Q&A Hero

Q: A transfer of contract rights to a third party is an assignment.

Q: The business judgment rule states that corporate directors and officers are liable to the corporation or its shareholders for even honest mistakes of judgment.

Q: Kelly and Lucas sign a written contract for the sale of Kelly's Koffee Kiosk to Lucas. The parties intend their written contract to be a final statement of the terms of their agreement. The writing that Kelly and Lucas signed is a. a completely integrated contract. b. a conditionally integrated contract. c. an agreeably integrated contract. d. an obviously integrated contract.

Q: The president of a corporation is an example of a corporate officer.

Q: Kelly and Lucas sign a written contract for the sale of Kelly's Koffee Kiosk to Lucas. The parties intend their written contract to be a final statement of the terms of their agreement. Lucas later disputes some of the provisions of the deal with Kelly. If the dispute results in litigation, a court will most likely exclude evidence that a. buttresses the written terms. b. contradicts the written terms. c. duplicates the written terms. d. reinforces the written terms.

Q: The election of directors of the corporation can be held by electronic transmission.

Q: A shareholder's authorization of another person to vote the shareholder's shares at a shareholders' meeting in the event of the shareholder's absence is known as a moxie.

Q: Glen and Hadley sign a written contract. Glen claims that the parties later orally agreed to modify the contract. Any oral modification is likely not enforceable if it falls under a. the doctrine of promissory estoppel. b. the "main purpose" exception. c. the "partial performance" exception. d. the Statute of Frauds.

Q: Once declared, a cash or property dividend cannot be revoked.

Q: Odell and Paula sign a contract for the sale of Odell's Pizza Parlor to Paula. The parties intend their written contract to be a final statement of most, but not all, of the terms of their agreementOdell must first buy the building from Quin, after which Odell and Paula will negotiate a final price. The writing that Odell and Paula signed is a. a completely integrated contract. b. a conditionally integrated contract. c. a partially integrated contract. d. a supplementally integrated contract.

Q: The shareholders are responsible for determining how much will be paid in dividends.

Q: Odell and Paula sign a contract for the sale of Odell's Pizza Parlor to Paula. The parties intend their written contract to be a final statement of most, but not all, of the terms of their agreementOdell must first buy the building from Quin, after which Odell and Paula will negotiate a final price. Paula later disputes some of the provisions of the deal with Odell. If the dispute results in litigation, a court will most likely admit evidence of a. ambiguous additional terms. b. consistent additional terms. c. contradictory additional terms. d. fraudulent additional terms.

Q: Shareholder resolutions are usually made when the corporation is soliciting proxies from its shareholders.

Q: Sid induces Ty to enter into a contract for the sale of a warehouse about which Sid fraudulently misrepresents a number of material facts. Sid also tells Ty that his commission is 6 percent, but their signed, written contract states "12 percent." The parol evidence rule governs a. contracts that are induced by fraud. b. contracts that must be in writing to be enforceable. c. the admissibility in court of oral evidence. d. the reformation of oral and written statements into one contract.

Q: Straight voting gives a minority shareholder a better opportunity to elect someone to the board of directors.

Q: Consumer Goods, Inc., and Delta Distribution, Inc., sign a written con­tract for a sale of goods. To be enforceable, this written contract must include a. a correct title, such as "Purchase Order" or "Sales Invoice." b. a declaration of the subject matter. c. a quantity term. d. the parties' names.

Q: Theo and Uma orally agree on the sale of Theo's Fitness Center to Uma and note the terms on a sheet of the center's stationery, which includes the Center's letterhead but which neither party signs. This agreement is most likely enforceable against a. neither Theo nor Uma. b. Theo and Uma. c. Theo only. d. Uma only.

Q: Once a quorum is present, the withdrawal of shares does not affect the quorum of the meeting.

Q: Macro Marketing, Inc., and National Food Corporation (NFC) discuss the terms of a contract. Macro faxes NFC a memo on Macro's letterhead that summarizes the items on which they agree. NFC begins to perform, but Macro refuses to pay. Between Macro and NFC, the memo is a. an oral contract. b. a pre-contract. c. a written contract. d. no contract.

Q: A system in which each shareholder votes the number of shares he or she owns on candidates for each of the positions open is known as cumulative voting.

Q: Uri and Vicky orally agree on the sale of Uri's Nite Club to Vicky and note terms on a pair of the Club's napkins, which they both sign. A written memorandum evidencing an oral contract that would otherwise be unenforceable must contain a. every term. b. the essential terms. c. the preliminary terms. d. the qualitative terms.

Q: Shareholders do not have to attend a shareholders' meeting to vote.

Q: The annual shareholders' meeting is held to elect new shareholders.

Q: Nina and Owen enter into an oral contract for Nina's sale to Owen of a la­ser printer for $400. Before Owen takes posses­sion of the printer, the con­tract is enforceable by a. either party. b. Nina only. c. neither party. d. Owen only.

Q: The shareholders of a corporation act as agents of the corporation.

Q: Elle buys a new textbook for $100 and a used car for $5,000, and signs a one-year lease for an apartment for $1,000 monthly rent to start at the beginning of the next month. The Statute of Frauds covers a. the apartment lease, and the textbook and car purchases. b. the apartment lease and the car purchase only. c. the apartment lease only. d. the textbook and car purchases only.

Q: Marshall is a purchasing agent for DigitoolArt Corporation. His duties require him to negotiate and execute contracts to purchase office supplies and equipment for the corporation. Assume that Bronson, a computer sales representative, pays Marshall a $20,000 kickback to purchase from him computers needed by DigitoolArt Corporation. What breach of the duty of loyalty has Marshall committed here? A) competing with the corporation B) making a secret profit C) self-dealing D) usurping a corporate opportunity

Q: Ollie buys a cup of coffee for $2, a magazine for $5, and a boombox for $600. The requirement of a writing for the enforceability of a contract for a sale of goods at, or for more than, a certain price is governed by a. the common law. b. the parol evidence rule. c. the parties' agreement. d. the Uniform Commercial Code.

Q: Jameson works for Fishy-Mart Corporation, a chain of superstores that sells large quantities of seafood. His job is to locate future sites for Fishy-Mart stores. Jameson finds a piece of real estate near a coastline that would make a great site for a Fishy-Mart store. He asks his friend to purchase the property from its current owner and has a secret agreement with his friend to split the profits when he sells the property to Fishy-Mart. Jameson, without disclosing his interest in the property, recommends the site to Fishy-Mart, which then purchases the property from Jameson's friend. The friend splits the profits with Jameson. What breach of the duty of loyalty has Jameson committed? A) usurping a corporate opportunity B) self-dealing C) competing with the corporation D) proxy

Q: Lem buys a used MP3 player for $50 and a new laptop for $1,500, and signs a one-year employment contract for a $4,000 monthly salary to start at the beginning of the next month. The Statute of Frauds covers a. the employment contract, and the laptop and MP3 purchases. b. the employment contract and the laptop purchase only. c. the employment contract only. d. the laptop and MP3 purchases only.

Q: Helen is the vice-president of Gotspeed Corporation, a company that designs, manufactures and sells sports shoes. Nestor, an independent entrepreneur, designs a new shoe that helps the user's foot grip the shoe better, and he calls it the Anklator. Nestor's friend schedules an appointment for him to meet Helen and present the Anklator for possible adoption by Gotspeed. Instead of presenting the opportunity to Gotspeed's board of directors, Helen pays Nestor's asking price and purchases the Anklator design for herself. She then quits and forms her own company to manufacture and sell Anklator shoes. Helen has breached her duty of loyalty to Gotspeed Corporation by ________. A) self-dealing B) usurping a corporate opportunity C) making a secret profit D) competing with the corporation

Q: Clay buys an MP3 player for $200 and a pair of stereo speakers for $600 from a Discount City store, and downloads $270 worth of digital music from eMusic.com. To be enforceable, the contract that must be in writing is the purchase of a. the digital music, the MP3 player, and the speakers. b. the MP3 player and the speakers only. c. the MP3 player only. d. the speakers only.

Q: Delta, Inc., agrees to assume a debt of Excel Company to First State Bank. The agreement is not in writing. To be enforceable, the promise must be for the benefit of a. any party. b. Delta. c. Excel. d. First State.

Q: Which of the following constitutes a breach of the duty of loyalty by a corporate officer? A) straight voting B) cumulative voting C) piercing the corporate veil D) self-dealing

Q: Randy and Beach Biz Company enter into an oral contract under which Randy agrees to clean Beach Biz's office for two years. This contract is en­forceable by a. Randy only. b. Beach Biz only. c. either party. d. neither party.

Q: Which of the following is true of cumulative voting? A) Each shareholder votes the number of shares he or she owns on candidates for each of the positions open for election. B) A majority shareholder always elects the entire board of directors. C) The cumulative voting method always applies to elections for the board of directors. D) A minority shareholder has a better opportunity to elect someone to the board of directors.

Q: Century Properties. Inc., and Broadview Capital Corporation enter into a con­tract for a sale of land. To be enforceable, the contract must be in writing if the land is valued at a. $50. b. $500. c. $5,000. d. any price.

Q: A duty that requires directors and officers to not act adversely to the interests of the corporation and to subordinate their personal interests to those of the corporation and its shareholders is known as ________. A) the duty of care B) the duty of loyalty C) the duty of obedience D) self-dealing

Q: Which of the following policies helps keep a corporate officer from being sued for honest mistakes made on behalf of a corporation? A) the duty of loyalty B) the duty of obedience C) the business judgment rule D) self-dealing

Q: Lara induces Moe to enter into a contract for the sale of an apartment about which Lara fraudulently misrepresents a number of material facts. Lara tells Moe that her commission is 6 percent, but their signed, written contract states "12 percent." The Statute of Frauds governs a. contracts that are induced by fraud. b. contracts that must be in writing to be enforceable. c. the admissibility in court of oral evidence. d. the merging of oral and written statements into one contract.

Q: ________ are employees of a corporation who are appointed by the board of directors to manage the day-to-day operations of the corporation. A) Corporate officers B) Shareholders C) Registered agents D) Ombudsmen

Q: Gary threatens physical harm to force Hugh to sell his business, Imported Goods, Inc., to Gary for a below-market price. This is a. duress. b. fraud. c. puffery. d. undue influence.

Q: A member of the board of directors who is also an officer of the corporation is known as a(n) ________. A) inside director B) ombudsman C) registered agent D) shareholder

Q: Steven, who is Bertha's guardian, convinces her to buy a certain parcel of land from Christy at a greatly inflated price. Steven may be liable for a. duress. b. fraud. c. puffery. d. undue influence.

Q: In which of the following cases can the alter ego doctrine be invoked in a corporate civil case? A) when shareholders bring a lawsuit on behalf of the corporation after the corporation failed to do so itself B) when unpaid creditors are trying to collect from shareholders a debt owed by the corporation C) when there is mismanagement of corporate stocks by the board of directors D) when shareholders are trying to collect for fraud committed by a third party

Q: Don, a salesperson for Excel Autos, promises Fern that a certain car will give her a "smooth ride." Don offers a test drive, which Fern de­clines. She buys the car but soon realizes that its suspension is in poor condi­tion. Fern a. can rescind the contract on the ground of fraud. b. can rescind the contract on the ground of misrepresentation. c. can rescind the contract on the ground of mistake. d. was not defrauded.

Q: Which of the following is true about dividends? A) Dividends are paid at the discretion of the shareholders. B) Dividends cannot be used for corporate purposes. C) Dividends will be paid to shareholders who have sold their shares prior to the record date. D) Dividends in cash or property, once declared, cannot be revoked.

Q: In selling software to Payroll Services Corporation, Ray tells Payroll's purchas­ing agent that the software is "almost human." This is a. fraud. b. duress. c. puffery. d. undue influence.

Q: ________ is a system in which each shareholder votes the number of shares he or she owns on candidates for each of the positions open. A) Cumulative voting B) Straight voting C) Supramajority voting D) Trust voting

Q: Olin convinces Pia, who has no artistic ability, that Pia has considerable talent and induces Pia to pay Olin $10,000 for art lessons. When Pia realizes the truth, she files a suit against Olin. Pia is most likely to recover on the basis of a. fraud. b. mistake. c. undue influence. d. none of the choices.

Q: Gina induces Hugh to enter into a contract for the purchase of a condominium about which Gina knowingly misrepresents a number of material features. When Hugh discovers the truth, he can a. not rescind the contract. b. rescind the contract on the basis of fraud. c. rescind the contract on the basis of mistake. d. rescind the contract on the basis of undue influence.

Q: According to the Revised Model Business Corporation Act (RMBCA), what establishes a quorum to hold a meeting of the shareholders? A) a majority of the outstanding shares B) a majority of the unissued shares C) a majority of the treasury shares D) a majority of the liquidated shares

Q: Ralph offers to sell Sophie, who is seventeen years of age, a car about which Ralph intentionally misrepresents several material facts. In reliance on the misrepresentations, Sophie buys the car. To prove fraud in this transaction, Sophie would have to show that a. Ralph intentionally deceived Sophie. b. Ralph made statements that were obviously exaggerated. c. Sophie does not know anything about cars. d. Sophie is under eighteen years of age.

Q: The Merrick and Stanley Corporation has 28,000 outstanding shares. During a proposal for a merger, the shareholders decide to increase the quorum of the vote of shareholders to 75 percent, using the supramajority voting rule. How many minimum affirmative votes would be needed to pass the supramajority voting requirement? A) 14,001 B) 21,280 C) 21,000 D) 28,000

Q: Suppose Lisa owns 1,000 shares of a corporation. Assume that four directors are to be elected to the board. With ________ voting, Lisa can multiply the number of shares she owns (1,000) by the number of directors to be elected (four), and she can cast all the resulting votes (4,000) for one candidate or split them among candidates as she determines. A) supramajority B) noncumulative C) cumulative D) preemptive

Q: May is a stockbroker. Due to May's statements, Nora believes that the price of OK Goods, Inc. (OKGI), a widely traded stock, is going to in­crease sub­stantially. Nora buys 500 shares of OKGI at $10 per share, but the price soon drops to $2. Nora can successfully recover a. nothing. b. the amount of the purchase price. c. the amount of the purchase price plus the expected increase. d. the amount of the purchase price plus the unexpected decrease.

Q: Bilkis Brans has 20,000 outstanding shares with four shareholders. Ester owns 9,000 shares, Mendez owns 4,000 shares, Judy owns 4,000 shares, and Aaron owns 3,000 shares. Suppose that two directors of the corporation are to be elected from a potential pool of five candidates. Ester favors candidates 1 and 5, Mendez favors candidates 2 and 4, Judy favors candidates 3 and 4, and Aaron favors candidates 2 and 3. If straight voting occurs, which of the two candidates are likely to win? A) candidates 1 and 5 B) candidates 1 and 4 C) candidates 2 and 3 D) candidates 2 and 4

Q: Hillside Homes, Inc., and Ideal Builders, Inc., enter into a construction contract that includes six pages of detailed calculations. Later Hillside, whose project manager compiled the figures, discovers that some numbers were multiplied incorrectly, but Ideal refuses to make changes. A court would most likely a. allow the parties to rescind the contract. b. award damages to Hillside for the mistakes. c. award damages to Ideal for the mistakes. d. enforce the contract without requiring changes.

Q: The Inkilwas Corporation has 30,000 shares outstanding. A shareholders' meeting is duly called to amend the company's articles of incorporation, and 17,501 shares are represented at the meeting. If an amendment to the articles of incorporation is put to vote at this meeting, which of the following statements is true in terms of passage of the amendment? A) The amendment will not pass, since all 30,000 outstanding shares must be represented at the meeting in order to vote to amend the articles of incorporation. B) The amendment will pass if all 17,501 shares represented at the meeting vote to approve it. C) The amendment will pass if 4,376 shares represented at the meeting vote to approve it. D) The amendment will pass if 8,751 shares represented at the meeting vote to approve it.

Q: Grover contracts to sell two tracts of land to Hank. Both parties believe that the two tracts are adjacent, but in fact they are not. Grover is still willing to sell the land, but under these circumstances the deal would adversely affect Hank. Because of the parties' belief about the adjacency of the property, their contract is a. unavoidable. b. unconscionable. c. unenforceable. d. voidable.

Q: The Inkilwas Corporation has 30,000 shares outstanding. A shareholders' meeting is duly called to amend the articles of incorporation, and 17,501 shares are represented at the meeting. According to the Revised Model Business Corporation Act (RMBCA), what is the minimum number of outstanding shares that must be represented in this case to have a quorum? A) 12,001 B) 18,501 C) 15,001 D) 17,501

Q: A written document in which a shareholder authorizes a person to vote the shareholder's shares at the shareholders' meetings in the event of the shareholder's absence is known as a ________. A) quorum B) notice of shareholder's meeting C) certificate of authority D) proxy

Q: Grover contracts to sell two tracts of land to Hank. Both parties believe that the two tracts are adjacent, but in fact they are not. Grover is still willing to sell the land, but under these circumstances the deal would adversely affect Hank. The parties' belief about the adjacency of the property is a. a bilateral mistake. b. a fraudulent misrepresentation. c. a unilateral mistake. d. unconscionable.

Q: An integrated contract is a contract with more than one subject or part.

Q: An integrated contract is the final embodiment of the terms of an agreement.

Q: When is the annual shareholders' meeting held? A) according to the date fixed in the bylaws B) at the discretion of the board of directors C) only if and when there is an organizational crisis D) only when necessary to elect a new board of members

Q: Oral evidence of the meaning of a contract with incomplete terms can be introduced at a trial.

Q: Which of the following is true of shareholders? A) They cannot enter into contracts that bind the corporation. B) They cannot vote to elect the board of directors. C) They cannot take active charge in deciding fundamental changes in the corporation. D) They are considered as agents of the corporation.

Q: What is common stock? What are its features?

Q: Oral evidence of the modification of a contract after its making can be introduced at a trial.

Q: Give an account of publicly held and closely held corporations.

Q: Oral evidence of otherwise clear terms in a contract can be introduced at a trial to contradict those terms.

Q: To be enforceable, a writing evidencing an oral contract that would otherwise be unenforceable must be signed by the party who seeks to enforce it.

Q: A contract between a corporation and a holder that contains the terms of a debt security is known as a(n) ________.

Q: A(n) ________ is a long-term unsecured debt instrument that is based on a corporation's general credit standing.

Q: To be enforceable, a memorandum evidencing an oral contract that would otherwise be unenforceable must include all essential terms.

Q: Authorized shares that have not been sold by the corporation are known as ________.

Q: An oral contract for a sale of land may be enforceable if the contract has been partially per­formed.

Q: Stock that permits a corporation to buy back the preferred stock at some future date is known as ________.

Q: The articles of incorporation is also known as the ________.