BUSINESS ORGANIZATIONS LUPPINO
PROGRESS TESTS 1 & 2
v(T/F) The term "vicarious liability" means that a person is liable for damages caused by their own
wrongdoing. - False
(T/F) Under general principles of agency law, both the principal and the agent have the power to
unilaterally terminate the agency relationship. - True
(T/F) The most important factor in determining if an agent had apparent authority to bind the principal
to a particular contract with a third party is whether or not the agent expressly told the third party that
the agent had such authority. - False
(T/F) The determination of whether a worker hired by a principal is an "employee" or an "independent
contractor" of the principal is important with respect to liability, tax, and employment law issues. - True
(T/F) By definition, a "partner by estoppel" is treated as a "partner in fact" for purposes of determining
the rights and obligations among partners. - False, (See RSMO 358.160)
(T/F) Under the Missouri partnership statutes a regular/general partnership is formed when a certificate
of partnership agreement is filed with the Missouri Secretary of State. - False, No filing is required in
Missouri
(T/F) Every partner in a Missouri limited liability limited partnership (LLLP) is by statute an agent of the
partnership for purposes of its business and affairs. - False, only general partners but not limited
partners
(T/F) In terms of apparent authority by statute, the situation of a member in in a member-managed
Missouri limited liability company (LLC) is essentially the same as that of a limited partner in a Missouri
limited partnership. - False, Members in a Missouri member-managed LLC are by statute agents with
apparent authority (RSMO 347.065), but limited partners in a Missouri limited partnership are not by
statute agents for the partnership under RSMO Chapter 359.
(T/F) Under "default rules" in the Missouri partnership statutes, the partners in a limited liability
partnership (LLP) have equal rights to participate in the management and conduct of the partnership's
business. - True, (See RSMO 358.180)
(T/F) Cases studied so far in this course indicate that an agreement to share the burden of losses from a
business is a weighty factor in determining if there is general/regular partnership between two persons
under Missouri law. - True, See Hillme and H2O cases
(T/F) A Missouri limited liability company (LLC) must indicate in its articles of organization whether it is
member-managed or manager-managed. - True, (See RSMO 347.039)
(T/F) A Missouri general business corporation is formed by filing its articles of incorporation with the
Missouri Secretary of State. - True
, (T/F) Under the Missouri LLC Act, the default rule is that members share cumulative net profits equally. -
True, (See RSMO 347.111)
(T/F) Using the "de jure corporation" standard as a bright line test to resolve a promoter liability claim
was rejected in the Robertson v. Levy (record store) case. - False, the court in that case applauded and
applied the "de jure" standard.
(T/F) The statutory liability shield for members in a Missouri limited liability partnership is lost if the LLP's
registration is not renewed annually. - True, (See RSMO 358.440)
(T/F) Veil piercing is unique to corporations and does not apply to any other types of business
organizations studied in this course. - False, we also discussed its application to LLCs
(T/F) In Kessler v. Antinora (joint venture to build and sell a house) the appellate court held that the
service partner (Antinora) was not personally liable to pay for a share of the venture's losses because the
partners had failed to reach an agreement on how to share partnership profits. - False, While the court
did conclude that Antinora was not personally liable to pay for a share of those losses, it was because the
court interpreted the overall agreement to provide that Kessler could recover his capital invested only
out of proceeds of the house sale, and not by requiring Antinora to contribute cash.
(T/F) The default rule on the assignment of member's ownership interest in a Missouri LLC is that the
assignee automatically becomes a member in the LLC. - False, (See RSMO 347.115 and 347.113)
(T/F) A "charging order" is a way for a partner or member to make their capital contributions to an
unincorporated entity in installment payments. - False, A charging order is in the nature of a lien on the
ownership interest of the partner or member in the partnership or LLC that gives rights to a creditor of
that partner or member to have distributions in respect of such ownership interest paid to such creditor
to apply to their claim against the partner or member. See RSMO 358.280, 359.421, and 347.119.
(T/F) It is possible that a court would enforce a reasonable share transfer restriction on stock issued by a
corporation even though the restriction is not conspicuously referenced on the face of the stock
certificates. - True, In lieu of such conspicuous reference, the party looking to enforce the restriction can
prove that the party they are trying to enforce it against had "actual knowledge" of the restriction. See
Ling v. Trinity Savings and Loan case.
Assuming that limiting their personal liability for a business organization's obligations is the most
important choice of entity consideration for a person looking to own an equity interest in the
organization, which of the following would, solely from that liability minimization perspective, be the
LEAST attractive type of business organization?
a. A registered Missouri limited liability partnership.
b. A Missouri manager-managed limited liability company, in which the person is a member and one of
the managers.
c. A Missouri general business corporation.
PROGRESS TESTS 1 & 2
v(T/F) The term "vicarious liability" means that a person is liable for damages caused by their own
wrongdoing. - False
(T/F) Under general principles of agency law, both the principal and the agent have the power to
unilaterally terminate the agency relationship. - True
(T/F) The most important factor in determining if an agent had apparent authority to bind the principal
to a particular contract with a third party is whether or not the agent expressly told the third party that
the agent had such authority. - False
(T/F) The determination of whether a worker hired by a principal is an "employee" or an "independent
contractor" of the principal is important with respect to liability, tax, and employment law issues. - True
(T/F) By definition, a "partner by estoppel" is treated as a "partner in fact" for purposes of determining
the rights and obligations among partners. - False, (See RSMO 358.160)
(T/F) Under the Missouri partnership statutes a regular/general partnership is formed when a certificate
of partnership agreement is filed with the Missouri Secretary of State. - False, No filing is required in
Missouri
(T/F) Every partner in a Missouri limited liability limited partnership (LLLP) is by statute an agent of the
partnership for purposes of its business and affairs. - False, only general partners but not limited
partners
(T/F) In terms of apparent authority by statute, the situation of a member in in a member-managed
Missouri limited liability company (LLC) is essentially the same as that of a limited partner in a Missouri
limited partnership. - False, Members in a Missouri member-managed LLC are by statute agents with
apparent authority (RSMO 347.065), but limited partners in a Missouri limited partnership are not by
statute agents for the partnership under RSMO Chapter 359.
(T/F) Under "default rules" in the Missouri partnership statutes, the partners in a limited liability
partnership (LLP) have equal rights to participate in the management and conduct of the partnership's
business. - True, (See RSMO 358.180)
(T/F) Cases studied so far in this course indicate that an agreement to share the burden of losses from a
business is a weighty factor in determining if there is general/regular partnership between two persons
under Missouri law. - True, See Hillme and H2O cases
(T/F) A Missouri limited liability company (LLC) must indicate in its articles of organization whether it is
member-managed or manager-managed. - True, (See RSMO 347.039)
(T/F) A Missouri general business corporation is formed by filing its articles of incorporation with the
Missouri Secretary of State. - True
, (T/F) Under the Missouri LLC Act, the default rule is that members share cumulative net profits equally. -
True, (See RSMO 347.111)
(T/F) Using the "de jure corporation" standard as a bright line test to resolve a promoter liability claim
was rejected in the Robertson v. Levy (record store) case. - False, the court in that case applauded and
applied the "de jure" standard.
(T/F) The statutory liability shield for members in a Missouri limited liability partnership is lost if the LLP's
registration is not renewed annually. - True, (See RSMO 358.440)
(T/F) Veil piercing is unique to corporations and does not apply to any other types of business
organizations studied in this course. - False, we also discussed its application to LLCs
(T/F) In Kessler v. Antinora (joint venture to build and sell a house) the appellate court held that the
service partner (Antinora) was not personally liable to pay for a share of the venture's losses because the
partners had failed to reach an agreement on how to share partnership profits. - False, While the court
did conclude that Antinora was not personally liable to pay for a share of those losses, it was because the
court interpreted the overall agreement to provide that Kessler could recover his capital invested only
out of proceeds of the house sale, and not by requiring Antinora to contribute cash.
(T/F) The default rule on the assignment of member's ownership interest in a Missouri LLC is that the
assignee automatically becomes a member in the LLC. - False, (See RSMO 347.115 and 347.113)
(T/F) A "charging order" is a way for a partner or member to make their capital contributions to an
unincorporated entity in installment payments. - False, A charging order is in the nature of a lien on the
ownership interest of the partner or member in the partnership or LLC that gives rights to a creditor of
that partner or member to have distributions in respect of such ownership interest paid to such creditor
to apply to their claim against the partner or member. See RSMO 358.280, 359.421, and 347.119.
(T/F) It is possible that a court would enforce a reasonable share transfer restriction on stock issued by a
corporation even though the restriction is not conspicuously referenced on the face of the stock
certificates. - True, In lieu of such conspicuous reference, the party looking to enforce the restriction can
prove that the party they are trying to enforce it against had "actual knowledge" of the restriction. See
Ling v. Trinity Savings and Loan case.
Assuming that limiting their personal liability for a business organization's obligations is the most
important choice of entity consideration for a person looking to own an equity interest in the
organization, which of the following would, solely from that liability minimization perspective, be the
LEAST attractive type of business organization?
a. A registered Missouri limited liability partnership.
b. A Missouri manager-managed limited liability company, in which the person is a member and one of
the managers.
c. A Missouri general business corporation.
