BUL 3310 Exam 4 (Unit 13, 14, & 15)
Questions with Verified Answers
Which of the following is considered a disadvantage of doing business as a general
partnership?
A general partnership is not a taxable entity under IRS rules.
Income in a general partnership flows directly to the partners.
All partners can participate in management of the partnership.
All partners are/may be held liable for partnership debts. - ANSWER-All partners
are/may be held liable for partnership debts.
To create a Limited Liability Corporation, articles of organization must be filed with
the state's Secretary of State's office.
True
False - ANSWER-true
State courts have the power to order that real property be sold to satisfy a
mechanic's lien.
True
False - ANSWER-true
Contracts of suretyship are legally indistinguishable from contracts of indemnity.
True
False - ANSWER-false
Edgar Esquire has an insurance contract with Lawyers Insurance Company which
provides that Lawyers Insurance will pay any malpractice judgment against Edgar up
to $3 million. The insurance contract between Edgar and Lawyers Insurance
Company is one of __________.
Suretyship
Special guarantee
General guarantee
Indemnity - ANSWER-Indemnity
A(n) _______ is a legal proceeding accompanying an action in court by which a
plaintiff may acquire a lien on a defendant's property as a security for the payment of
any judgment that the plaintiff may recover.
,Attachment.
Sheriff's sale.
Meeting of creditors.
Discharge in bankruptcy. - ANSWER-Attachment.
State law determines whether or not a mortgage will have priority over a mechanic's
lien.
True
False - ANSWER-true
Subrogation means the substitution of one person in place of another.
True
False - ANSWER-true
Lack of capacity and discharge in bankruptcy are two common defenses that are
available to a surety that may be asserted against a creditor.
True
False - ANSWER-false
Any profits which a surety makes when called upon to perform the principal's duties
belong to the surety.
True
False - ANSWER-false
Pearl sued Sam and was awarded a judgment against him for $50,000. Sam has a
savings account with First Bank that can be seized in partial satisfaction of the
judgment. The writ the court will use ordering First Bank to turn over to it the funds in
Sam's account is a writ of____________.
Attainder
Attachment
Garnishment
Execution - ANSWER-NOT Attachment
A security interest in personal property in favor of one who has performed services
on the personal property is an ________.
Mechanic's lien.
Artisan's lien.
Color of title.
Security Deposit. - ANSWER-Artisan's lien.
,Allison is going to create a lawn service business. Allison would like to limit her
liability by creating a subchapter "S" corporation. She does not know if the state she
lives in allows for a single shareholder corporation. Where should Allison look to find
the answer to her question?
State statutes
Federal statutes
US Code of Federal Regulations
Local ordinances - ANSWER-State statutes
LLC combine the limited liability of the partnership and the tax advantages of
corporations.
True
False - ANSWER-False
LLC's are taxed as partnerships unless the owners choose to be taxed as a
corporation.
True
False - ANSWER-True
A member of an LLC can never be personally liable for the debts of the LLC.
True
False - ANSWER-False
Relative to corporate and partnership law there is not a comparble amount of case
law involving LLCs.
True
False - ANSWER-True
In the majority of states an LLC can be both formed and managed by only one
member.
True
False - ANSWER-True
If you form an LLC you are required to have a written operating agreement.
True
False - ANSWER-False
In a memeber-managed LLC all members participate in management.
True
False - ANSWER-True
In a manager-managed LLC, only the manager-members have access to the LLCs
books.
True
False - ANSWER-True
, An artisan's lien is a special lien that applies exclusively to the liens artist receive on
artwork they personally performed.
True
False - ANSWER-False
Bob voluntarily surrender's a watch that he repaird back to the owner. Bob had a lien
on the property for the value of his labor. Bob later re-acquires the property. Bob has
now revived his lien since he was able to re-acquire possession of the property.
True
False - ANSWER-False
A suretyship provides a lien credit a legal interest in the property of the debtor to
secure repayment of the loan.
True
False - ANSWER-False
A surety and guarantor have always been treated as the exact same thing.
True
False - ANSWER-False
A general guarantor's promise is not limited to a single transaction.
True
False - ANSWER-True
When dealing with an absolute guarantor, the creditor does not have to first attempt
to collect from the debtor prior to proceeding against the guarantor.
True
False - ANSWER-True
Modernly, surety and indemnification contracts are the same thing.
True
False - ANSWER-False
BOTH perforance bonds and fidelity bonds are sureties.
True
False - ANSWER-True
Surety agreements may also be created by operation of law.
True
False - ANSWER-True
The surety relationship requires good faith, but not fair dealing.
True
False - ANSWER-False
A creditor can never be required to give the surety notice that the debtor is in default.
True
False - ANSWER-False
Questions with Verified Answers
Which of the following is considered a disadvantage of doing business as a general
partnership?
A general partnership is not a taxable entity under IRS rules.
Income in a general partnership flows directly to the partners.
All partners can participate in management of the partnership.
All partners are/may be held liable for partnership debts. - ANSWER-All partners
are/may be held liable for partnership debts.
To create a Limited Liability Corporation, articles of organization must be filed with
the state's Secretary of State's office.
True
False - ANSWER-true
State courts have the power to order that real property be sold to satisfy a
mechanic's lien.
True
False - ANSWER-true
Contracts of suretyship are legally indistinguishable from contracts of indemnity.
True
False - ANSWER-false
Edgar Esquire has an insurance contract with Lawyers Insurance Company which
provides that Lawyers Insurance will pay any malpractice judgment against Edgar up
to $3 million. The insurance contract between Edgar and Lawyers Insurance
Company is one of __________.
Suretyship
Special guarantee
General guarantee
Indemnity - ANSWER-Indemnity
A(n) _______ is a legal proceeding accompanying an action in court by which a
plaintiff may acquire a lien on a defendant's property as a security for the payment of
any judgment that the plaintiff may recover.
,Attachment.
Sheriff's sale.
Meeting of creditors.
Discharge in bankruptcy. - ANSWER-Attachment.
State law determines whether or not a mortgage will have priority over a mechanic's
lien.
True
False - ANSWER-true
Subrogation means the substitution of one person in place of another.
True
False - ANSWER-true
Lack of capacity and discharge in bankruptcy are two common defenses that are
available to a surety that may be asserted against a creditor.
True
False - ANSWER-false
Any profits which a surety makes when called upon to perform the principal's duties
belong to the surety.
True
False - ANSWER-false
Pearl sued Sam and was awarded a judgment against him for $50,000. Sam has a
savings account with First Bank that can be seized in partial satisfaction of the
judgment. The writ the court will use ordering First Bank to turn over to it the funds in
Sam's account is a writ of____________.
Attainder
Attachment
Garnishment
Execution - ANSWER-NOT Attachment
A security interest in personal property in favor of one who has performed services
on the personal property is an ________.
Mechanic's lien.
Artisan's lien.
Color of title.
Security Deposit. - ANSWER-Artisan's lien.
,Allison is going to create a lawn service business. Allison would like to limit her
liability by creating a subchapter "S" corporation. She does not know if the state she
lives in allows for a single shareholder corporation. Where should Allison look to find
the answer to her question?
State statutes
Federal statutes
US Code of Federal Regulations
Local ordinances - ANSWER-State statutes
LLC combine the limited liability of the partnership and the tax advantages of
corporations.
True
False - ANSWER-False
LLC's are taxed as partnerships unless the owners choose to be taxed as a
corporation.
True
False - ANSWER-True
A member of an LLC can never be personally liable for the debts of the LLC.
True
False - ANSWER-False
Relative to corporate and partnership law there is not a comparble amount of case
law involving LLCs.
True
False - ANSWER-True
In the majority of states an LLC can be both formed and managed by only one
member.
True
False - ANSWER-True
If you form an LLC you are required to have a written operating agreement.
True
False - ANSWER-False
In a memeber-managed LLC all members participate in management.
True
False - ANSWER-True
In a manager-managed LLC, only the manager-members have access to the LLCs
books.
True
False - ANSWER-True
, An artisan's lien is a special lien that applies exclusively to the liens artist receive on
artwork they personally performed.
True
False - ANSWER-False
Bob voluntarily surrender's a watch that he repaird back to the owner. Bob had a lien
on the property for the value of his labor. Bob later re-acquires the property. Bob has
now revived his lien since he was able to re-acquire possession of the property.
True
False - ANSWER-False
A suretyship provides a lien credit a legal interest in the property of the debtor to
secure repayment of the loan.
True
False - ANSWER-False
A surety and guarantor have always been treated as the exact same thing.
True
False - ANSWER-False
A general guarantor's promise is not limited to a single transaction.
True
False - ANSWER-True
When dealing with an absolute guarantor, the creditor does not have to first attempt
to collect from the debtor prior to proceeding against the guarantor.
True
False - ANSWER-True
Modernly, surety and indemnification contracts are the same thing.
True
False - ANSWER-False
BOTH perforance bonds and fidelity bonds are sureties.
True
False - ANSWER-True
Surety agreements may also be created by operation of law.
True
False - ANSWER-True
The surety relationship requires good faith, but not fair dealing.
True
False - ANSWER-False
A creditor can never be required to give the surety notice that the debtor is in default.
True
False - ANSWER-False
