Question 1

What are the principal attributes of a corporation?

Accepted Answer

(a)It is a legal entity.
(b)It owes its

Question 2

Under the RMBCA,a pre-incorporation subscription may be revoked at any time without the consent of the subscribers.

Accepted Answer

A) True 
 B)False

Question 3

A promoter who enters a preincorporation contract in the name of the corporation usually remains liable on the contract even if the corporation adopts it.

Accepted Answer

A) True 
 B)False

Question 4

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 5

Bill Bonney,the sole stockholder of Kidd Corporation,wrongfully used the corporation to avoid a personal liability.A court order that disregards the corporate entity and holds Bonney personally liable is called:

Accepted Answer

A) limited liability. 
B) ultra vires. 
C) diversity of interest. 
D) piercing the corporate veil. 
A) limited liability. 
B) ultra vires. 
C) diversity of interest. 
D) piercing the corporate veil.

Question 6

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 the above 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 the above may be used.

Question 7

The modern approach follows the common law rule in holding that a corporation cannot commit a criminal act.

Accepted Answer

A) True 
 B)False

Question 8

Under the Revised Act,the filing of the articles of incorporation by the secretary of state is conclusive proof that the incorporators have satisfied all conditions precedent to incorporation so that a shareholder or creditor would be unable to challenge the existence of the corporation.

Accepted Answer

A) True 
 B)False

Question 9

Big Burger Co.sues Bakum Corporation for breach of contract for $1,000 of hamburger buns that were not delivered.Bakum may assert as a defense to payment that Big Burger is not a de jure corporation.

Accepted Answer

A) True 
 B)False

Question 10

Under which of the following provisions of the U.S.Constitution is a corporation not a "person"?

Accepted Answer

A) The Fifth Amendment Due Process Clause. 
B) The Fourteenth Amendment Due Process Clause. 
C) The Fourteenth Amendment Equal Protection Clause. 
D) The Fifth Amendment right against self-incrimination. 
E) The Fourth Amendment protection against unreasonable searches and seizures. 
A) The Fifth Amendment Due Process Clause. 
B) The Fourteenth Amendment Due Process Clause. 
C) The Fourteenth Amendment Equal Protection Clause. 
D) The Fifth Amendment right against self-incrimination. 
E) The Fourth Amendment protection against unreasonable searches and seizures.

Question 11

Claire opened Claire's Beauty Parlor in her home.She solicited funds to begin the business from Jack,who believed that the business was incorporated.Claire had,in fact,never filed the papers.One day,Claire fell asleep while giving a customer a perm 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 Revised Model Act,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 12

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 13

Use of "Evans & Hall,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 14

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

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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 17

Which of the following would not usually be found in the articles of incorporation of a corporation?

Accepted Answer

A) The number of directors necessary for a quorum. 
B) The name of the corporation. 
C) The name and address of each incorporator. 
D) The number of authorized shares. 
A) The number of directors necessary for a quorum. 
B) The name of the corporation. 
C) The name and address of each incorporator. 
D) The number of authorized shares.

Question 18

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 19

Which of the following is correct regarding the characteristics of a corporation?

Accepted Answer

A) A corporation is considered a person within the meaning of the Fourteenth Amendment's equal protection clause. 
B) The Fifth Amendment provisions against self-incrimination protect a corporation. 
C) A corporation is protected by the Fourth Amendment's provision against unreasonable searches and seizures. 
D) Two of the above, (a) and (c). 
A) A corporation is considered a person within the meaning of the Fourteenth Amendment's equal protection clause. 
B) The Fifth Amendment provisions against self-incrimination protect a corporation. 
C) A corporation is protected by the Fourth Amendment's provision against unreasonable searches and seizures. 
D) Two of the above, (a) and (c).

Question 20

A corporation formed in substantial compliance with the incorporation statute and the required organizational procedures is a:

Accepted Answer

A) de facto corporation. 
B) de jure corporation. 
C) corporation by estoppel. 
D) private corporation. 
A) de facto corporation. 
B) de jure corporation. 
C) corporation by estoppel. 
D) private corporation.

Exam 33: Nature and Formation of Corporations

What are the principal attributes of a corporation?

Under the RMBCA,a pre-incorporation subscription may be revoked at any time without the consent of the subscribers.

A promoter who enters a preincorporation contract in the name of the corporation usually remains liable on the contract even if the corporation adopts it.

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

Bill Bonney,the sole stockholder of Kidd Corporation,wrongfully used the corporation to avoid a personal liability.A court order that disregards the corporate entity and holds Bonney personally liable is called:

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

The modern approach follows the common law rule in holding that a corporation cannot commit a criminal act.

Under the Revised Act,the filing of the articles of incorporation by the secretary of state is conclusive proof that the incorporators have satisfied all conditions precedent to incorporation so that a shareholder or creditor would be unable to challenge the existence of the corporation.

Big Burger Co.sues Bakum Corporation for breach of contract for $1,000 of hamburger buns that were not delivered.Bakum may assert as a defense to payment that Big Burger is not a de jure corporation.

Under which of the following provisions of the U.S.Constitution is a corporation not a "person"?

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

Use of "Evans & Hall,Ltd." as a corporate name would be:

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

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

Which of the following would not usually be found in the articles of incorporation of a corporation?

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.

Which of the following is correct regarding the characteristics of a corporation?

A corporation formed in substantial compliance with the incorporation statute and the required organizational procedures is a:

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

Filters