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Exam 36: Limited Liability Companies and Special Business Forms

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Question 1

Multiple Choice

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Overseas Shipping Corporation and Port Storage Company transfer their assets to Quality Operations, Inc., which manages the assets and distributes the profits to the beneficiaries. This form of business organization is

A) a business trust.
B) a joint stock company.
C) a joint venture.
D) a syndicate.

E) None of the above
F) A) and B)

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Question 2

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Most states apply to a limited liability company formed in another state the law of the state in which the firm currently does most of its business.

A) True
B) False

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Question 3

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In most circumstances, the manager of a limited liability company is liable in that capacity for the liability of the firm.

A limited liability company is an aggregate of its members, not a separate legal entity.

Rural Development Company and Suburban Real Estate Corporation form a joint stock company. This firm can be formed for, at the most,

Business Media, a partnership, publishes periodicals, including Cycle Review . DangerZoners, also a partnership, publishes Extreme Sports . Business Media and DangerZoners agree to pool their resources in a one-time deal to print and market a book, Future Runs . In contracting with Geo Cache, Inc., for supplies to print the book, Business Media commits fraud. In contracting with Host Articles Agency for materials to use in Extreme Sports , DangerZoners commits fraud. Geo Cache and Host Articles file suits against Business Media and DangerZoners. What type of business organization has Business Media and DangerZoners formed? To whom, if anyone, is Business Media liable? To whom, if anyone, is DangerZoners liable?

Because title to the property of a limited liability company must be held in the name of one or more of its members, disputes over its ownership is avoided.

Among the states, the law governing limited liability companies is far from uniform because

When a limited liability company is dissolved, the members may preserve the assets for a reasonable time to optimize their return during the winding up process.

Accounting LLC is a member-managed limited liability company. Unless the members have agreed otherwise, all decisions with respect to the firm's business are made by

Like other limited liability companies, for federal jurisdictional purposes, Rodeo Productions LLC is most likely a citizen of

If a joint venturer secretly profits from a project that was supposed to be a venture-related deal, the other joint venturers may be awarded damages for the breach of loyalty.

If a member of a limited liability company dissociates from the firm, the other members can continue the firm's business, and the dissociated member can continue to act as an agent for the firm.

Dairy Products, Inc., and Eden Farms Corporation form a joint venture to make and test-market Frosty Ice Cream. If this joint venture is like most joint ventures, it will continue

As the promoter of Glassworks LLC, Hans enters into a contract with Interstate Transport Company. Once formed, Glassworks can

Choosing a business organizational form that limits its owners' liability may lead to greater profits for the firm.

GMO Grain Corporation and Hybrid Yields, Inc., form a joint stock company. The ownership of this company is represented by

Oil Inc. and Petro Corporation form a joint venture to design and test petroleum storage facilities and equipment. When a dispute arises, Oil files a suit against Petro. The court is most likely to apply the same principles to this joint venture as it applies to

Orly's Adventure Travel and Paquito's Wild River Tours form a joint venture. Orly can participate in the venture's management to

The members of a limited liability company should protect their interests by creating a written operating agreement.