Question 1

Discuss what is required in most states to form a corporation.

Accepted Answer

Formation of a corporation must comply w

Question 2

Under the Statutory Close Corporation Supplement to the MBCA, a close corporation must have bylaws on file with the office of the secretary of state or some other public office.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A)  Proceeding by shareholders for an injunction. 
B)  Suit by the corporation or shareholders derivatively against present or former directors or officers for commission of the acts. 
C)  A proceeding by the attorney general of the state of incorporation to enjoin it from the transaction of unauthorized business. 
D)  All of these may be used. 
A)  Proceeding by shareholders for an injunction. 
B)  Suit by the corporation or shareholders derivatively against present or former directors or officers for commission of the acts. 
C)  A proceeding by the attorney general of the state of incorporation to enjoin it from the transaction of unauthorized business. 
D)  All of these may be used.

Question 4

Most incorporation statutes have adopted an intermediate position regarding the revocability of preincorporation subscriptions, making them irrevocable for a stated period without regard to whether they are supported by consideration.

Accepted Answer

A) True 
 B)False

Question 5

The incorporators would typically do which of the following?

Accepted Answer

A)  Purchase the outstanding shares. 
B)  Assemble the assets. 
C)  Sign the charter. 
D)  Prepare the incorporation papers. 
A)  Purchase the outstanding shares. 
B)  Assemble the assets. 
C)  Sign the charter. 
D)  Prepare the incorporation papers.

Question 6

Which of the following is not a requirement of a Subchapter S corporation?

Accepted Answer

A)  It must be a domestic corporation. 
B)  It must have no more than 50 shareholders. 
C)  A corporation or partnership cannot be a shareholder. 
D)  It may have only one class of stock. 
A)  It must be a domestic corporation. 
B)  It must have no more than 50 shareholders. 
C)  A corporation or partnership cannot be a shareholder. 
D)  It may have only one class of stock.

Question 7

Corporate powers granted by the RMBCA include all but which of the following?

Accepted Answer

A)  To establish profit-sharing plans and other employee benefit plans. 
B)  To make charitable donations. 
C)  To be considered a person under the Fourth Amendment's search and seizures clause and the Fifth Amendment's self-incrimination clause. 
D)  To borrow and lend money. 
A)  To establish profit-sharing plans and other employee benefit plans. 
B)  To make charitable donations. 
C)  To be considered a person under the Fourth Amendment's search and seizures clause and the Fifth Amendment's self-incrimination clause. 
D)  To borrow and lend money.

Question 8

A corporation has no constitutional protection against unreasonable searches and seizures.

Accepted Answer

A) True 
 B)False

Question 9

Mark complied with all formation requirements for incorporating his taxicab business. He is the sole shareholder in the corporation. The corporation owns two automobiles that Mark frequently uses for his own personal use. In addition, he sometimes deposits the money he takes in during the day into his personal checking account. One day, an employee of the company, while driving one of the company vehicles, accidentally hits a pedestrian in a crosswalk. The pedestrian sues both Mark and the taxi company for $100,000. The corporate assets are only $32,000. Is the corporation liable for the acts of its employee? Will Mark be personally liable under the facts? Explain.

Accepted Answer

Since the formalities of creating a corp

Question 10

Under Subchapter S of the Internal Revenue Code, a corporation's income is taxed only at the shareholder level.

Accepted Answer

A) True 
 B)False

Question 11

Use of "Stewart and Woods, Ltd." as a corporate name would be:

Accepted Answer

A)  permissible as long as it is distinguishable from the name of any domestic corporation or any foreign corporation authorized to do business within the state. 
B)  impermissible because it does not clearly designate that the organization is a corporation. 
C)  impermissible because it includes surnames. 
D)  permissible because the selection of a corporate name is purely up to the organizers of the corporation. 
A)  permissible as long as it is distinguishable from the name of any domestic corporation or any foreign corporation authorized to do business within the state. 
B)  impermissible because it does not clearly designate that the organization is a corporation. 
C)  impermissible because it includes surnames. 
D)  permissible because the selection of a corporate name is purely up to the organizers of the corporation.

Question 12

All of the following are characteristics of a corporation EXCEPT:

Accepted Answer

A)  it has perpetual existence. 
B)  it is a legal entity of its own. 
C)  it is able to be sued and to sue. 
D)  it is usually managed by its shareholders. 
A)  it has perpetual existence. 
B)  it is a legal entity of its own. 
C)  it is able to be sued and to sue. 
D)  it is usually managed by its shareholders.

Question 13

The case of Harris v. Looney dealt with the issue of:

Accepted Answer

A)  a de facto corporation. 
B)  defective incorporation. 
C)  personal liability for a debt by a person purporting to act as or on behalf of a corporation, knowing no corporation existed. 
D)  the effect of an ultra vires act. 
A)  a de facto corporation. 
B)  defective incorporation. 
C)  personal liability for a debt by a person purporting to act as or on behalf of a corporation, knowing no corporation existed. 
D)  the effect of an ultra vires act.

Question 14

Identify and give the basic characteristics of each of the following specialized types of corporations. 
a. Professional corporations 
b. Public corporations 
c. Nonprofit corporations

Accepted Answer

a. Used by doctors, dentists, lawyers, a

Question 15

Name the classifications of corporations.

Accepted Answer

Corporations may be classified

Question 16

All of the following are true of promoters of a corporation EXCEPT:

Accepted Answer

A)  They solicit investors to begin the corporation. 
B)  They prepare the formal documents of incorporation. 
C)  They may make contracts in the name of the corporation. 
D)  They continue to solicit capital whenever needed after incorporation. 
A)  They solicit investors to begin the corporation. 
B)  They prepare the formal documents of incorporation. 
C)  They may make contracts in the name of the corporation. 
D)  They continue to solicit capital whenever needed after incorporation.

Question 17

Carroll, Daniels, and Elmore organized their veterinary practice as a professional corporation. This organization of professionals will be treated as a partnership for liability purposes.

Accepted Answer

A) True 
 B)False

Question 18

The possible consequences of a defective incorporation include which of the following?

Accepted Answer

A)  The state may bring an action against the association for involuntary dissolution. 
B)  A third party may assert that it is not liable to the association. 
C)  The associates are held personally liable to a third party. 
D)  All of these are possible consequences. 
A)  The state may bring an action against the association for involuntary dissolution. 
B)  A third party may assert that it is not liable to the association. 
C)  The associates are held personally liable to a third party. 
D)  All of these are possible consequences.

Question 19

A benefit corporation must periodically report on its promotion of the public benefit and of the best interests of those materially affected by the corporation's conduct.

Accepted Answer

A) True 
 B)False

Question 20

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

Exam 33: Nature and Formation of Corporations

Discuss what is required in most states to form a corporation.

Under the Statutory Close Corporation Supplement to the MBCA, a close corporation must have bylaws on file with the office of the secretary of state or some other public office.

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

Most incorporation statutes have adopted an intermediate position regarding the revocability of preincorporation subscriptions, making them irrevocable for a stated period without regard to whether they are supported by consideration.

The incorporators would typically do which of the following?

Which of the following is not a requirement of a Subchapter S corporation?

Corporate powers granted by the RMBCA include all but which of the following?

A corporation has no constitutional protection against unreasonable searches and seizures.

Under Subchapter S of the Internal Revenue Code, a corporation's income is taxed only at the shareholder level.

Use of "Stewart and Woods, Ltd." as a corporate name would be:

All of the following are characteristics of a corporation EXCEPT:

The case of Harris v. Looney dealt with the issue of:

Identify and give the basic characteristics of each of the following specialized types of corporations. a. Professional corporations b. Public corporations c. Nonprofit corporations

Name the classifications of corporations.

All of the following are true of promoters of a corporation EXCEPT:

Carroll, Daniels, and Elmore organized their veterinary practice as a professional corporation. This organization of professionals will be treated as a partnership for liability purposes.

The possible consequences of a defective incorporation include which of the following?

A benefit corporation must periodically report on its promotion of the public benefit and of the best interests of those materially affected by the corporation's conduct.

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

Introduction to Law

Business Ethics

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

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability Warranties and Strict Liability

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits Collections and Funds Transfers

Relationship of Principal and Agent

Relationship With Third Parties

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Financial Structure of Corporations

Management Structure of Corporations

Fundamental Changes of Corporations

Secured Transactions and Suretyship

Bankruptcy

Securities Regulation

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

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 Wills

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