LEGL 2700 FINAL EXAM UGA
(HACKLEMAN) 2024 WITH 100%
ACCURATE ANSWERS
3 types of partnerships - correct answers1. General
2. Limited
3. Limited Liability
Closely Held Organizations - correct answerssmall group of people (like family owned)
Publicly Held Organization - correct answersA corporation that may have thousands of stockholders and
whose stock is regularly traded on a national securities exchange.
basic forms of business organizations - correct answers1. Sole Proprietorship
2. Partnership
3. Corporation
partnership examples - correct answers-2 doctors, general partners in same practice, case brought
against 1 doctor for negligence, both liable
-father and son both grow potatoes, own their own equipment/ land, once harvested they advertise
together with both names, a loss arises, both liable
hybrid forms of business organizations - correct answers-limited partnerships
-s corporations
-limited liability companies
,-limited liability partnerships
factors to consider when picking a business' organization form - correct answers1) cost of creation (time,
paperwork, money)
2) continuity of the organization (stability/ durability of business and impact of disillusion)
3) managerial control of decision (who manages the business)
4) owner liability (how personally liable is the owner of the business)
5) taxation (single/ double taxed)
Sole Proprietorship - correct answers-business owned and operated by one person
-least expensive business organization
-continuity is tied directly to will of owner
-owner is in total control of the business' goals & operations
-no formal documentation necessary
-owner has unlimited liability for the obligations of the business organization
-not taxed as an organization (person is taxed)
-ownership (legal entity of sole proprietorship) can't be transferred
Example of sole proprietor - correct answerswriter, painter, vendor at farmers market
partnerships - correct answers-agreement between 2 or more persons to share a common interest in a
commercial endeavor
-cost to form is minimal
-strongly recommended to get a legal partnership agreement
-state assumed name statute is necessary if names aren't included in company name
-may need to dissolve partnership before adding a new person unless you have the buy out clause
-unlimited liability (jointly and unseverably liable)
-not a taxable organization
,corporations - correct answers-artificial and intangible entity created under the authority of a state's law
-more expensive to form than sole prop/ partnership
-have their own personal taxation rate
types of corporations - correct answers-domestic (located in original state it was formed in)
-foreign (located in a state outside of it's originated state)
-alien (relocated from a different country)
articles of incorporation - correct answersa written legal document that defines ownership and
operating procedures and conditions for the business
-includes business name, purpose of business, intended timespan, information about initial owners, etc.
Deleware - correct answers-tons of corporations started here
-Delaware court of chancery (most prestigious business court in America)
-stable legal system
Tamika R. Montgomery-Reeves - correct answers-from UGA
-first African American and second woman to serve on Delaware Chancery
-first African American on Delaware Supreme Court
fiduciary duty - correct answersA legal obligation of one party to act in the best interest of another.
proxy - correct answersAgent, substitute, person authorized to act on behalf of another
corporate managerial control flow chart - correct answersShareholders -> board of directors -> officers -
> employees
-board of directors are elected
-officers and employees are hired
, derivative suit - correct answersa minority shareholder who believes a majority shareholder has acted in
his/ her personal interest to the detriment of the corporation may bring a derivative suit against the
majority shareholder on behalf of the company
is limited personal liability guaranteed? - correct answersNO!
piercing the corporate veil - correct answersAn action in which a court disregards the corporate entity
and holds the shareholders personally liable for corporate debts and obligations.
Alli v. US (2008) - correct answers-formed B.S.A Corp., they bought apartments, went into agreement
with Hud, Hud stopped paying housing assistance (written in contract), Alli sues
-court found that B.S.A breached contract and awarded damages to Hud
-court allows piercing of the corporate veil... now Alli's are held personally liable
double taxation - correct answersa corporation pays income taxes on its earnings, and when dividends
are distributed to stockholders, the stockholders pay taxes a second time on the corporate dividends
they receive
501(c)(3) organization - correct answers-nonprofit corporation exempt from federal income tax
-when a company donates to one of these they can deduct their contribution from their taces
limited partnership - correct answers-A partnership with one or more general partners and one or more
limited partners
-includes all attributes of a partnership
-continuity is the same as usual with general partners; with limited partnership you don't have to
dissolve with adding/ removing people
-general partners are in control; limited partners need to stay silent
-general partners have total liability; limited partners are liable
Limited vs. General Partnership - correct answerslimited: not responsible for debts of the business
organization
(HACKLEMAN) 2024 WITH 100%
ACCURATE ANSWERS
3 types of partnerships - correct answers1. General
2. Limited
3. Limited Liability
Closely Held Organizations - correct answerssmall group of people (like family owned)
Publicly Held Organization - correct answersA corporation that may have thousands of stockholders and
whose stock is regularly traded on a national securities exchange.
basic forms of business organizations - correct answers1. Sole Proprietorship
2. Partnership
3. Corporation
partnership examples - correct answers-2 doctors, general partners in same practice, case brought
against 1 doctor for negligence, both liable
-father and son both grow potatoes, own their own equipment/ land, once harvested they advertise
together with both names, a loss arises, both liable
hybrid forms of business organizations - correct answers-limited partnerships
-s corporations
-limited liability companies
,-limited liability partnerships
factors to consider when picking a business' organization form - correct answers1) cost of creation (time,
paperwork, money)
2) continuity of the organization (stability/ durability of business and impact of disillusion)
3) managerial control of decision (who manages the business)
4) owner liability (how personally liable is the owner of the business)
5) taxation (single/ double taxed)
Sole Proprietorship - correct answers-business owned and operated by one person
-least expensive business organization
-continuity is tied directly to will of owner
-owner is in total control of the business' goals & operations
-no formal documentation necessary
-owner has unlimited liability for the obligations of the business organization
-not taxed as an organization (person is taxed)
-ownership (legal entity of sole proprietorship) can't be transferred
Example of sole proprietor - correct answerswriter, painter, vendor at farmers market
partnerships - correct answers-agreement between 2 or more persons to share a common interest in a
commercial endeavor
-cost to form is minimal
-strongly recommended to get a legal partnership agreement
-state assumed name statute is necessary if names aren't included in company name
-may need to dissolve partnership before adding a new person unless you have the buy out clause
-unlimited liability (jointly and unseverably liable)
-not a taxable organization
,corporations - correct answers-artificial and intangible entity created under the authority of a state's law
-more expensive to form than sole prop/ partnership
-have their own personal taxation rate
types of corporations - correct answers-domestic (located in original state it was formed in)
-foreign (located in a state outside of it's originated state)
-alien (relocated from a different country)
articles of incorporation - correct answersa written legal document that defines ownership and
operating procedures and conditions for the business
-includes business name, purpose of business, intended timespan, information about initial owners, etc.
Deleware - correct answers-tons of corporations started here
-Delaware court of chancery (most prestigious business court in America)
-stable legal system
Tamika R. Montgomery-Reeves - correct answers-from UGA
-first African American and second woman to serve on Delaware Chancery
-first African American on Delaware Supreme Court
fiduciary duty - correct answersA legal obligation of one party to act in the best interest of another.
proxy - correct answersAgent, substitute, person authorized to act on behalf of another
corporate managerial control flow chart - correct answersShareholders -> board of directors -> officers -
> employees
-board of directors are elected
-officers and employees are hired
, derivative suit - correct answersa minority shareholder who believes a majority shareholder has acted in
his/ her personal interest to the detriment of the corporation may bring a derivative suit against the
majority shareholder on behalf of the company
is limited personal liability guaranteed? - correct answersNO!
piercing the corporate veil - correct answersAn action in which a court disregards the corporate entity
and holds the shareholders personally liable for corporate debts and obligations.
Alli v. US (2008) - correct answers-formed B.S.A Corp., they bought apartments, went into agreement
with Hud, Hud stopped paying housing assistance (written in contract), Alli sues
-court found that B.S.A breached contract and awarded damages to Hud
-court allows piercing of the corporate veil... now Alli's are held personally liable
double taxation - correct answersa corporation pays income taxes on its earnings, and when dividends
are distributed to stockholders, the stockholders pay taxes a second time on the corporate dividends
they receive
501(c)(3) organization - correct answers-nonprofit corporation exempt from federal income tax
-when a company donates to one of these they can deduct their contribution from their taces
limited partnership - correct answers-A partnership with one or more general partners and one or more
limited partners
-includes all attributes of a partnership
-continuity is the same as usual with general partners; with limited partnership you don't have to
dissolve with adding/ removing people
-general partners are in control; limited partners need to stay silent
-general partners have total liability; limited partners are liable
Limited vs. General Partnership - correct answerslimited: not responsible for debts of the business
organization
