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Questions
Q:
An offeror must have a serious intention to become bound by the offer.
Q:
Agents of an LLC are not permitted to enter into contracts on behalf of the LLC.
Q:
An offer must be practical to be effective.
Q:
A distributional interest refers to a member's ownership interest in an LLC.
Q:
When the average physical product is rising,A) total cost is falling. B) average total cost is increasing.C) average variable cost is falling. D) marginal cost is always rising.
Q:
An agreement is evidenced by a single event: an offer.
Q:
Profits and losses from an LLC do not have to be distributed in the same proportion.
Q:
On May 1, Local Cartage Company and Modern Computers, Inc., orally agree that Local Cartage will pick up from National Chip Corporation and deliver to Modern Computers' manufacturing plant a certain numÂber of computer chips on each Monday in May. Under the agreeÂment, Modern Computers will pay for the delivery services on June 1. On May 1, is this contract express, implied in fact, or implied in law? On May 31, after all of the deliveries have been made, is the contract exeÂcuted or executory?
Q:
An operating agreement can be amended orally.
Q:
On May 1, Faith, a real estate agent, and Grace, a commercial property owner, sign an agreement to find a buyer for Grace's office building. Under the terms, if a buyer makes a serious offer within sixty days, Grace must pay Faith's commission. Faith puts signs on the building, ads in real estate pamphlets and a local newspaper, and features the property in a "walking" tour on the Internet. On June 1, Grace tells Faith that she is canceling their arrangement. Ten days later, Grace closes a sale on the building without Faith's participation. Faith files a suit against Grace for the amount of her commission. In whose favor is the court most likely to rule and why?
Q:
An operating agreement is a document that states the terms for converting an existing business to an LLC.
Q:
Ed, a businessperson, is a friend of Fran, the owner of a candy store. Every day, Ed spends five minutes in Fran's candy store, looking at the candy and usually buying one or two candy bars. One afternoon, Ed goes into the store, looks at the candy, and picks up a $1 candy bar. Ed waves the candy at Fran without saying a word and walks out. Is there a conÂtract? If so, how would it be classified in terms of formation, performÂance, and enforceability?
Q:
Production functions indicate the relationship betweenA) factor costs and output prices. B) factor inputs and the quantity of output.C) the value of inputs and average costs. D) factor inputs and factor prices.
Q:
Articles of organization are documents that evidence a member's ownership interest in an LLC.
Q:
Cody signs and returns a letter from Deb, referring to Deb's Double-D Ranch and its price. When Cody attempts to complete the deal, Deb reÂfuses, claiming that they have no conÂtract. Cody claims they do. What standard determines whether these parties have a contract?
Q:
National Grocers, Inc., enters into a contract with Overland Shipping Company for the deÂlivery of a shipment of fresh produce. If ambiguities appear in the conÂtract, they will be construed against
a. the party who drafted the contract.
b. the party with the greater bargaining power.
c. the promisor.
d. the promisee.
Q:
An LLC organized in the United States is considered a domestic LLC throughout the United States.
Q:
Diaz and Cuzco enter an express contract for the construction of a warehouse. Express contract terms are given, in relation to the parties' course of performance,
a. less priority.
b. the same priority.
c. no priority.
d. more priority.
Q:
An LLC cannot amend its articles of organization.
Q:
The existence of an LLC begins when the articles of organization are filed.
Q:
Which of the following equations is correct?A) accounting profit = total revenue - (explicit costs + implicit costs) B) normal profit = accounting profit + economic profitC) economic profit = accounting profit - implicit costsD) economic profit = accounting profit - explicit costs
Q:
Cory enters into a contract with Diane to act as her personal sports trainer. If they later dispute the meaning, and the contract contains unÂclear terms, the rules of contract interpretation will give effect to
a. the parties' intent as expressed in their contract.
b. what the defendant claims was the parties' intent.
c. what the plaintiff claims was the parties' intent.
d. what the parties now agree they intended.
Q:
A limited liability company cannot be abbreviated as LC.
Q:
In negotiations with Diamond Refining Company, Coastal Oil, Inc., inÂsists that their contract be drafted acÂcording to certain plain language laws. These laws concern the phrasing of
a. contracts that include unfamiliar legal terms.
b. ads that contain vague guaranties.
c. instruction manuals that are difficult to follow.
d. epithets that are too colorful.
Q:
An LLC can be organized in only one state.
Q:
Phil enters into a contract with Quality Resorts, Inc., to work as a chef. Under the plain meaning rule, the meaning of this contract must be deÂterÂmined by reference to
a. any available evidence.
b. any relevant extrinsic evidence.
c. the face of the instrument.
d. the later testimony of the parties.
Q:
The income or losses of an LLC flow through to the members' individual income tax returns; this avoids double-taxation.
Q:
Green Grocers, Inc., enters into a contract with Hiway Transport Company for the delivÂery of a shipment of fresh produce. In a later dispute between these parties over the delivery, the doctrine of quasi contract cannot be used because
a. both of the parties involved are businesses.
b. at least one of the parties had greater bargaining power.
c. the subject of the contract was a service.
d. there is an actual contract covering the subject in dispute.
Q:
An LLC is taxed at the entity level.
Q:
Use the above figure. What would make all possible points attainable for the individual to consume?A) A decrease in the price of good y. B) An increase in the price of good y. C) An increase in the price of good x. D) A decrease in income.
Q:
Ada mistakenly pays property taxes that should have been assessed against Bud. Ada can recover the amount from Bud in quantum meriut
a. even if Bud was not aware of the error.
b. only if Bud tried to conceal the error.
c. only if Bud was aware of the error.
d. under no circumstances.
Q:
The ULLCA is a federal law and is valid across the United States.
Q:
Dot, a real estate agent, tells Elbert, a home seller, that her commission is 12 percent. Elbert agrees that Dot can sell his house but refuses to sign a contract unless the amount of the commission is reduced. After Dot sells the house, Elbert refuses to pay 12 percent. Dot is most likely to recover
a. nothing.
b. on a theory of an express contract.
c. on a theory of an implied contract.
d. on a theory of a quasi contract.
Q:
The Uniform Limited Liability Company Act is a model act that provides comprehensive and uniform laws for the formation, operation, and dissolution of LLCs.
Q:
Mia, a physician, renders aid to Noel, who is injured and unconscious. Mia can recover the cost of the aid from Noel
a. even if Noel was not aware of the aid.
b. only if Noel recovers because of the aid.
c. only if Noel was aware of the aid.
d. under no circumstances.
Q:
A member or a shareholder is the owner of an LLC.
Q:
Scot enters into a contract with Tiffany that later proves voidable at Tiffany's option. If she elects to avoid any duty to perform under the contract
a. both parties are released from it.
b. neither party is released from it.
c. only Scot is released from it.
d. only Tiffany is released from it.
Q:
Quantity of PizzaMarginal UtilityQuantity of BeerMarginal Utility1451402402403303354154105-550Referring to the above table, suppose Bobʹs ratios of marginal utility of beer to the price of beer and the marginal utility of pizza to the price of pizza are equal. If the price of beer increasesA) Bob will probably consume more beer and less pizza. B) Bob will probably consume less beer and less pizza. C) Bob will probably consume less beer and more pizza.D) Bob will still consume the same amount of beer and pizza.
Q:
Courtney promises to buy illegal digital copies of music and movies from Devin, who promises to deliver on August 15. These promises are most likely
a. enforceable.
b. valid.
c. void.
d. voidable.
Q:
LLCs are treated as artificial persons who can sue or be sued and enter into and enforce contracts.
Q:
Vernon claims that his contract with Ulani for catering services is voidable. If their contract is avoided
a. both parties are released from it.
b. both parties must fully perform their obligations under it.
c. a wholly different contract is agreed to.
d. a wholly different contract is imposed "as if" the parties had agreed.
Q:
Limited liability companies are created by federal law.
Q:
A limited liability company is an incorporated business entity.
Q:
Holiday Sales Company and Global Distributors, Inc., enter into a contract for the delivery of imported specialty goods. Until the goods are delivered and paid for, these parties have
a. an executory contract.
b. no contract.
c. a quasi contract.
d. an informal contract.
Q:
The ________ is a duty owed by a member of an LLC to not act adversely to the interests of the LLC.
A) duty of discharge
B) duty of restitution
C) duty of loyalty
D) duty of resolution
Q:
Debit & Credit Accounting Services and Brickwork Construction Company negotiate a contract. If it has all of the elements necessary for one of the parties to enforce it in court, it is
a. a valid contract.
b. a voidable contract.
c. a void contract.
d. an unenforceable contract.
Q:
Which of the following actions requires all members in a manager-managed LLC to vote?
A) issuing a certificate of interest
B) admitting new members
C) converting an existing business into an LLC
D) expanding operations in another country
Q:
Income elasticity of demand is defined asA) the change in income divided by the change in quantity. B) the change in price divided by the change in income.C) the percentage change in demand divided by the percentage change in income. D) the change in income multiplied by the change in quantity.
Q:
Cole drives into Dino's Service Station and asks Erin, the attendant, to fill the tank in Cole's sport utility vehicle. After Erin fills the tank, but before Cole pays for the gas, any contract between Cole and Dino's is
a. executed.
b. executory.
c. quasi.
d. unenforceable.
Q:
Which of the following methods is used to appoint a manager of a manager-managed LLC?
A) appointment by the secretary of state
B) majority vote of the members
C) unanimous vote of members
D) unanimous vote of shareholders
Q:
Following negotiations with Lester's Landscaping for maintenance services for a lawn and garden, Moore enters into an informal contract. This means that the parties' contract
a. requires no special form.
b. is not enforceable.
c. is not a true contract.
d. is voidable.
Q:
Mary, Harold, Harvey, and William form an LLC by contributing $20,000, $50,000, $55,000, and $150,000, respectively. The LLC is designated to be member-managed. When a decision is put to vote, Mary, Harvey, and Harold vote "yes," whereas William votes "no." Which of the following is true in this context?
A) William's decision prevails as he has invested the maximum capital.
B) No conclusion can be derived as the vote is not unanimous.
C) Mary, Harvey, and Harold's decision prevails due to simple majority.
D) The decision is put to vote among employees of the company.
Q:
Which of the following is true of a member-managed LLC?
A) Each member has equal rights in the management of the business of the LLC.
B) The member with the highest capital contribution becomes the de facto manager of the LLC.
C) Any matter relating to the business of the LLC is decided by a unanimous vote of the members.
D) Shareholders are not allowed to decide matters relating to the business of the LLC.
Q:
On behalf of the rock group Uno, their manager Thalia agrees to a performance in Seaside Amphitheatre on July 4. Rex, acting for Seaside, sends a written copy of the agreement to Thalia to be signed. If Thalia signs the copy, the parties will have
a. an express contract.
b. an implied contract.
c. a quasi contract.
d. no contract.
Q:
Which of the following is true of the management of an LLC?
A) Members cannot become managers of an LLC.
B) A manager-managed LLC shares management powers between members and managers.
C) A nonmember can become a manager of an LLC.
D) An LLC can be both member-managed and manager-managed simultaneously.
Q:
Cameron enters a coffee shop in which she has an open account, fills a cup of coffee, holds it so the cashier can see it, acknowledges the cashier's nod, and walks out with the coffee, knowing that she will be billed for it at the end of the month. Cameron has formed
a. an express contract.
b. an implied contract.
c. no contract.
d. a quasi contract.
Q:
What is the price elasticity of demand? How is the price elasticity of demand calculated?
Q:
Following negotiations with Merchants Storage Company, Lonny enters into an informal contract to clean the loading dock. This means that the parties' contract
a. requires no special form.
b. must be drafted "in form" to be valid.
c. is indefinite and imprecise.
d. does not exist.
Q:
A ________ is a person who intentionally or unintentionally causes injury or death to another person.
A) protagonist
B) supplanter
C) reversionist
D) tortfeasor
Q:
When Jeff's car breaks down, he asks Kwik Tow, Inc., to tow it from its location to Loyal Repair Shop. There is no discussion of a price, and Jeff and Kwik do not sign any documents. After the tow, Kwik sends Jeff a bill. With respect to Jeff's obligation to pay the bill, this is
a. an express contract.
b. an implied contract.
c. a quasi contract.
d. no contract.
Q:
Which of the following is true of liabilities of LLCs?
A) Members of the LLC are liable to the extent of their capital contribution.
B) Managers of LLCs are personally liable for the debts, obligations, and liabilities of the LLC.
C) LLCs are not liable for any loss or injury caused by their employees.
D) LLCs are not liable for losses caused due to negligence of their managers during the ordinary course of business.
Q:
Flo tells Gregor that she will buy his textbook from last semester for $65. Gregor agrees. Flo and Gregor have
a. an executed contract.
b. an express contract.
c. an implied contract.
d. a quasi contract.
Q:
Members of an LLC have ________ liability.
A) limited
B) unlimited personal
C) unlimited capital
D) strict
Q:
Transaction costs areA) the costs associated with making a transaction that is required by the government. B) not true costs since they are often not paid.C) the costs associated with exchanges in the service area.D) the costs associated with making, reaching and enforcing agreements.
Q:
John, Nathan, and Julio form JNJ, LLC, with equal capital investment each. On his way to a business meeting with clients of JNJ, Nathan accidentally injures Jessica in a car accident. Which of the following is true in this scenario?
A) Jessica can claim damages from JNJ, LLC, as she was injured in the ordinary course of business.
B) Jessica can only claim damages from Nathan and not from JNJ, LLC.
C) Jessica can choose to claim damages from any one of the three partners.
D) John, Nathan, and Julio have equal personal liability for Jessica's injuries.
Q:
Opie offers to sell his guitar to Pinky for $100. Pinky agrees. They complete and sign a printed form, and Pinky gives Opie a check for the price. This check is
a. a formal contract.
b. an informal contract.
c. a simple contract.
d. no contract.
Q:
A member's distributional interest in an LLC is ________ and may be transferred in whole or in part.
A) a vote
B) a proxy
C) personal property
D) an authority in management
Q:
On behalf of the jazz group Synco-Passion, their manager Raul agrees to a performance in the Quay Club on May 1. Portia, acting for Quay Club, sends a written copy of the agreement to Raul to be signed. Typically, businesspersons put their contracts in writing to
a. ensure proof of the contracts' existence.
b. create substance from form.
c. obtain a check or other negotiable instrument.
d. practice their "plain meaning."
Q:
A member's ownership interest in an LLC is called a ________.
A) certificate of interest
B) distributional interest
C) collateral interest
D) creditor's interest
Q:
On Monday, Neil tells Outdoor Landscaping, Inc., that he will pay Outdoor $500 if a variety of tasks are completed by Friday. On Wednesday, when Outdoor is more than half done with the work, Neil says that he has changed his mind. Under the present-day view, these parties had
a. an expired contract when Neil said that he had changed his mind.
b. a quasi contract when Neil said that he would pay for certain work.
c. a unilateral contract as soon as Outdoor began to perform.
d. no contract.
Q:
Which of the following best defines the term distributional interest?
A) the ratio in which profit is distributed among members of an LLC
B) the process of distributing profits or losses according to the capital investment of the member
C) the constitution of management of the LLC based on the extent of each member's financial investment
D) a member's ownership interest in an LLC that entitles the member to receive distributions of money and property from the LLC
Q:
Which of the following is NOT a reason for the increase in health care costs?A) the aging of the population B) the implementation of new technologiesC) the increase in third party payments D) the decrease in the fertility rate
Q:
Paco offers to pay Quik Delivery (QD) $50 if it picks up and delivers to him a package from Rich within 30 minutes. QD can acÂcept the offer only by meeting the deadline. If QD performs as directed, these parties will have
a. a bilateral contract.
b. a trilateral contract.
c. a unilateral contract.
d. no contract.
Q:
Jasmin, Shou-Yi, and Vanessa form an LLC, and each contributes $25,000 in capital. The LLC operates for a period of time, during which it borrows money from banks and purchases goods on credit from suppliers. After some time, the LLC experiences financial difficulties and goes out of business. If the LLC fails with $500,000 in debts, which of the following is an accurate statement regarding the liability of Jasmin, Shou-Yi, and Vanessa?
A) Each will lose her capital contribution of $25,000, but will not be personally liable for the rest of the unpaid debts of the LLC.
B) Each will lose her capital contribution of $25,000, and will be personally liable for the rest of the unpaid debts of the LLC.
C) Each will not be personally liable for the $500,000 in debts, and will be reimbursed for her $25,000 capital contribution.
D) Each will not be personally liable for the $500,000 in debts, and a constructive trust for the entire $75,000 in capital contributions will be imposed so that Jasmin, Shou-Yi and Vanessa can form a new business venture.
Q:
Clay offers to pay Dorianne $50 for a golf lesson for Estee. They agree to meet the day after tomorrow to exchange the cash for the lesson. These parties have
a. a bilateral contract.
b. a trilateral contract.
c. a unilateral contract.
d. no contract.
Q:
Philip and Deborah form an LLC. Philip contributes $50,000 capital and Deborah contributes $75,000 capital. They do not have an agreement as to how profits are to be shared. If the LLC makes $100,000 profit in its first year, how will the profit be divided among the members?
A) Philip gets $30,000 and Deborah gets $70,000.
B) Philip gets $50,000 and Deborah gets $50,000.
C) Philip gets $25,000 and Deborah gets $75,000.
D) Philip gets $35,000 and Deborah gets $65,000.
Q:
Mona asserts that a deal she entered into with Nate is an unenforceÂable contract. Defenses to the enforcement of a contract include
a. a desire not to perform.
b. adverse economic consequences.
c. results that do not match expectations.
d. the lack of a party's voluntary consent.
Q:
In which of the following cases does the conversion of an existing business to an LLC take effect?
A) when the articles of organization are filed with the secretary of state
B) when the members enter into an agreement of conversion
C) when an operating agreement is finalized by members
D) when the first certificate of interest is issued
Q:
Expert Pavers, Inc., contracts with Fabricated Building Corporation to repave Fabricated's parking lot for which Fabricated agrees to pay. The elements of this, and any other, contract include
a. capability.
b. consideration.
c. formation.
d. practicality.
Q:
Peter, Preston, and Penny organize an LLC in January. While composing the operating agreement, they forget to include an amendment clause. Six months later, the situation demands an amendment to the operating agreement. Which of the following would best apply in this scenario?
A) The operating agreement can be amended if all three members approve.
B) The operating agreement cannot be amended as it contains no amendment provision.
C) The operating agreement can be amended with the affirmative majority of all shareholders.
D) The operating agreement can be amended only 60 days after a new amendment provision is included.