Limited Liability Partnership (LLP)
Fred and Ginger are general partners in a business. They decide to purchase a building for the partnership. Ginger will put up the money for the building, and Fred will complete the remodeling. While inspecting the building, Fred is informed that the building is packed full of asbestos. He fails to tell Ginger of the presence of the substance. They buy the building and go into business. During the remodeling of the building, people from the neighborhood begin complaining about the dust from the building. Some of them even threaten to sue. Who is liable? Both Ginger and Fred are liable, regardless of the circumstances, by virtue of the fact that they are partners. Which type of business formation is typically reserved for professionals such as accountants, lawyers, and doctors? Limited Liability Partnership (LLP)
There are two general partners, each of whom contributes $5,000 in capital to a limited partnership. There are two limited partners, each of whom contributes $20,000. The total amount of capital contributed is $50,000. The limited partnership agreement does not stipulate how profits and losses are to be allocated. Assume that the limited partnership makes $300,000 in profits. Under the Revised Uniform Limited Partnership Act (RULPA), how much would each partner receive? Each general partner would receive $30,000, and each limited partner would receive $120,000. Which of the following is true of The Federal Arbitration Act? It provides that arbitration agreements are valid, irrevocable, and enforceable. Which of the following is true of a corporation?
A corporation is a separate legal entity.
Which of the following is true in the creation of a general partnership? The name selected cannot indicate that it is a corporation.
Which of the following is true of arbitration?
Parties can introduce evidence to support their case.
Which of the following is one of the major purposes of a settlement conference? To facilitate the settlement of a case.
Which of the following is true regarding mediation?
A mediator does not make a decision or an award.
When parties agree in advance to adhere to an arbitrator’s decision and award, it is known as Binding arbitration
Martha started a flower shop as a sole proprietor. After 1 year, she was forced to close the shop because business was so bad. At that time, the business assets totaled $50,000, but the business liabilities totaled $125,000. Which of the following statements is true? Martha is personally liable for the additional $75,000 owed to business creditors. George has served Mary with a complaint alleging breach of contract. Mary has never been sued before and as such, she seeks your advice on what to do with the complaint. You advise that she Answer George’s complaint by admitting or denying the allegations George has asserted against her The Black Squirrel limited partnership has been in operation for many years, but has recently fallen on hard times. The partners have decided to dissolve, although there are few assets remaining in the partnership.
Shortly after the partnership filed its certificate of limited partnership, the partners had the foresight to incorporate into their partnership agreement a provision that, in the event of dissolution, the assets would be distributed in payment of claims first to limited partners, then to general partners, then to creditors. Hilda is a limited partner and feels relieved that she will receive at least a portion of her capital. Henry, one of the general partners, said that this provision is void and unenforceable.
Which of the following best describes this situation? The provision placing the partners ahead of creditors is not enforceable, but the priority of limited partners over general partners is enforceable.
Which of the following is true about the choice of business entity for an entrepreneur? The choice takes into account many factors, including finding an option that has all the characteristics desired.
What is the effect of having a corporation as the general partner of a limited partnership? The liability of the corporate general partner will be limited to the amount of its assets.
Which form of alternative dispute resolution occurs when the parties choose an impartial third party to hear and decide their dispute? Arbitration