LEGL 2700 FINAL EXAM UGA
(HACKLEMAN) QUESTIONS AND
ANSWERS GRADED A+ 2025/2026
Closely Held Organizations - ANS small group of people (like family owned)
Publicly Held Organization - ANS A corporation that may have thousands of stockholders and
whose stock is regularly traded on a national securities exchange.
basic forms of business organizations - ANS 1. Sole Proprietorship
2. Partnership
3. Corporation
hybrid forms of business organizations - ANS -limited partnerships
-s corporations
-limited liability companies
-limited liability partnerships
factors to consider when picking a business' organization form - ANS 1) cost of creation (time,
paperwork, money)
2) continuity of the organization (stability/ durability of business and impact of disillusion)
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,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 - ANS -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 - ANS writer, painter, vendor at farmers market
partnerships - ANS -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
3 types of partnerships - ANS 1. General
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,2. Limited
3. Limited Liability
partnership examples - ANS -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
corporations - ANS -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 - ANS -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 - ANS a 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 - ANS -tons of corporations started here
-Delaware court of chancery (most prestigious business court in America)
-stable legal system
Tamika R. Montgomery-Reeves - ANS -from UGA
-first African American and second woman to serve on Delaware Chancery
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, -first African American on Delaware Supreme Court
fiduciary duty - ANS A legal obligation of one party to act in the best interest of another.
proxy - ANS Agent, substitute, person authorized to act on behalf of another
corporate managerial control flow chart - ANS Shareholders -> board of directors -> officers -
> employees
-board of directors are elected
-officers and employees are hired
derivative suit - ANS a 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? - ANS NO!
piercing the corporate veil - ANS An action in which a court disregards the corporate entity
and holds the shareholders personally liable for corporate debts and obligations.
Alli v. US (2008) - ANS -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 - ANS a 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
4 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
(HACKLEMAN) QUESTIONS AND
ANSWERS GRADED A+ 2025/2026
Closely Held Organizations - ANS small group of people (like family owned)
Publicly Held Organization - ANS A corporation that may have thousands of stockholders and
whose stock is regularly traded on a national securities exchange.
basic forms of business organizations - ANS 1. Sole Proprietorship
2. Partnership
3. Corporation
hybrid forms of business organizations - ANS -limited partnerships
-s corporations
-limited liability companies
-limited liability partnerships
factors to consider when picking a business' organization form - ANS 1) cost of creation (time,
paperwork, money)
2) continuity of the organization (stability/ durability of business and impact of disillusion)
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,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 - ANS -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 - ANS writer, painter, vendor at farmers market
partnerships - ANS -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
3 types of partnerships - ANS 1. General
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,2. Limited
3. Limited Liability
partnership examples - ANS -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
corporations - ANS -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 - ANS -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 - ANS a 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 - ANS -tons of corporations started here
-Delaware court of chancery (most prestigious business court in America)
-stable legal system
Tamika R. Montgomery-Reeves - ANS -from UGA
-first African American and second woman to serve on Delaware Chancery
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, -first African American on Delaware Supreme Court
fiduciary duty - ANS A legal obligation of one party to act in the best interest of another.
proxy - ANS Agent, substitute, person authorized to act on behalf of another
corporate managerial control flow chart - ANS Shareholders -> board of directors -> officers -
> employees
-board of directors are elected
-officers and employees are hired
derivative suit - ANS a 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? - ANS NO!
piercing the corporate veil - ANS An action in which a court disregards the corporate entity
and holds the shareholders personally liable for corporate debts and obligations.
Alli v. US (2008) - ANS -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 - ANS a 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
4 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
