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Legal Envi. of Bus
FINAL EXAM (Chapters 17-23, 28) Chp 18
| Question | Answer |
|---|---|
| Essential characteristic is a partnership that does not treat all partners equally | Limited Partnership (LP) |
| The one running the enterprise is called this _____ partner, and takes on all the risk, | general partner |
| The one putting up the money is called the ______ partner, and no risk beyond is original investment | limited partner |
| Which partner does NOT face limited liability? General or Limited? | Limited |
| designate one or more “general partners” general partner is the manager of the partnership enterprise, also has unlimited liability for debts, torts etc. | Articles of Partnership |
| designate one or more “limited partners” who contribute capital and share in profits but do NOT have management authority and do not have unlimited liability | Articles of Partnership |
| What does the Articles of Partnership do? | Put the world on notice |
| adoption of partnership articles that spell out particulars, name general and limited partners, designate capital contribution of each | Formation of LP |
| unlimited liability for general partner—it is possible to name a corporation as a general partner, thus limiting the unlimited liability—liability for limited partner is limited to amount of capital contribution | Liability |
| general partners have all rights, all duties—limited partners have all rights except right to manage | Rights and Duties |
| if general partner leaves (_________), dies or becomes bankrupt, LP is ________ unless all limited partners agree and designate new general partner—limited partners may dissociate with proper notice or as provided in articles | Dissociates/ dissolves |
| used by professional groups such as law firms and accounting firms—allows liability of ALL partners to be limited to their contribution | Limited Liability Partnership (LLP) |
| ____ ______ _______ is a hybrid between the partnership and the corporation | Limited Liability Company (LLC) |
| --allows limited liability of all owners, like a corporation --allows tax consequences to pass through, like a partnership | Limited Liability Company |
| --defined by state law --created by a written agreement—articles of organization --creates a separate legal entity from the partners --not necessarily a taxable entity --Members get limited liability for debts and torts | Essentials of LLC |
| The people who set up an LLC are called: | Members |
| _____ LLC is formed by adoption of articles of organization—form and information required for articles of organization will be provided for in state law | LLC |
| -Limited liability of all members -Non-U.S. citizens can invest in an LLC | Advantages of LLC |
| Disadvantages of LLC | |
| all members participate in management, decisions made by majority | member managed |
| members designate managers, can be members or outsiders | manager managed |
| describes who will manage, how profits will be divided, transferability of interests, dissociation/dissolution issues, voting rights, meetings for memebers | Operating agreement |
| (one member leaving) may be permitted by operating agreement | Dissociation |
| (termination)—by majority vote of members, bankruptcy of LLC, other circumstances as described in operating agreement | Dissolution |
| Members owe fiduciary duty to ___, may also owe fiduciary duty to ____ ______. | LLC/ other members |
| _____ law may require operating agreement, may require it to be in writing—best practice is to have a written operating agreement | State |
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