After the series of Law questions in http://assignmentdesigners.blogspot.com, continuing part 4 here
1. Bill Hotrod customizes hotrods for local gear heads. His business entity is one of a sole proprietorship. One of the services he performs is to install a breaking system that will allow you to lock the breaks on one side of the vehicle causing it to turn sharply in the direction of the locked breaks. Sue Gofaster paid Bill’s employee Grease Monkey to install break locks on her car. Grease Monkey installed the parts during normal working hours at Bill’s place of business. While driving safely down the street the break locks malfunctioned and she is sent flying into the other lane and has a head on collision with another vehicle.
Which of the following is true:
A. If Sue obtains a judgment against Bill the fact that he has registered his business as a sole proprietorship will protect his personal property from the judgment.
B. Beyond the exemptions provided for by state law Bill can lose everything if Sue wins.
C. Sue can only get the assets of the business assuming she wins her suit.
D. Since Grease did the work, Sue can only recover from Grease.
2. Same fact as provided for in Question 1 except Bill operates his business through a duly established and managed LLC. Which of the following are true:
A. Would not make a difference the out come is the same as above.
B. Sue can sue Grease and Bill’s LLC.
C. Sue can take all of the assets of the LLC but not Bill’s other personal
property assuming she wins her action.
- B. and C. are correct.
- A. and B. are correct
3. A General Partnership:
A. Results in all partners being held personally responsible for their own acts and omissions.
B. Results in all partners being personally responsible for their partners’act s and omissions.
C. Results in all partners being personally liable for the act and omissions of other partners but not employees.
D. All of the above are true
E. A. through C. are all true except for b.
F. A. through C. are all true except for c.
4. Joe Cool and Fridge Sal employ 5 people who repairs air conditioning systems. They have never entered into any kind of a business agreement aside from a written promise from Fridge to Joe that if they were ever sued, she would pay all the costs if Joe would put up their start up money. They have been in business for 10 years. Fridge makes all management decisions and Joe supervises work. The best description of their company is of a:
- LLP (Limited Liability Partnership)
B. GP (General Partnership)
C. LLC (Limited Liability Corporation)
D. none of the above
5. Frank’s in the majority share holder and CEO of Smelly, Inc. a company that specializes in the disposal of stinky stuff for companies that produce stinky waste that smells too bad for the land fill workers to tolerate. Since they are now unionized they can refuse to accept waste that smells bad. Smelly needs additional land to expand its operation. Last Saturday, on his day off, while in his own car, Frank sees a piece of land that would be suitable for Smelly’s needs. However, because the price is right he is considering buying it himself.
Frank’s rights and duties are:
A. Bring the land to the attention of the Board of Directors.
B. Make best efforts to purchase it for Smelly if the Board of Directors decide they want the property.
C. Purchase it for himself, only if the Board votes not to purchase it.
D. A. and C. only are true
E. A., B. and C. above are true
6.Slow Sally was rear-ended by Steve Go Faster who was driving a 60,000 lbs truck owned by Joe, Inc. All of Joe, Inc. shares are owned by Joe Tight Wad and there are no other share holders. During discovery it is determined that Joe, Inc., does not have enough assets and insurance to cover all of the damages and you, the attorney for Sally want to pierce the Corporate veil to go after Wad’s personal assets. Which of the facts are relevant to your efforts to pierce the Corporate Vail:
A. Joe was heard saying he knew it would happen sooner or later the way Steve drives.
B. Joe, Inc. and Wad’s accounts are comingled.
C. There has never been a meeting of share holders for Joe, Inc.
D. The reason there is insufficient insurance is because Joe, Inc. did not have enough start up money to buy a policy that would cover any thing beyond the least amount required by law.
E. All of the above.
F. B. through D.
G. A., B. & D.
7. Jack and Jill own a bucket company located onHill Street. They have no operating agreement of any kind. For the first time, there is a profit to split. Jack has always put 75% of the costs required in to the company and Jill has put in about 25%. They now have a dispute over how to split the profit. What would be the proper out come.
A. They split the profits evenly.
B. Jack gets 75%, Jill gets 25%
C. The one that can push the other off the hill takes all.
8. Same question as 7 above except that there is an operation agreement which states that “A partner’s share of profit’s shall be equal to that partner’s share of capital contributions.” Now what is the proper out come?
A. They split the profits evenly.
B. Jack gets 75%, Jill gets 25%
C. The one that can push the other off the hill takes all if they do not spill their water in the process.
9. Greg is a minority share holder of Right Way Inc., a for profit group of do gooders. Right Wayhas charged a fee of $100 per week for each homeless person it provides shelter to for five years. The fee is paid by the City ofBlue Collar. Recently, Right Way Board of Directors has voted to reduce the fee to $90 per week so as to save the good citizens from an impending tax increase. At $90 per weekRight Waywill still make a profit but it will have to pay less dividends as a result. If Greg suesRight Waywhat is the proper result.
A. Right Way wins because it is doing the right thing
B. Right Way wins because it will still be able to pay dividends.
C. Greg wins becauseRight Way’s duty is to make profits for it’s share holders.
D. Greg wins because there was no real plan in place to raise taxes.
E. Greg loses becauseRight Way’s Directors are fulfilling the propose of the majority of it’s share holders.
10. Sam starts a nonprofit corporation, Meals, Inc., to serve meals to needy people. He pays himself a Salary of $40,000 per year as the director, cook and driver. This is about $5,000 more than he was making running a restaurant. His fees are the same as all other providers of these types of services in his location. Recently, after an interview with Liberals Are US, NewsRoom, when he and the host thought the microphone was turned off he was over heard laughing with the host about how they thought all of the people they helped were just stupid and they were just in the do good business for the money. Self Righteous, a consumer advocacy group sues to have all of Meals’ contracts voided because he really does not care about people. The correct out come is:
A. Sam wins because he has valid contracts and he is not in breach.
B. Sam wins because the judge believes his testimony that the remarks were taken out of context and he really cares about people.
C. Sam losses because even though he a properly formed a nonprofit corporation and complied with all laws his motive is really to make a profit.
D. Sam losses if Self Righteous can prove that he is providing an service through a non-profit organization for more money than he earned doing a similar serve for a for profit entity.
- B. Beyond the exemptions provided for by state law Bill can lose everything if Sue wins.
- A. Would not make a difference the out come is the same as above.
- B. Results in all partners being personally responsible for their partners’ acts and omissions.4. D. none of the above
5. E. A., B. and C. above are true
6. B. Joe, Inc. and Wad’s accounts are comingled.
7. A. They split the profits evenly.
8. B. Jack gets 75%, Jill gets 25%
9. B. Right Way wins because it will still be able to pay dividends.
10.A. Sam wins because he has valid contracts and he is not in breach.
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