CLA/CP Exam CLA/CP Business and Corporate Law Questions and Answers 2 — Questions and Answers
Question 1: Under the Revised Uniform Limited Partnership Act (RULPA), which statement is true regarding a limited partner's liability?
- A limited partner is liable for all partnership debts
- A limited partner's liability is generally limited to their capital contribution (Correct answer)
- A limited partner has unlimited personal liability if they invest more than $10,000
- A limited partner is always jointly and severally liable with general partners
Correct answer: A limited partner's liability is generally limited to their capital contribution
Under RULPA, limited partners generally risk only their capital contribution unless they participate in control of the business.
Question 2: Which document is typically required to be filed with the Secretary of State to form a corporation?
- Operating agreement
- Partnership agreement
- Articles of incorporation (Correct answer)
- Shareholder resolution
Correct answer: Articles of incorporation
Articles of incorporation must be filed with the Secretary of State as the foundational document to legally create a corporation.
Question 3: In a general partnership, what is the default rule for sharing profits when there is no partnership agreement addressing the issue?
- Profits are shared in proportion to capital contributions
- Profits are shared equally among all partners (Correct answer)
- The managing partner receives 60% and the rest is split equally
- Profits are shared based on seniority
Correct answer: Profits are shared equally among all partners
Under the Uniform Partnership Act, absent an agreement to the contrary, partners share profits equally regardless of their capital contributions.
Question 4: What is the legal effect of a corporate bylaws provision that conflicts with the articles of incorporation?
- The bylaws provision controls because bylaws are more specific
- The articles of incorporation prevail over conflicting bylaws (Correct answer)
- Both documents are void on the conflicting point
- The court will decide which provision is more equitable
Correct answer: The articles of incorporation prevail over conflicting bylaws
Articles of incorporation are the superior governing document, and any bylaw provision that conflicts with them is unenforceable.
Question 5: Which fiduciary duty requires corporate directors to act with the care that a reasonably prudent person would use in similar circumstances?
- Duty of loyalty
- Duty of obedience
- Duty of care (Correct answer)
- Duty of good faith
Correct answer: Duty of care
The duty of care requires directors to make informed decisions with the diligence that a reasonably prudent person would exercise in a similar position.
Question 6: What distinguishes a de jure corporation from a de facto corporation?
- A de jure corporation has fewer shareholders
- A de facto corporation has substantially complied with incorporation statutes but has a minor defect (Correct answer)
- A de jure corporation exists only by court order
- A de facto corporation has more legal protections than a de jure corporation
Correct answer: A de facto corporation has substantially complied with incorporation statutes but has a minor defect
A de facto corporation exists when incorporators have made a good faith attempt to comply with incorporation requirements but have a minor technical defect.
CLA/CP Exam CLA/CP Business and Corporate Law Questions and Answers 2
Under the Revised Uniform Limited Partnership Act (RULPA), which statement is true regarding a limited partner's liability?