: Under a dram shop act or a social host statute, liability can be imposed without proof of negligence.

Q: Noah and Orin do business as Personnel Partners. In most states, for purposes of suing and being sued, Personnel Partners would be treated as a. an aggregate of the individual partners. b. a natural person. c. an entity. d. a non-existent party.

Q: The owners of a joint stock company are personally liable for its obligations.

Q: The doctrine of res ipsa loquitur applies if an event causing harm does not normally occur in the absence of negligence.

Q: Ben, who runs a livestock breeding business, owes the Circle C Ranch $40,000. Ben agrees to pay the Circle C a percentage of his profits each month until the debt is paid. Because of this agreement, the Circle C is a. Ben's creditor and partner. b. Ben's creditor only. c. Ben's partner only. d. neither Ben's creditor nor his partner.

Q: A group of individuals getting together to finance a particular project may form a syndicate.