Katie and Her Siblings Created a Design Company Called Homeward

question 205

Multiple Choice

Katie and her siblings created a design company called Homeward Bound LLP. Although key business functions are centralized, each sibling is a licensed architect that designs, builds, and installs residential and commercial buildings for his/her own clients. Unfortunately, a recent design of Katie's that was ultimately created and installed for one of their clients resulted in water damage to the basement of the client's new home. The limited liability partnership

• A) guarantees that none of the company's partners will lose more than the amount they invested in the company.
• B) guarantees that only those partners who were directly involved in designing and building this home face unlimited liability for claims against the firm.
• C) protects the partners from any suit by the client.
• D) will enable the firm to quickly reorganize with only minor financial losses.

---

Definitions:

Organization Meeting

The initial meeting where the structure of a new organization is decided, officers are elected, and bylaws are adopted.

Preincorporation Contracts

Agreements made by the founding members of a corporation on its behalf before the company is formally incorporated.

Articles of Incorporation

A set of formal documents filed with a state governmental authority to legally document the creation of a corporation.

Bylaws

Written rules and regulations governing the operations of a corporation or other formal organizations.