Question 1

Grape Vineyards LLC, the members of which include Howie and Ilya, can hold title to property because as a limited liability company the firm is

Accepted Answer

A limited liability company (LLC) is considered a legal person, meaning it can own property, enter into contracts, and conduct business in its own name, separate from its members.

Question 2

In a joint stock company, the shareholders are considered to be agents of one another, as the partners are in a partnership.

Accepted Answer

In a joint stock company, shareholders are not considered agents of one another; instead, the company itself is a separate legal entity responsible for its own actions.

Question 3

If the members of a limited liability company do not stipulate in their operating agreement how voting rights will be apportioned, in most states, only the member-managers will be entitled to vote.

Accepted Answer

In most states, if the members of a limited liability company do not stipulate in their operating agreement how voting rights will be apportioned, voting rights are typically apportioned according to the members' respective contributions to the company, not limited to member-managers.

Question 4

Like a partner in a partnership, the member of a limited liability company has the power to dissociate from the firm at any time, but may not have the right.

Accepted Answer

Members of a limited liability company (LLC) can choose to leave the LLC at any time, similar to partners in a partnership. However, whether they have the right to do so without facing potential legal or financial consequences depends on the terms outlined in the LLC's operating agreement or state laws governing LLCs.

Question 5

Like partners, unless otherwise agreed, joint venturers have an equal voice in controlling a venture-related project.

Accepted Answer

In a joint venture, unless the agreement specifies otherwise, all partners typically have an equal say in the control and management of the venture-related project, mirroring the default rule for partnerships where each partner has an equal voice in managing the affairs of the partnership.

Question 6

The beneficiaries of a business trust are personally liable for the trust's debts and obligations.

Accepted Answer

In a business trust, the beneficiaries are typically not personally liable for the trust's debts and obligations; instead, the trust entity itself holds the liability.

Question 7

Because the activities of a partnership are more limited than the business of a joint venture, the members of a joint venture are presumed to have more power to bind their co-venturers.

Accepted Answer

In a joint venture, the activities are typically more limited and specific compared to a partnership, which generally involves a broader and ongoing business relationship. Therefore, the presumption about the power to bind co-venturers does not necessarily hold based on the scope of activities.

Question 8

If a member of a limited liability company dissociates from the firm in violation of the operating agreement, the member can be held liable for any loss to the business resulting from the withdrawal.

Accepted Answer

Under many jurisdictions, if a member of a limited liability company (LLC) dissociates in violation of the operating agreement, they can indeed be held liable for damages or losses their departure causes to the business. This is because the operating agreement often outlines the conditions under which members can leave the LLC, and breaching these terms can lead to legal consequences.

Question 9

Among the states, the law governing limited liability companies is far from uniform because

Accepted Answer

State limited liability company statutes vary from state to state, leading to a lack of uniformity in the law governing limited liability companies.

Question 10

The operating agreement of a limited liability company cannot provide for the calculation of a buyout price on a member's dissociation because the event has not yet occurred.

Accepted Answer

An operating agreement of a limited liability company can indeed provide for the calculation of a buyout price on a member's dissociation, including specifying the method for determining the value of the member's interest in advance of any such event occurring. This is a common practice to ensure clarity and fairness in the event of a member's departure.

Question 11

The operating agreement of a limited liability company and a state's LLC statute can be applied together to determine the outcome of a dispute between the firm's members.

Accepted Answer

The operating agreement of a limited liability company (LLC) outlines the governance and operational guidelines agreed upon by its members, while the state's LLC statute provides the legal framework and default rules for LLCs. In the event of a dispute, both the specific provisions of the operating agreement and the applicable state laws are considered to resolve the issue, with the operating agreement typically taking precedence unless it conflicts with mandatory state law provisions.

Question 12

In most situations, with respect to a limited liability company's debts, the firm's members are shielded from

Accepted Answer

The answer of In most situations, with respect to a...

Question 13

A syndicate may be organized as a corporation or a partnership, or in some situations as no recognizable form of business organization.

Accepted Answer

A syndicate can be organized in various forms including as a corporation, a partnership, or even an informal and temporary arrangement without a formal business structure, depending on the goals and needs of the participants.

Question 14

A cooperative can be incorporated.

Accepted Answer

A cooperative can be incorporated under state laws, which allows it to be recognized as a legal entity separate from its members, capable of owning property, entering into contracts, and being sued.

Question 15

If a joint venturer secretly profits from a project that was supposed to be a venture-related deal, the other joint venturers may be awarded damages for the breach of loyalty.

Accepted Answer

In a joint venture, all parties owe each other a duty of loyalty, which includes not secretly profiting at the expense of the venture or the other venturers. Breaching this duty can lead to damages being awarded to the aggrieved parties.

Question 16

When a limited liability company is dissolved, the members may preserve the assets for a reasonable time to optimize their return during the winding up process.

Accepted Answer

During the winding-up process of a limited liability company, members are allowed to preserve the assets for a reasonable time to ensure they can optimize their return, which involves settling debts, liquidating assets, and distributing the remaining assets to members according to their ownership interests.

Question 17

If a member of a limited liability company dissociates from the firm, the other members can continue the firm's business, and the dissociated member can continue to act as an agent for the firm.

Accepted Answer

Upon dissociation, a member loses the ability to act as an agent for the LLC and cannot bind the LLC in business dealings or transactions.

Question 18

Ensure Care LLC's owners are Fez and Guan. As a limited liability company, Ensure Care enters into contracts

Accepted Answer

Limited liability companies (LLCs) like Ensure Care LLC can enter into contracts as a separate legal entity, distinct from their owners. This means the company itself, rather than the owners personally, is party to the contracts.

Question 19

If a limited liability company is not meeting the economic purpose for which it was established, a court may order the dissolution of the firm.

Accepted Answer

Courts can order the dissolution of a limited liability company (LLC) if it is not meeting its economic purpose or if it is deemed necessary for the protection of the rights and interests of the members, among other reasons.

Question 20

A business organizational form that limits its owners' liability allows the firm to lawfully

Accepted Answer

Limiting owners' liability in a business organizational form, such as a corporation or limited liability company (LLC), allows the firm to take risks without exposing the owners to personal financial loss beyond their investment in the company. This does not legally permit the business to act recklessly or engage in misconduct.

Quiz 36: Limited Liability Companies and Special Business Forms