BLAW 310 MAIN EXAMINATION 2026 SET QUESTIONS
AND ANSWERS GRADED A+
✔✔How is an LLC managed if it is not designated as manager-managed? - ✔✔It is a
member-managed LLC, where each member has equal rights in management.
✔✔What defines a manager-managed LLC? - ✔✔Members designate a manager to
manage the LLC, who can be a member or a non-member.
✔✔In a member-managed LLC, who has the authority to bind the LLC to contracts? -
✔✔All members have agency authority to bind the LLC to contracts.
✔✔What is the duty of loyalty for members of an LLC? - ✔✔Members must act honestly
in their dealings with the LLC.
✔✔What events can lead to the dissolution of an LLC? - ✔✔Dissolution can occur due
to events specified in the operating agreement, member consent, unlawful business
operations, court order, or expiration of the LLC's term.
✔✔What is the process of winding up an LLC? - ✔✔It involves liquidating the LLC's
assets and distributing proceeds to satisfy claims, first to creditors and then to
members.
✔✔What is a continuation agreement in an LLC? - ✔✔It provides for the continuation of
the LLC upon the withdrawal of a member or other specified event, often involving a
buyout.
✔✔What is required for the formation of an LLP? - ✔✔An LLP must file a statement of
qualification with the secretary of state.
✔✔What must the name of an LLP include? - ✔✔It must contain 'Registered Limited
Liability Partnership' or 'Limited Liability Partnership' or abbreviations like 'R.L.L.P.' or
'L.L.P.'
✔✔How are LLPs taxed? - ✔✔LLPs enjoy flow-through tax benefits, with no tax at the
partnership level; profits and losses are reported on individual partners' tax returns.
✔✔What rights do partners have in the management of an LLP? - ✔✔All partners have
an equal right to participate in the management of the LLP.
✔✔What is the liability of an LLP for wrongful acts? - ✔✔An LLP is liable for loss or
injury caused by a partner's wrongful act in the ordinary course of business.
, ✔✔What are the two main parties in a franchise arrangement? - ✔✔Franchisor
(licensor) grants the franchise, and franchisee (licensee) is granted the franchise.
✔✔What is a distributorship franchise? - ✔✔A franchise where the franchisor
manufactures a product and licenses the franchisee to distribute it.
✔✔What is a processing plant franchise? - ✔✔A franchise where the franchisor
provides a secret formula or process for the franchisee to manufacture and distribute a
product.
✔✔What is a chain-style franchise? - ✔✔A franchise where the franchisor licenses a
franchisee to sell products or services from a retail outlet in an exclusive territory.
✔✔What is included in a franchise agreement? - ✔✔It sets forth the terms and
conditions of the franchise and includes detailed information about the franchisee's
background.
✔✔What is the liability relationship between franchisors and franchisees? -
✔✔Franchisors and franchisees are separate legal entities; franchisees are liable for
their own contracts and torts.
✔✔What is licensing in a business context? - ✔✔An arrangement where the owner of
intellectual property permits another party to use that property.
✔✔What is copyright? - ✔✔A legal protection for original works, preventing
unauthorized dissemination or sale.
✔✔What is a corporation? - ✔✔A corporation is a legal entity that is separate and
distinct from its owners, with its own rights and obligations.
✔✔What are the major characteristics of a corporation? - ✔✔Major characteristics
include limited liability, continuity of existence, ability to raise capital, and the ability to
enter into contracts.
✔✔What is limited liability in the context of corporations? - ✔✔Limited liability means
that shareholders are not personally liable for the debts and liabilities of the corporation
beyond their investment in shares.
✔✔What is the process of incorporating a corporation? - ✔✔The process involves filing
articles of incorporation with the state, paying a fee, and complying with state laws and
regulations.
✔✔How is a corporation financed? - ✔✔A corporation is financed through equity
securities (stocks) and debt securities (bonds).
AND ANSWERS GRADED A+
✔✔How is an LLC managed if it is not designated as manager-managed? - ✔✔It is a
member-managed LLC, where each member has equal rights in management.
✔✔What defines a manager-managed LLC? - ✔✔Members designate a manager to
manage the LLC, who can be a member or a non-member.
✔✔In a member-managed LLC, who has the authority to bind the LLC to contracts? -
✔✔All members have agency authority to bind the LLC to contracts.
✔✔What is the duty of loyalty for members of an LLC? - ✔✔Members must act honestly
in their dealings with the LLC.
✔✔What events can lead to the dissolution of an LLC? - ✔✔Dissolution can occur due
to events specified in the operating agreement, member consent, unlawful business
operations, court order, or expiration of the LLC's term.
✔✔What is the process of winding up an LLC? - ✔✔It involves liquidating the LLC's
assets and distributing proceeds to satisfy claims, first to creditors and then to
members.
✔✔What is a continuation agreement in an LLC? - ✔✔It provides for the continuation of
the LLC upon the withdrawal of a member or other specified event, often involving a
buyout.
✔✔What is required for the formation of an LLP? - ✔✔An LLP must file a statement of
qualification with the secretary of state.
✔✔What must the name of an LLP include? - ✔✔It must contain 'Registered Limited
Liability Partnership' or 'Limited Liability Partnership' or abbreviations like 'R.L.L.P.' or
'L.L.P.'
✔✔How are LLPs taxed? - ✔✔LLPs enjoy flow-through tax benefits, with no tax at the
partnership level; profits and losses are reported on individual partners' tax returns.
✔✔What rights do partners have in the management of an LLP? - ✔✔All partners have
an equal right to participate in the management of the LLP.
✔✔What is the liability of an LLP for wrongful acts? - ✔✔An LLP is liable for loss or
injury caused by a partner's wrongful act in the ordinary course of business.
, ✔✔What are the two main parties in a franchise arrangement? - ✔✔Franchisor
(licensor) grants the franchise, and franchisee (licensee) is granted the franchise.
✔✔What is a distributorship franchise? - ✔✔A franchise where the franchisor
manufactures a product and licenses the franchisee to distribute it.
✔✔What is a processing plant franchise? - ✔✔A franchise where the franchisor
provides a secret formula or process for the franchisee to manufacture and distribute a
product.
✔✔What is a chain-style franchise? - ✔✔A franchise where the franchisor licenses a
franchisee to sell products or services from a retail outlet in an exclusive territory.
✔✔What is included in a franchise agreement? - ✔✔It sets forth the terms and
conditions of the franchise and includes detailed information about the franchisee's
background.
✔✔What is the liability relationship between franchisors and franchisees? -
✔✔Franchisors and franchisees are separate legal entities; franchisees are liable for
their own contracts and torts.
✔✔What is licensing in a business context? - ✔✔An arrangement where the owner of
intellectual property permits another party to use that property.
✔✔What is copyright? - ✔✔A legal protection for original works, preventing
unauthorized dissemination or sale.
✔✔What is a corporation? - ✔✔A corporation is a legal entity that is separate and
distinct from its owners, with its own rights and obligations.
✔✔What are the major characteristics of a corporation? - ✔✔Major characteristics
include limited liability, continuity of existence, ability to raise capital, and the ability to
enter into contracts.
✔✔What is limited liability in the context of corporations? - ✔✔Limited liability means
that shareholders are not personally liable for the debts and liabilities of the corporation
beyond their investment in shares.
✔✔What is the process of incorporating a corporation? - ✔✔The process involves filing
articles of incorporation with the state, paying a fee, and complying with state laws and
regulations.
✔✔How is a corporation financed? - ✔✔A corporation is financed through equity
securities (stocks) and debt securities (bonds).
