Q&A Hero

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: A limited liability company cannot be abbreviated as LC.

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 un­clear 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: An LLC can be organized in only one state.

Q: In negotiations with Diamond Refining Company, Coastal Oil, Inc., in­sists that their contract be drafted ac­cording 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: The income or losses of an LLC flow through to the members' individual income tax returns; this avoids double-taxation.

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 de­ter­mined 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: Green Grocers, Inc., enters into a contract with Hiway Transport Company for the deliv­ery 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: 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: 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: 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: 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: 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: 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: 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: 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: Members of an LLC have ________ liability. A) limited B) unlimited personal C) unlimited capital D) strict

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: 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: 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 ac­cept 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 unenforce­able 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: 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.

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: Crosby believes that he and Dakota agreed he would act as her personal sports trainer for seven workout sessions. In a later dispute, the existence of any contract can be judged by a. the parties' statements at the time of their alleged contract. b. what the defendant claims was the parties' intent. c. what the plaintiff claims was the parties' intent. d. what the parties agree they intended.

Q: A(n) ________refers to an agreement among members that governs the affairs and business of the LLC and the relations among members, managers, and the LLC. A) certificate of interest B) franchise agreement C) operating agreement D) agreement of conversion

Q: Cassandra accepts what she believes was an offer to work for Destination Vacations, Inc., as a chef. In determining whether a contract has been formed, an element of prime importance is a. the condition of the workplace. b the duration of the work. c. the intent of the parties. d. the subject of the contract.

Q: The certificate of interest acts the same as a(n) ________ issued by a corporation. A) promissory note B) stock certificate C) deposit note D) initial public offer

Q: When the words in a contract have more than one meaning, they are cut from the contract.

Q: A(n) ________ refers to a document that evidences a member's ownership interest in an LLC. A) certificate of interest B) distributional interest C) operating agreement D) agreement of conversion

Q: A reasonable, lawful, and effective meaning will normally be given to all of a contract's terms.

Q: Sam Muller and Toby Richardson form an LLC in the state of Delaware. In the articles of organization, they specify the duration of the LLC as 25 years from the date of filing the articles of organization. Which of the following is true in this context? A) The LLC is invalid as it does not specify a date of termination. B) The LLC may be dissolved at will any time after 25 years from the date of filing the articles of organization. C) Muller and Richardson have formed a term LLC. D) Muller and Richardson have formed an at-will LLC.

Q: Plain language laws regulate some types of contracts to require "legalese."

Q: An LLC that was organized in Alabama and is operating in Texas with no operations outside the United States is considered a ________ in Texas. A) foreign limited liability company B) limited liability partnership C) domestic limited liability company D) general partnership

Q: The doctrine of quasi contract can be used only when there is an actual con­tract that covers the matter in controversy.

Q: An LLC is a ________ in the state in which it is organized. A) sole proprietorship B) domestic LLC C) term LLC D) general partnership

Q: A party who confers a benefit on someone else unnecessarily can invoke the principle of quasi contract to recover the cost.

Q: ________ refer to the formal documents that must be filed at the secretary of state's office of the state of organization of an LLC to form the LLC. A) Operating agreements B) Certificates of interest C) Articles of organization D) Articles of amendment

Q: In states where an LLC may be organized by only one member, ________ can obtain the benefit of the limited liability shield of an LLC. A) corporations B) sole proprietors C) LLPs D) general partnerships

Q: A quasi contract is a true contract.

Q: Which of the following is true of an LLC formation? A) Doctors and lawyers can operate practices as LLCs. B) An LLC has to be organized in every state that it operates. C) LC cannot be used to denote an LLC. D) An LLC is a creation of federal law.

Q: A void contract produces legal obligations on the parties but is not otherwise enforceable.

Q: Which of the following is true of LLC taxation? A) An LLC is taxed as a corporation in all general cases. B) Income or losses of an LLC do not flow through to the members' individual income tax returns. C) Members of an LLC are subject to double taxation. D) An LLC is not taxed at the entity level.

Q: An unenforceable contract is one that cannot be enforced because of cer­tain legal defenses against it.

Q: Which of the following is true of the ULLCA? A) It provides comprehensive laws for the formation of corporations. B) It provides uniform laws for the dissolution of LLCs. C) It is a state law that is uniform across the United States. D) It governs the operation of proprietorships and LLPs.

Q: A void contract is enforceable if it is in writing.

Q: The owner of an LLC is called a ________. A) general partner B) limited partner C) proprietor D) member