Fanny and john each own and manage their own

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Fanny and John each own and manage their own companies.Fanny's business is manufacturing freight boxes of all types, andJohn's business is selling freight boxes to different industries.They decide to combine their expertise and knowledge toproduce and sell freight boxes specifically designed for the newairline company that just formed in their city. Which of thefollowing best describes the business formed by the parties?Question 4a. A general partnership.b. A limited liability partnership.c. A sole proprietorship.d. A joint venture.
Choice "d" is correct.A joint venture is formed for a single business undertaking suchas building and designing freight containers to be sold specificallyto one company.Each company coming together in this jointventure has its own business outside of this one endeavor.Question 4
Noll Corp. and Orr Corp. are contemplating entering into anunincorporated joint venture.Such a joint venture:Question 5
Choice "a" is correct.The legal requirements, the consequences, the advantages, anddisadvantages of forming a joint venture generally are identicalto those of a general partnership.Joint ventures are treated as a partnership in most importantlegal aspects.Question 5
A.Nature of a Corporation1.Distinct Legal EntityA corporation is a legal entity (i.e., it exists as an entitydistinct from its shareholders). Thus, it can sue and canbe sued, own property, and even has some constitutionalrights.IV. Corporations
a.Corporation is LiableAs a distinct legal entity, only the corporation is liable forcorporate obligations.b.Generally No Personal LiabilityGenerally, shareholders, directors, and officers are notpersonally liable for contracts made by their corporation.Neither are they liable for corporate torts, except to theextent the shareholder, officer, or director participated inthe tort.IV. Corporations
B. Formation of a Corporation1. Created Under StatuteCorporationsarecreatedbycomplyingwitha stateincorporation statute. A majority of states follow the RevisedModel Business Corporation Act, or RMBCA. Many CPA Examquestions have specifically asked for RMBCA rules.IV. Corporations
B. Formation of a Corporation2. Promoters Procure Capital CommitmentsThe first step in forming a corporation is the procurement ofcommitments for capital. This is done by promoters. Generally,promoters enter into contracts (called "stock subscriptions")with the third parties who are interested in becomingshareholders of the corporation once it is formed. Promotersmight also enter into contracts with others for goods orservices to be provided to the corporation once it is formed.

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Term
Spring
Professor
N/A
Tags
Business Law, Corporation

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