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Questions and Answers
What was John's relationship to the property bought by Haub?
What was John's relationship to the property bought by Haub?
Why did David and Jessica approve the purchase of the building?
Why did David and Jessica approve the purchase of the building?
What legal action did David and Jessica consider against John?
What legal action did David and Jessica consider against John?
What potential risk was associated with John's failure to disclose his ownership?
What potential risk was associated with John's failure to disclose his ownership?
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What is likely to happen to John in light of the price Haub paid for the building?
What is likely to happen to John in light of the price Haub paid for the building?
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What is the significance of the building next to Haub being similar to John's building?
What is the significance of the building next to Haub being similar to John's building?
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Which market value was indicated after Haub's purchase from John?
Which market value was indicated after Haub's purchase from John?
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What concept might shield John from being held liable for his actions?
What concept might shield John from being held liable for his actions?
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What legal remedy does a creditor have against a single-member LLC for the debts of its member?
What legal remedy does a creditor have against a single-member LLC for the debts of its member?
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In a partnership where the agreement requires unanimous approval for expenditures over $1,000, which statement is true if one partner makes a purchase unilaterally?
In a partnership where the agreement requires unanimous approval for expenditures over $1,000, which statement is true if one partner makes a purchase unilaterally?
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Which of the following best describes John’s authority in purchasing the Grand Widget Maker without Jane's consent?
Which of the following best describes John’s authority in purchasing the Grand Widget Maker without Jane's consent?
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For a debtor to pierce the veil of a single-member LLC, which of the following must be shown?
For a debtor to pierce the veil of a single-member LLC, which of the following must be shown?
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If a partnership agreement states that expenditure over $1,000 needs unanimous consent, what is the impact of one partner purchasing an item without consent?
If a partnership agreement states that expenditure over $1,000 needs unanimous consent, what is the impact of one partner purchasing an item without consent?
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In the scenario where John sees a machine discounted at 50%, which factor most importantly affects whether the partnership is bound by his decision?
In the scenario where John sees a machine discounted at 50%, which factor most importantly affects whether the partnership is bound by his decision?
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What is a limitation a creditor faces when trying to recover debts from a single-member LLC?
What is a limitation a creditor faces when trying to recover debts from a single-member LLC?
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What justification might John use to defend his unilateral purchase of the Grand Widget Maker given the partnership agreement?
What justification might John use to defend his unilateral purchase of the Grand Widget Maker given the partnership agreement?
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What is the primary implication of the fraud-on-the-market theory?
What is the primary implication of the fraud-on-the-market theory?
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How can a plaintiff utilize fraud-on-the-market in a 10(b)/10b-5 violation case?
How can a plaintiff utilize fraud-on-the-market in a 10(b)/10b-5 violation case?
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What is NOT a method for forming a general partnership?
What is NOT a method for forming a general partnership?
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In a loan agreement, an example of a representation made by the company is:
In a loan agreement, an example of a representation made by the company is:
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What is the purpose of a warrant received by a bank in a loan agreement?
What is the purpose of a warrant received by a bank in a loan agreement?
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Which of the following is an example of affirmative and negative covenants in a loan agreement?
Which of the following is an example of affirmative and negative covenants in a loan agreement?
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What does the exercise price of the warrant indicate?
What does the exercise price of the warrant indicate?
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What is NOT a characteristic of a general partnership?
What is NOT a characteristic of a general partnership?
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Which of the following entities can benefit from pass-through taxation?
Which of the following entities can benefit from pass-through taxation?
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What is likely the court's stance regarding the request for emails in a DGCL 220 action?
What is likely the court's stance regarding the request for emails in a DGCL 220 action?
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In the context of a 10(b)/10b-5 action for a material misstatement, what is the fraud-on-the-market theory about reliance?
In the context of a 10(b)/10b-5 action for a material misstatement, what is the fraud-on-the-market theory about reliance?
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What constitutes a proper purpose for a shareholder to request company documents under DGCL?
What constitutes a proper purpose for a shareholder to request company documents under DGCL?
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In response to a shareholder's request for documents, what is a board’s potential obligation?
In response to a shareholder's request for documents, what is a board’s potential obligation?
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Which of the following best describes a limitation on a shareholder’s ability to object to board actions?
Which of the following best describes a limitation on a shareholder’s ability to object to board actions?
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What is one condition under which shareholders may not be entitled to emails in a records request?
What is one condition under which shareholders may not be entitled to emails in a records request?
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Which scenario does not qualify a shareholder's request as a proper purpose under DGCL?
Which scenario does not qualify a shareholder's request as a proper purpose under DGCL?
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What is true regarding a sole proprietorship?
What is true regarding a sole proprietorship?
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Which fiduciary duties do noncontrolling minority shareholders owe the corporation?
Which fiduciary duties do noncontrolling minority shareholders owe the corporation?
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In a dispute about Jane removing John from his employment in a close corporation, what would a court likely find?
In a dispute about Jane removing John from his employment in a close corporation, what would a court likely find?
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Which of the following statements correctly describes the liabilities of a sole proprietor?
Which of the following statements correctly describes the liabilities of a sole proprietor?
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Which of the following best describes the relationship between controlling shareholders and minority shareholders?
Which of the following best describes the relationship between controlling shareholders and minority shareholders?
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Why might a court determine that Jane did not breach her fiduciary duty?
Why might a court determine that Jane did not breach her fiduciary duty?
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What important characteristic distinguishes a close corporation from a public corporation?
What important characteristic distinguishes a close corporation from a public corporation?
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What is a potential outcome if John's claim is upheld regarding oppression?
What is a potential outcome if John's claim is upheld regarding oppression?
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Study Notes
Overview of Question Types/First Three Samples
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Sample Level 1 Question (questions 1-25): James, a member of a single-member LLC, owes a significant debt. The creditor sues the LLC. The creditor likely cannot fully manage the LLC until the debt is paid, nor will a charging order allow full access to distributions. The creditor must prove piercing or reverse piercing the veil to manage the LLC.
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Sample Level 2 Question (questions 26-35): John and Jane (50% each partners in J&J Widgets) had a unanimous approval of $1,000 spending. John, spotting a discounted inventory item, bought it without Jane's approval. J&J is still bound to this decision if it was within the ordinary course of partnership business.
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Representative Level 3 Question (questions 36-60): John, a member of Haub Widget Services, identified business expansion opportunities. Haub needed extra space, and John owned a building next door. He did not disclose this ownership when Haub decided to purchase the building. It was below market value. Potential legal actions for breach of fiduciary duty may arise from this situation. Key to deciding possible outcomes are fairness, good faith, fair dealing and materiality.
More Sample Questions
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Question 1: Shareholder's lawsuit against directors dismissed by a special litigation committee. The suit will be decided if the court rejects the dismissal and determines shareholder claims are valid.
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Question 2: Sole proprietorship. The owner is personally liable, and must report on their separate taxes and return.
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Question 3: Noncontrolling minority shareholders owe fiduciary duties to the corporation. They have duties to act in the best interests of the corporation.
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Question 4: Jane (70% ownership, director and officer) and John (30%, director and officer) in a close corporation. John’s poor performance was a factor in his removal from the corporation. Jane used her controlling position to issue dividends and other decisions.. John could bring an action for breach of fiduciary duty.
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Question 5: Entities benefiting from pass-through taxation include general partnerships, LLPs, LLCs, and LPs.
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Question 6: Shareholder demands board records. A shareholder wanting board minutes, resolutions, and emails that concern corporate decisions has legitimate reasons for requesting this data.
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Question 7: Plaintiff in a 10(b)/10b-5 action against company. The "fraud-on-the-market" approach shows reliance.
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Question 8: Formation of a general partnership. General partnerships are formed by doing business together without formal legal filings.
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Question 9: A loan agreement between company and bank mentions financial conditions, undisclosed debt, and projections. These are examples of representations and warranties.
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Question 10: Warrant holder exercises a warrant. Warrants are valuable when the price of common stock increases significantly.
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Question 11: The bylaws of a corporation outline shareholder meeting notice requirements.
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Description
Test your understanding of key concepts in business law, focusing on LLC and partnership structures. This quiz covers various scenarios involving member responsibilities, creditor rights, and partnership agreements. Dive into real-world applications of these legal principles with practical examples.
