Question 1

A director:

Accepted Answer

A)  can be removed from office if he or she voluntarily failed to attend directors' meetings. 
B)  cannot be removed from office because he or she has acted contrary to the interests of the corporation. 
C)  cannot be removed from office by shareholders without any cause. 
D)  can be removed from office without being given notice or a hearing. 
A)  can be removed from office if he or she voluntarily failed to attend directors' meetings. 
B)  cannot be removed from office because he or she has acted contrary to the interests of the corporation. 
C)  cannot be removed from office by shareholders without any cause. 
D)  can be removed from office without being given notice or a hearing.

Question 2

A corporation is liable for all torts committed by its employees while acting in the course of and within the scope of their employment.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is true of the lawsuits in which minority shareholders complain that they have been unfairly treated by the directors?

Accepted Answer

A)  These suits always involve open corporations. 
B)  Minority shareholders will always win such suits. 
C)  These suits can claim a freeze-out. 
D)  The business judgment rule cannot be applied to such lawsuits. 
A)  These suits always involve open corporations. 
B)  Minority shareholders will always win such suits. 
C)  These suits can claim a freeze-out. 
D)  The business judgment rule cannot be applied to such lawsuits.

Question 4

When a corporate manager makes an honest error in judgment,the business judgment rule directs that the manager will:

Accepted Answer

A)  be liable for corporate losses. 
B)  not be liable and a court will step in to correct the manager's mistake. 
C)  not be liable if he acted with care and in good faith. 
D)  be liable for all losses resulting from the error. 
A)  be liable for corporate losses. 
B)  not be liable and a court will step in to correct the manager's mistake. 
C)  not be liable if he acted with care and in good faith. 
D)  be liable for all losses resulting from the error.

Question 5

Vacancies on the board can be filled:

Accepted Answer

A)  by appointment by the chief executive officer of a corporation. 
B)  only by a vote of the shareholders. 
C)  by appointment by the chairperson of the board. 
D)  only by a vote of the corporation's employees. 
A)  by appointment by the chief executive officer of a corporation. 
B)  only by a vote of the shareholders. 
C)  by appointment by the chairperson of the board. 
D)  only by a vote of the corporation's employees.

Question 6

Directors and officers are not prohibited from entering into transactions with the corporation.

Accepted Answer

A) True 
 B)False

Question 7

A charter option statute authorizes a corporation to adopt a specific amendment to its articles of incorporation to:

Accepted Answer

A)  grant directors and officers blanket immunity. 
B)  remove breach of duty as a cause of action for monetary damages against directors. 
C)  limit director liability without the approval of the board of directors and the shareholders. 
D)  limit the maximum liability that may be imposed on directors to the sum of $100,000. 
A)  grant directors and officers blanket immunity. 
B)  remove breach of duty as a cause of action for monetary damages against directors. 
C)  limit director liability without the approval of the board of directors and the shareholders. 
D)  limit the maximum liability that may be imposed on directors to the sum of $100,000.

Question 8

According to the MBCA,the board of directors cannot act unless properly convened as a board.

Accepted Answer

A) True 
 B)False

Question 9

A _____ places ceiling on director liability for breach of duty; the board and the shareholders,however,may amend the corporate charter to reduce the cap.

Accepted Answer

A)  charter option statute 
B)  self-executing statute 
C)  SEC oversight statute 
D)  cap on monetary damages statute 
A)  charter option statute 
B)  self-executing statute 
C)  SEC oversight statute 
D)  cap on monetary damages statute

Question 10

What are the three elements that must be met before directors or officers may be found to have usurped a corporate opportunity?

Accepted Answer

Three elements must be met before direct

Question 11

A _____ is a majority of the number of directors fixed by the articles or bylaws.

Accepted Answer

A)  qualification 
B)  quorum 
C)  referendum 
D)  novation 
A)  qualification 
B)  quorum 
C)  referendum 
D)  novation

Question 12

Officers who,in good faith,enter into an ultra vires transaction are not held personally liable.

Accepted Answer

A) True 
 B)False

Question 13

The _____ usually keeps the minutes of meetings of the shareholders and directors and other general corporate records such as stockholder records.

Accepted Answer

A)  corporate secretary 
B)  treasurer 
C)  vice president 
D)  chairman 
A)  corporate secretary 
B)  treasurer 
C)  vice president 
D)  chairman

Question 14

In cases where an officer or director has been found guilty of a crime,he or she may be indemnified under voluntary indemnification if:

Accepted Answer

A)  he or she had reason to believe that his or her conduct was unlawful. 
B)  he or she acts in bad faith. 
C)  he or she acted in a manner that he or she believed not to be opposed to the corporation's best interests. 
D)  he or she prevails on the merits of the suit against him or her. 
A)  he or she had reason to believe that his or her conduct was unlawful. 
B)  he or she acts in bad faith. 
C)  he or she acted in a manner that he or she believed not to be opposed to the corporation's best interests. 
D)  he or she prevails on the merits of the suit against him or her.

Question 15

All corporate actions can be taken only through board initiative.

Accepted Answer

A) True 
 B)False

Question 16

The Sarbanes-Oxley Act requires CEOs and CFOs of publicly traded corporations to certify that,to their knowledge,all financial information in quarterly reports is not false.

Accepted Answer

A) True 
 B)False

Question 17

Write a note on indemnification in corporations.

Accepted Answer

The cost of defending and/or settling a

Question 18

A corporate officer is never held liable for the illegal behavior of a subordinate.

Accepted Answer

A) True 
 B)False

Question 19

The cap on monetary damages statute holds that the maximum liability that may be imposed on directors is the greater of:

Accepted Answer

A)  $100,000 or the amount of cash compensation that the director received from the corporation during the previous 24 months. 
B)  $100,000 or the amount of cash compensation that the director received from the corporation during the previous 12 months. 
C)  $50,000 or the amount of cash compensation that the director received from the corporation during the previous 12 months. 
D)  $100,000 or the amount of cash compensation that the director received from the corporation during the previous 36 months. 
A)  $100,000 or the amount of cash compensation that the director received from the corporation during the previous 24 months. 
B)  $100,000 or the amount of cash compensation that the director received from the corporation during the previous 12 months. 
C)  $50,000 or the amount of cash compensation that the director received from the corporation during the previous 12 months. 
D)  $100,000 or the amount of cash compensation that the director received from the corporation during the previous 36 months.

Question 20

A corporation is:

Accepted Answer

A)  liable for all torts committed by its retired and ex-employees. 
B)  liable for all torts committed by its employees while acting within the scope of their employment. 
C)  liable for all torts committed by its employees under the doctrine of ultra vires. 
D)  not liable for the torts committed by its employees while acting on the instructions of a high-level manager. 
A)  liable for all torts committed by its retired and ex-employees. 
B)  liable for all torts committed by its employees while acting within the scope of their employment. 
C)  liable for all torts committed by its employees under the doctrine of ultra vires. 
D)  not liable for the torts committed by its employees while acting on the instructions of a high-level manager.

Exam 29: Management of the Corporate Business

A director:

A corporation is liable for all torts committed by its employees while acting in the course of and within the scope of their employment.

Which of the following statements is true of the lawsuits in which minority shareholders complain that they have been unfairly treated by the directors?

When a corporate manager makes an honest error in judgment,the business judgment rule directs that the manager will:

Vacancies on the board can be filled:

Directors and officers are not prohibited from entering into transactions with the corporation.

A charter option statute authorizes a corporation to adopt a specific amendment to its articles of incorporation to:

According to the MBCA,the board of directors cannot act unless properly convened as a board.

A _____ places ceiling on director liability for breach of duty; the board and the shareholders,however,may amend the corporate charter to reduce the cap.

What are the three elements that must be met before directors or officers may be found to have usurped a corporate opportunity?

A _____ is a majority of the number of directors fixed by the articles or bylaws.

Officers who,in good faith,enter into an ultra vires transaction are not held personally liable.

The _____ usually keeps the minutes of meetings of the shareholders and directors and other general corporate records such as stockholder records.

In cases where an officer or director has been found guilty of a crime,he or she may be indemnified under voluntary indemnification if:

All corporate actions can be taken only through board initiative.

The Sarbanes-Oxley Act requires CEOs and CFOs of publicly traded corporations to certify that,to their knowledge,all financial information in quarterly reports is not false.

Write a note on indemnification in corporations.

A corporate officer is never held liable for the illegal behavior of a subordinate.

The cap on monetary damages statute holds that the maximum liability that may be imposed on directors is the greater of:

A corporation is:

Law, Legal Reasoning, and the Legal Profession

Dispute Settlement

Business Ethics and Corporate Social Responsibility

Business and the Constitution

Crimes

Intentional Torts

Negligence and Strict Liability

Licensing and Intellectual Propertypart Two Contracts

The Nature and Origins of Contracts

Creating a Contract: Offers

Creating a Contract: Acceptances

Consideration

Capacity to Contract

Voluntary Consent

Illegality

The Form and Meaning of Contracts

Third Parties Contract Rights

Performance and Remediespart Three Sales

Formation and Terms of Sales Contracts

Warranties and Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contractspart Four Agency and Employment

The Agency Relationship-Creation, duties, and Termination

Liability of Principals and Agents to Third Parties

Employment Laws-Part Five Business Organizations

Which Form of Business Organization

Partnerships

Formation and Termination of Corporations

Financing the Corporation and the Role of the Shareholders

Securities Regulation

Legal Liability of Accountantspart Six Property

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance-Part Seven Commercial Paper

Negotiable Instruments

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Fund Transfers-Part Eight Credit Transactions

Introduction to Security

Security Interests in Personal Property

Bankruptcy-Part Nine Government Regulation

The Antitrust Laws

Consumer Protection Laws

Environmental Regulation

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