CLA/CP Business and Corporate Law Questions and Answers Flashcards

Under the Revised Uniform Limited Partnership Act (RULPA), which statement is true regarding a limited partner's liability?

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.

Which document is typically required to be filed with the Secretary of State to form a corporation?

Answer: Articles of incorporation

Articles of incorporation must be filed with the Secretary of State as the foundational document to legally create a corporation.

In a general partnership, what is the default rule for sharing profits when there is no partnership agreement addressing the issue?

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.

What is the legal effect of a corporate bylaws provision that conflicts with the articles of incorporation?

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.

Which fiduciary duty requires corporate directors to act with the care that a reasonably prudent person would use in similar circumstances?

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.

What distinguishes a de jure corporation from a de facto corporation?

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.