BUL3320 FINAL EXAM REVIEW PRACICE
QUESTIONS WITH CORRECT ANSWERS NEW
MODIFIED TESTED AND APPROVED GRADED A+
An LLC charter must be filed with the _____ in the jurisdiction in which it is formed.
Court Magistrate
District Attorney
cooperative
Secretary of State --CORRECT ANSWER--Secretary of State
Harry and Sally want to form a partnership. What is necessary to create a legal partnership
between them?
A formal filing with the Secretary of State
A written document
Nothing
Overt consent from the two --CORRECT ANSWER--Nothing
Nothing is legally necessary to create a legal partnership, although typically there is an
agreement of some sort. The agreement need not be in writing.
Leonard C. Blum, an attorney, was negligent in his representation of Louis Anthony, Sr. In
settlement of Anthony's claim against him, Blum signed a promissory note for $10,400 on
behalf of his law firm, an LLC. When the law firm did not pay, Anthony filed suit against
Blum personally for payment of the note. Is a member personally liable for the debt of an
LLC that was caused by his own negligence?
Page 1 of 126
,Yes, unless the articles of organization limits his liability.
No, regardless of his actions, Blum cannot be personally liable for this debt.
No, Blum is only liable for intentional torts.
Yes, if the LLC was a sham. --CORRECT ANSWER--No, regardless of his actions, Blum
cannot be personally liable for this debt.
Although Blum would have been liable for his own negligence, Anthony is suing him for
payment of a promissory note signed by the LLC. As a member, Blum is not liable for the
debts of the LLC.
To form an LLP, the partners must file a statement of qualification with _____.
the court
the district attorney
state officials
the members of the firm --CORRECT ANSWER--state officials
George wants to sell franchises. What must he include in the Franchise Disclosure Document
(FDD)?
-Exact costs of initial investment
-Any current litigation against George
-How many franchisees have gone out of business in the past 10 years
-The number of franchises in operation --CORRECT ANSWER--The number of franchises in
operation
Page 2 of 126
,Mrs. Meadows opened a biscuit shop called The Biscuit Bakery, LLP. The business was not
incorporated. Whenever she ordered supplies, she was careful to sign the contract in the name
of the business, not personally: The Biscuit Bakery, LLP, by Daisy Meadows. Unfortunately,
she had no money to pay her flour bill. When the vendor threatened to sue her, Mrs.
Meadows told him that he could only sue the business because all the contracts were in the
business's name. Mrs. Meadows is a member of a limited liability partnership. Is Mrs.
Meadows liable for the debt to the vendor?
Yes, because she is a partner.
Yes, if she authorized the loan.
No, because partners in an LLP are never liable for the debts of the partnership.
No, unless she agreed to be liable. --CORRECT ANSWER--No, unless she agreed to be
liable.
In an LLP, the partners are not liable for the debts of the partnership. Mrs. Meadows is not
liable unless she agreed to be liable for the debt.
To organize a _____, a person must have a charter.
cooperative
sole proprietorship
limited liability company
state-owned enterprise --CORRECT ANSWER--Limited liability company
Page 3 of 126
, Waffle Shoppe, Inc. sells a local franchise to Dave and Sharon Sanders. After three years,
Waffle Shoppe sells another franchise in the same town to Bill and Fran Copeland. Bill and
Fran open their Waffle Shoppe across the street from Dave and Sharon, cutting their income
in half. The franchise agreement does not address the locations of the local franchises. Dave
and Sharon sue Waffle Shoppe for breach of contract. Dave and Sharon maintain that Waffle
Shoppe had a duty not to sell a second franchise so close to them as to interfere with their
customer base. Are Dave and Sharon correct?
Yes. Waffle Shoppe violated an express contractual obligation to its franchisees by selling a
second franchise with a location which would compete with a pre-existing location.
Yes. Waffle Shoppe is contractually required to investigate new locations before selling the
franchise.
No. Waffle Shoppe did not contractually agree to lim --CORRECT ANSWER--No. Waffle
Shoppe did not contractually agree to limit the sale of franchises in Dave and Sharon's area.
The franchise purchase contract is silent as to the sale of additional franchises in the same
geographical area.
The Franchise Disclosure Document (FDD) does NOT have to provide information on
_____.
litigation with franchisees
earnings
required advertising expenses
business continuity --CORRECT ANSWER--earnings
Page 4 of 126
QUESTIONS WITH CORRECT ANSWERS NEW
MODIFIED TESTED AND APPROVED GRADED A+
An LLC charter must be filed with the _____ in the jurisdiction in which it is formed.
Court Magistrate
District Attorney
cooperative
Secretary of State --CORRECT ANSWER--Secretary of State
Harry and Sally want to form a partnership. What is necessary to create a legal partnership
between them?
A formal filing with the Secretary of State
A written document
Nothing
Overt consent from the two --CORRECT ANSWER--Nothing
Nothing is legally necessary to create a legal partnership, although typically there is an
agreement of some sort. The agreement need not be in writing.
Leonard C. Blum, an attorney, was negligent in his representation of Louis Anthony, Sr. In
settlement of Anthony's claim against him, Blum signed a promissory note for $10,400 on
behalf of his law firm, an LLC. When the law firm did not pay, Anthony filed suit against
Blum personally for payment of the note. Is a member personally liable for the debt of an
LLC that was caused by his own negligence?
Page 1 of 126
,Yes, unless the articles of organization limits his liability.
No, regardless of his actions, Blum cannot be personally liable for this debt.
No, Blum is only liable for intentional torts.
Yes, if the LLC was a sham. --CORRECT ANSWER--No, regardless of his actions, Blum
cannot be personally liable for this debt.
Although Blum would have been liable for his own negligence, Anthony is suing him for
payment of a promissory note signed by the LLC. As a member, Blum is not liable for the
debts of the LLC.
To form an LLP, the partners must file a statement of qualification with _____.
the court
the district attorney
state officials
the members of the firm --CORRECT ANSWER--state officials
George wants to sell franchises. What must he include in the Franchise Disclosure Document
(FDD)?
-Exact costs of initial investment
-Any current litigation against George
-How many franchisees have gone out of business in the past 10 years
-The number of franchises in operation --CORRECT ANSWER--The number of franchises in
operation
Page 2 of 126
,Mrs. Meadows opened a biscuit shop called The Biscuit Bakery, LLP. The business was not
incorporated. Whenever she ordered supplies, she was careful to sign the contract in the name
of the business, not personally: The Biscuit Bakery, LLP, by Daisy Meadows. Unfortunately,
she had no money to pay her flour bill. When the vendor threatened to sue her, Mrs.
Meadows told him that he could only sue the business because all the contracts were in the
business's name. Mrs. Meadows is a member of a limited liability partnership. Is Mrs.
Meadows liable for the debt to the vendor?
Yes, because she is a partner.
Yes, if she authorized the loan.
No, because partners in an LLP are never liable for the debts of the partnership.
No, unless she agreed to be liable. --CORRECT ANSWER--No, unless she agreed to be
liable.
In an LLP, the partners are not liable for the debts of the partnership. Mrs. Meadows is not
liable unless she agreed to be liable for the debt.
To organize a _____, a person must have a charter.
cooperative
sole proprietorship
limited liability company
state-owned enterprise --CORRECT ANSWER--Limited liability company
Page 3 of 126
, Waffle Shoppe, Inc. sells a local franchise to Dave and Sharon Sanders. After three years,
Waffle Shoppe sells another franchise in the same town to Bill and Fran Copeland. Bill and
Fran open their Waffle Shoppe across the street from Dave and Sharon, cutting their income
in half. The franchise agreement does not address the locations of the local franchises. Dave
and Sharon sue Waffle Shoppe for breach of contract. Dave and Sharon maintain that Waffle
Shoppe had a duty not to sell a second franchise so close to them as to interfere with their
customer base. Are Dave and Sharon correct?
Yes. Waffle Shoppe violated an express contractual obligation to its franchisees by selling a
second franchise with a location which would compete with a pre-existing location.
Yes. Waffle Shoppe is contractually required to investigate new locations before selling the
franchise.
No. Waffle Shoppe did not contractually agree to lim --CORRECT ANSWER--No. Waffle
Shoppe did not contractually agree to limit the sale of franchises in Dave and Sharon's area.
The franchise purchase contract is silent as to the sale of additional franchises in the same
geographical area.
The Franchise Disclosure Document (FDD) does NOT have to provide information on
_____.
litigation with franchisees
earnings
required advertising expenses
business continuity --CORRECT ANSWER--earnings
Page 4 of 126
