Question 1

Matt and Ron would like to form a corporation.Discuss what is required in most states to form a corporation.

Accepted Answer

Organizers or promoters arrange for capi

Question 2

Which of the following is not true of promoters of a corporation?

Accepted Answer

A) They arrange for capital and financing to start a corporation. 
B) They assemble the necessary assets to start a corporation. 
C) They attend to the actual legal formation of a corporation. 
D) They continue to solicit capital whenever needed after incorporation. 
A) They arrange for capital and financing to start a corporation. 
B) They assemble the necessary assets to start a corporation. 
C) They attend to the actual legal formation of a corporation. 
D) They continue to solicit capital whenever needed after incorporation.

Question 3

Which of the following may be used to redress the ultra vires acts committed by a corporation?

Accepted Answer

A) A proceeding by shareholders to enjoin furthers such acts 
B) A shareholder derivative suit against the directors or officers for exceeding their authority 
C) A proceeding by the Attorney General of the state to enjoin the corporation from the transaction of unauthorized business 
D) All of these may be used. 
A) A proceeding by shareholders to enjoin furthers such acts 
B) A shareholder derivative suit against the directors or officers for exceeding their authority 
C) A proceeding by the Attorney General of the state to enjoin the corporation from the transaction of unauthorized business 
D) All of these may be used.

Question 4

Claire opened Claire's Beauty Parlor in her home.She solicited funds to begin the business from Jack, who was led to believe that the business was incorporated.Claire had, in fact, never filed the papers.One day, Claire fell asleep while giving a customer a permanent and the solution caused her customer severe burns.The customer sued the Beauty Parlor for $500,000, an amount enormously in excess of the business assets.Under the RMBCA, what would be the result?

Accepted Answer

A) Claire and Jack would not be personally liable. 
B) Claire would not be personally liable, but Jack would. 
C) Jack would not be personally liable, but Claire would. 
D) Both would be personally liable since there was no corporation formed. 
A) Claire and Jack would not be personally liable. 
B) Claire would not be personally liable, but Jack would. 
C) Jack would not be personally liable, but Claire would. 
D) Both would be personally liable since there was no corporation formed.

Question 5

A promoter is personally liable on contracts made by him in the name of the unformed corporation:

Accepted Answer

A) even if the corporation adopts the contract. 
B) only until the corporation is formed. 
C) if the promoter, the third party, and the corporation enter into a novation substituting the corporation for the promoter. 
D) only if the corporation is never formed. 
A) even if the corporation adopts the contract. 
B) only until the corporation is formed. 
C) if the promoter, the third party, and the corporation enter into a novation substituting the corporation for the promoter. 
D) only if the corporation is never formed.

Question 6

A publicly held corporation is one that is both (a) owned by at least 50 shareholders and (b) required to register under the Federal Securities and Exchange Act of 1934.

Accepted Answer

A) True 
 B)False

Question 7

The Revised Act provides that only one person need act as the incorporator, though more may do so.

Accepted Answer

A) True 
 B)False

Question 8

The Model Business Corporation Act provides for small, closely held corporations to be organized and creates
Subchapter S corporations with special benefits.

Accepted Answer

A) True 
 B)False

Question 9

Master Ink owns all the stock of Prime Pen Co.A Prime Pen employee commits a tort for which the employer is liable.The suit results in a judgment for $1 million against Prime Pen.Prime Pen assets total $650,000, but Master Ink's assets are in the millions.In which of the following situations would the judgment have to be paid by Master Ink?

Accepted Answer

A) The Master Ink board of directors is exactly the same as Prime Pen's. 
B) The president of Master Ink is also the vice president of Prime Pen. 
C) Prime Pen's income and Master Ink's income is held in one account. 
D) None of these. 
A) The Master Ink board of directors is exactly the same as Prime Pen's. 
B) The president of Master Ink is also the vice president of Prime Pen. 
C) Prime Pen's income and Master Ink's income is held in one account. 
D) None of these.

Question 10

The bylaws of the corporation:

Accepted Answer

A) are adopted as one of the first items of business at the organizational meeting held promptly after incorporation. 
B) may contain any provision for managing the business not inconsistent with law or the charter. 
C) may be repealed by the board of directors. 
D) All of these. 
A) are adopted as one of the first items of business at the organizational meeting held promptly after incorporation. 
B) may contain any provision for managing the business not inconsistent with law or the charter. 
C) may be repealed by the board of directors. 
D) All of these.

Question 11

In many states, the services of the incorporators are perfunctory and short-lived.

Accepted Answer

A) True 
 B)False

Question 12

A nonprofit corporation may make a profit, but it may not be distributed to members, directors, or officers.

Accepted Answer

A) True 
 B)False

Question 13

The Tennessee Valley Authority is an example of a private corporation.

Accepted Answer

A) True 
 B)False

Question 14

A corporation whose principal place of business operation is Florida must be incorporated in Florida.

Accepted Answer

A) True 
 B)False

Question 15

The president of Hi-Glow Cosmetics sends his top chemist to Hi-Glow's competitor's labs to steal its formula for shiny lipstick.The chemist gets caught and is sent to jail.Can Hi-Glow be found to be criminally liable?

Accepted Answer

A) Yes, under the theory of ultra vires 
B) Yes, since the president authorized the crime 
C) No, because a corporation acts through the board of directors 
D) No, because a corporation can't go to jail 
A) Yes, under the theory of ultra vires 
B) Yes, since the president authorized the crime 
C) No, because a corporation acts through the board of directors 
D) No, because a corporation can't go to jail

Question 16

A corporation can be formed in the State of New York by complying with New York statutes or with the Federal
Model Corporation Act.

Accepted Answer

A) True 
 B)False

Question 17

The "corporate veil" is most likely to be pierced in the case of closely held corporations and in parent-subsidiary relationships.

Accepted Answer

A) True 
 B)False

Question 18

If an act is ultra vires, it is beyond the legal authority of the corporation.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is correct regarding a foreign corporation?

Accepted Answer

A) A foreign corporation is incorporated in a foreign country. 
B) A foreign corporation may not do business, except for acts in interstate commerce, in any state other than the state of its incorporation. 
C) Doing or transacting business within a particular state makes a foreign corporation subject to local litigation, regulation, and taxation. 
D) All of these are correct. 
A) A foreign corporation is incorporated in a foreign country. 
B) A foreign corporation may not do business, except for acts in interstate commerce, in any state other than the state of its incorporation. 
C) Doing or transacting business within a particular state makes a foreign corporation subject to local litigation, regulation, and taxation. 
D) All of these are correct.

Question 20

Define "promoter" in reference to a corporation.

Accepted Answer

A promoter is a person who brings about

Exam 33: Nature, Formation, and Powers

Matt and Ron would like to form a corporation.Discuss what is required in most states to form a corporation.

Which of the following is not true of promoters of a corporation?

Which of the following may be used to redress the ultra vires acts committed by a corporation?

A promoter is personally liable on contracts made by him in the name of the unformed corporation:

A publicly held corporation is one that is both (a) owned by at least 50 shareholders and (b) required to register under the Federal Securities and Exchange Act of 1934.

The Revised Act provides that only one person need act as the incorporator, though more may do so.

The Model Business Corporation Act provides for small, closely held corporations to be organized and creates Subchapter S corporations with special benefits.

The bylaws of the corporation:

In many states, the services of the incorporators are perfunctory and short-lived.

A nonprofit corporation may make a profit, but it may not be distributed to members, directors, or officers.

The Tennessee Valley Authority is an example of a private corporation.

A corporation whose principal place of business operation is Florida must be incorporated in Florida.

The president of Hi-Glow Cosmetics sends his top chemist to Hi-Glow's competitor's labs to steal its formula for shiny lipstick.The chemist gets caught and is sent to jail.Can Hi-Glow be found to be criminally liable?

A corporation can be formed in the State of New York by complying with New York statutes or with the Federal Model Corporation Act.

The "corporate veil" is most likely to be pierced in the case of closely held corporations and in parent-subsidiary relationships.

If an act is ultra vires, it is beyond the legal authority of the corporation.

Which of the following is correct regarding a foreign corporation?

Define "promoter" in reference to a corporation.

Introduction to Law

Business Ethics and the Social Responsibility of Business

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remedies

Relationship of Principal and Agent

Relationship With Third Parties

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Products Liability: Warranties and Strict Liability in Tort

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transfers

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Financial Structure

Management Structure

Fundamental Changes

Secured Transactions and Suretyship

Bankruptcy

Protection of Intellectual Property

Antitrust

Consumer Protection

Employment Law

Securities Regulation

Accountants Legal Liability

Environmental Law

International Business Law

Introduction to Property, Property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Decedents Estates

51: The Legal Environment Of Business

52: Contracts.

53: Agency.

54: Sales

55: Negotiable Instruments

56: Unincorporated Business Association

57: Corporations

58: Debtor and Creditor Relation

59: Regulation of Business

60: Property.

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