LLC liability and piercing the veil — Flashcards

8 flashcards

When may an LLC member or manager be personally liable for an LLC obligation?

What factors commonly support piercing an LLC’s veil?

Under RUPA, if a partner acts in the ordinary course of business but exceeds an internal authority limit, when is the partnership bound, and are the general partners personally liable?

What is the general rule for a director’s personal liability for corporate obligations?

When is a partnership liable for a partner’s wrongful act?

What does the business judgment rule do for directors?

Are shareholders personally liable for corporate debts merely because they own shares?

What is a partner’s personal liability for partnership obligations under RUPA?

LLC liability and piercing the veil Bar Exam Flashcards - Medical Study Cards

Master LLC liability and piercing the veil with Oncourse flashcards. These spaced repetition flashcards are designed for medical students preparing for NEET PG, USMLE Step 1, USMLE Step 2, MBBS exams, and other medical licensing examinations.

LLC liability and piercing the veil Flashcard Deck - 8 Cards

Flashcard 1: When may an LLC member or manager be personally liable for an LLC obligation?

Answer: An LLC member or manager is generally not liable solely because of that status, but remains liable for the person’s own wrongful conduct and may be liable if a court pierces the LLC veil.

Flashcard 2: What factors commonly support piercing an LLC’s veil?

Answer: Courts commonly consider domination, commingling of assets, failure to maintain separateness, undercapitalization, and misuse of the LLC to perpetrate fraud or injustice; no single factor is usually sufficient by itself.

Flashcard 3: Under RUPA, if a partner acts in the ordinary course of business but exceeds an internal authority limit, when is the partnership bound, and are the general partners personally liable?

Answer: The partnership is bound if the third party did not know or receive notification of the partner's lack of authority. If the partnership is bound, all general partners are jointly and severally liable for the resulting partnership obligation under RUPA §306.

Flashcard 4: What is the general rule for a director’s personal liability for corporate obligations?

Answer: A director is not personally liable for a corporation’s contract debts merely because of director status, but may be liable for the director’s own tort, breach of fiduciary duty, or other wrongful conduct.

Flashcard 5: When is a partnership liable for a partner’s wrongful act?

Answer: Under the majority RUPA rule, the partnership is liable when the partner’s act or omission occurs in the ordinary course of the partnership’s business or with authority, even if the partnership is not at fault itself.

Flashcard 6: What does the business judgment rule do for directors?

Answer: The majority rule presumes that disinterested, informed directors acted in good faith and in the corporation’s best interests, so courts generally do not impose damages for an honest business decision absent a basis such as bad faith, self-dealing, or gross negligence.

Flashcard 7: Are shareholders personally liable for corporate debts merely because they own shares?

Answer: No; a corporation is a separate legal person, so shareholders ordinarily have limited liability and risk only their investment, absent grounds for piercing the corporate veil.

Flashcard 8: What is a partner’s personal liability for partnership obligations under RUPA?

Answer: Under the majority RUPA rule, all partners are jointly and severally liable for partnership obligations, although a claimant generally must first obtain a judgment against the partnership before enforcing it against a partner’s separate assets.

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LLC liability and piercing the veil Flashcards for Bar Exam

Study 8 flashcards on LLC liability and piercing the veil for Bar Exam Business Associations and Relationships. These active recall cards cover the key concepts, clinical associations, and high-yield facts from this chapter of Liability rules. Each card is designed to test your understanding rather than just recognition, building stronger and more durable memories for exam day.

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There are 8 flashcards for LLC liability and piercing the veil, covering the key concepts, clinical correlations, and high-yield facts from this chapter of Liability rules.

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Read through each prompt and try to answer before revealing the back of the card. This active recall approach builds stronger memories than passive reading. Combine flashcards with the study notes and MCQ practice for the best results.

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Yes. This page covers one chapter of Liability rules. Visit the topic page to see all chapters and their flashcards under Business Associations and Relationships.

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