Question

One of the advantages to the standard limited liability form over the Subchapter S corporation form is that:

A) The Subchapter S form does not provide “full shield” insulation or liability for its shareholders.

B) In the Subchapter S form, corporate profits are effectively taxed twice.

C) The limited liability company cannot have a manager-managed form of control, whereas that is common in the Subchapter S form.

D) The limited liability company form requires few formalities in its operation (minutes, annual meetings, etc.).

An agreement to rob a bank is an example of a:

A) Voidable Contract

B) Void Contract

C) Quasi Contract

D) Contract Implied in Law

National Widget Company and Rex Corp. orally agreed that National Widget would supply Rex 1,000 of National Widget’s standard, base widgets at $100 per widget. After National Widget manufactured the widgets at a cost of $90,000, Rex notified National Widget that the widgets were no longer needed. National Widget is holding the widgets and has requested payment from Rex. National Widget has not attempted to resell the widgets. National Widget has incurred storage fees of $2,000. If Rex refuses to pay National Widget, and National Widget sues Rex, the most National Widget will be entitled to recover is:

A) $100,000

B) Nothing

C) $90,000.

D) $102,000

Bridget and Bill are the sole members of B&B Distribution, LLC, a Missouri limited liability company, which is set up to be taxed as a partnership. Each of them owns 50% of the membership interests in B&B Distribution. Last year, B&B Distribution had a profit of $100,000, but only distributed $50,000, retaining $50,000 to grow the business. Bridget and Bill may each be liable for income taxes on:

A) $100,000

B) None of the above. Limited liability companies always pay all of the taxes on the business’s profit.

C) $25,000

D) $50,000

E) Whatever they receive from their B&B Distribution.

Which of the following employees’ acts is least likely to result in the employers’ vicarious liability?

A) A lazy fast food clerk leaves lettuce on the floor around the salad bar while he texts friends and a customer slips on the lettuce.

B) A salesperson knowingly lies to a customer about the service record of a product to induce the customer’s purchase of the product.

C) A bank teller mistakenly cashes a forged check on a customer’s checking account.

D) A nurse poisons an orderly at the hospital where they both work when the affair they are having goes bad.

Biggest Corp. in New York City emails a job offer to Sandy in Los Angeles, saying “We will pay you $100,000 per year, starting July 1.” Sandy emails right back, saying, “Thank you. That’s great. I accept your generous offer and am excited to start work, although I will need $3,000 to pay for my move across the country.” On July 1, Sandy arrives and finds that the position is filled by Lee. Sandy sues Biggest Corp.

A) Sandy wins $103,000.

B) Sandy wins $100,000.

C) Sandy wins $3,000.

D) Sandy wins nothing

Acme Motor Company sold Dana Buyer a $90,000 Jaguar as new that actually had flood damage. Acme did not disclose the flood damage to Dana. Dana sues for fraud and recovers a compensatory aware of $90,000. In most cases, a jury would rarely be allowed to award more than ________ in punitive damages on top of the actual damages.

A) $180,000

B) $810,000

C) $90,000.

D) $2,000,000

Answer 1

1. D. The limited liability company form requires few formalities in its operation (minutes, annual meetings, etc.).

LLC don't have to comply with such formalities as corporations.

2. B. Void contract.

A contract is void if it has an illegal purpose.

3. B. Nothing.

Oral contract aren't enforceable in the court of law for amounts over $500. So this contract would not be enforceable.

4. C. $25,000

In LLC , partners are taxed on their income which is 50,000. in this case $25,000 each.