Question 1

The City of Chicago would best be described as which of the following?

Accepted Answer

A) A corporation formed pursuant to the Model Business Corporation Act. 
B) A close corporation. 
C) A public corporation. 
D) A domestic corporation. 
A) A corporation formed pursuant to the Model Business Corporation Act. 
B) A close corporation. 
C) A public corporation. 
D) A domestic corporation.

Question 2

A corporation is a domestic corporation in the state in which it is incorporated.

Accepted Answer

A) True 
 B)False

Question 3

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 the above. 
E) None of the above. 
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 the above. 
E) None of the above.

Question 4

Which of the following is correct regarding a foreign corporation?

Accepted Answer

A) A foreign corporation is incorporated in a foreign country. 
B) Failure to obtain a certificate of authority to transact business in the state impairs the validity of a contract entered into by the corporation. 
C) A foreign corporation transacting business within a particular state without having first qualified cannot use the state court to maintain a lawsuit until the corporation obtains a certificate of authority. 
D) All of the above are correct. 
A) A foreign corporation is incorporated in a foreign country. 
B) Failure to obtain a certificate of authority to transact business in the state impairs the validity of a contract entered into by the corporation. 
C) A foreign corporation transacting business within a particular state without having first qualified cannot use the state court to maintain a lawsuit until the corporation obtains a certificate of authority. 
D) All of the above are correct.

Question 5

The Model Business Corporation Act is a state statute that, like the UCC, has been adopted by all of the states in the United States to make state incorporation statutes uniform throughout the United States.

Accepted Answer

A) True 
 B)False

Question 6

A preincorporation subscription is an offer to purchase capital stock in a corporation yet to be formed.

Accepted Answer

A) True 
 B)False

Question 7

The RMBCA has been adopted, in whole or in part, by more than half of the states.

Accepted Answer

A) True 
 B)False

Question 8

Identify each of the following corporations by type.
a.Dr.Smith and Dr.Jones are both medical doctors who practice together.They incorporate their medical practice so that they can offer themselves and their employees better employment benefits.
b.A group of concerned citizens obtains a corporate charter from the state to form a local Water Planning and Management Corporation that is authorized to do water planning on a local level and to grant permits for such purposes as the installation of ditches, and the encouragement of good water usage practices in their jurisdictional area.
c.Agatha and Betty, who are sisters, form a corporation in which they are the sole shareholders.They plan to operate a large retail store that sells collectibles.Agatha is the president and Betty is the chairperson of the board of directors.
d.Bill and Carl form a corporation to prevent spouse and child abuse.The corporation operates a shelter for battered women and homeless children.
e.Zeron Corporation is incorporated in the State of West Virginia.It decides to expand its business to Kentucky.What type of corporation is it in West Virginia? What type of corporation is it in Kentucky?

Accepted Answer

a.Smith and Jones have a professional co

Question 9

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 10

Which of the following is untrue regarding closely held corporations?

Accepted Answer

A) Most corporations in the U.S.are closely held. 
B) Shareholders frequently restrict the transfer of shares to prevent "outsiders" from obtaining the stock. 
C) Shareholders usually have little voice in the management and control of the business. 
D) Some states have enacted special legislation to accommodate the needs of closely held corporations. 
A) Most corporations in the U.S.are closely held. 
B) Shareholders frequently restrict the transfer of shares to prevent "outsiders" from obtaining the stock. 
C) Shareholders usually have little voice in the management and control of the business. 
D) Some states have enacted special legislation to accommodate the needs of closely held corporations.

Question 11

Most states have special incorporation statutes governing nonprofit corporations.

Accepted Answer

A) True 
 B)False

Question 12

If a foreign corporation wishes to avoid being considered doing business in Arkansas, it would be careful NOT to do which of the following in Arkansas?

Accepted Answer

A) Maintain a telephone listing there. 
B) Make contracts in the state. 
C) Maintain an office to conduct intrastate business. 
D) All of the above. 
A) Maintain a telephone listing there. 
B) Make contracts in the state. 
C) Maintain an office to conduct intrastate business. 
D) All of the above.

Question 13

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

Accepted Answer

A) General Supply's board of directors is exactly the same as Playne's. 
B) The president of General Supply is also the vice president of Playne. 
C) Playne's income and General Supply's income is held in one account. 
D) None of the above. 
A) General Supply's board of directors is exactly the same as Playne's. 
B) The president of General Supply is also the vice president of Playne. 
C) Playne's income and General Supply's income is held in one account. 
D) None of the above.

Question 14

The Statutory Close Corporation Supplement to the Model and Revised Acts applies only to corporations having fewer than forty shareholders.

Accepted Answer

A) True 
 B)False

Question 15

Under the RMBCA, a newly formed corporation need not hold an organizational meeting.

Accepted Answer

A) True 
 B)False

Question 16

What is the doctrine of ultra vires? What is the effect of an ultra vires contract?

Accepted Answer

Ultra vires acts are without legal autho

Question 17

Subchapter S is a section of the Model Business Corporation Act that provides special benefits for small corporations.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

What are the consequences of a defective incorporation?

Accepted Answer

The possible consequences of a defective

Question 20

"Piercing the corporate veil" will result in personal liability of shareholders.

Accepted Answer

A) True 
 B)False

Exam 34: Nature and Formation of Corporations

The City of Chicago would best be described as which of the following?

A corporation is a domestic corporation in the state in which it is incorporated.

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

Which of the following is correct regarding a foreign corporation?

The Model Business Corporation Act is a state statute that, like the UCC, has been adopted by all of the states in the United States to make state incorporation statutes uniform throughout the United States.

A preincorporation subscription is an offer to purchase capital stock in a corporation yet to be formed.

The RMBCA has been adopted, in whole or in part, by more than half of the states.

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

Which of the following is untrue regarding closely held corporations?

Most states have special incorporation statutes governing nonprofit corporations.

If a foreign corporation wishes to avoid being considered doing business in Arkansas, it would be careful NOT to do which of the following in Arkansas?

The Statutory Close Corporation Supplement to the Model and Revised Acts applies only to corporations having fewer than forty shareholders.

Under the RMBCA, a newly formed corporation need not hold an organizational meeting.

What is the doctrine of ultra vires? What is the effect of an ultra vires contract?

Subchapter S is a section of the Model Business Corporation Act that provides special benefits for small corporations.

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

What are the consequences of a defective incorporation?

"Piercing the corporate veil" will result in personal liability of shareholders.

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

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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