BUL 5810 – CORPORATIONS TEST
2 QUESTIONS WITH REVISED
ANSWERS
Which of the following is the basic governing document of a corporation? - Answer-
Articles of Incorporation
The incorporators would typically do which of the following?
a. Purchase outstanding shares.
b. Assemble the assets.
c. Sign the charter. - Answer-Assemble the assets
Whether a corporation is a de facto corporation may be challenged by: - Answer-the
state in which the business attempted to incorporate
Courts have responded by piercing the veil when the shareholders have:
a. not followed the formalities of corporate procedures.
b. not provided an adequate financial basis for the business.
c. used the corporation to defraud. - Answer-ALL OF THESE ARE CORRECT
James, a promoter of Unobtainium Corporation, has a fiduciary duty to: - Answer-Both
the other promoters and the initial shareholders of Unobtainium Corporation
Use of "Evans & Hall, Ltd." as a corporate name would be: - Answer-permissible as long
as it is distinguishable from the nae of any other domestic corporation or any foreign
corporation authorized to do business within the state
Wyatt, the sole stockholder of International Travel Corporation, wrongfully used the
corporation to avoid a personal liability. A court's disregarding the corporate entity and
holding Wyatt personally liable is called: - Answer-piercing the corporate veil
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
permanent 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 Act, what would be the result? - Answer-Jack would not be
personally liable, but Claire would
The president of Hi-Glow Cosmetics sends his top chemist to Hi-Glow's competitor's
labs to steal its formula for shiny lipstick. The chemist gets caught and is sent to jail.
Can Hi-Glow be found to be criminally liable? - Answer-Yes, since the president
authorized the crime
Deer Haven, Inc. is a corporation incorporated in Arkansas and has its principal office in
San Antonio, Texas. Which of the following is true of Deer Haven, Inc.'s citizenship
status? - Answer-Deer Haven, Inc. is a citizen of Arkansas and Texas, for the purpose
of determining diversity of citizenship
Carlos is a promoter of Debonair Enterprises, Inc. To whom, if any, does Carlos owe a
fiduciary duty? - Answer-Carlos owes a fiduciary duty to any other promoters of
Debonair Enterprises.
Robert approaches you and seeks to form a corporation. He asks you which document
should he create to govern the corporation. What do you tell him? - Answer-Create
Articles of Incorporation
Shareholders of Tridential, Inc. are worried that the court will "pierce" its corporate veil
and hold the shareholders liable. Which of the following factors will a court consider in
deciding whether to pierce Tridential, Inc.'s corporate veil?
a. Tridential, Inc. did not follow the formalities of corporate procedures.
b. Tridential, Inc. did not provide an adequate financial basis for the business.
c. Tridential, Inc. did used the corporation to defraud others. - Answer-ALL OF THESE
ARE CORRECT
Michael is truck driver employed by Simmons Construction Corporation. While operating
the truck during business hours, Michael negligently crashes into Peter. Is Simmons
Construction Corporation liable? - Answer-Yes, Simmons Construction Corporation is
liable under the doctrine of respondeat superior
Barbara, a self-made millionaire, wants to start a corporation exclusively for charitable
and educational purposes. What type of corporation should Barbara form? - Answer-
Non-profit corporation
In the case of Harold Lang Jewelers, Inc. v. Johnson, the court found that: - Answer-
Lang's business was regular, continuous and substantial such that it was transacting
business in North Carolina
2 QUESTIONS WITH REVISED
ANSWERS
Which of the following is the basic governing document of a corporation? - Answer-
Articles of Incorporation
The incorporators would typically do which of the following?
a. Purchase outstanding shares.
b. Assemble the assets.
c. Sign the charter. - Answer-Assemble the assets
Whether a corporation is a de facto corporation may be challenged by: - Answer-the
state in which the business attempted to incorporate
Courts have responded by piercing the veil when the shareholders have:
a. not followed the formalities of corporate procedures.
b. not provided an adequate financial basis for the business.
c. used the corporation to defraud. - Answer-ALL OF THESE ARE CORRECT
James, a promoter of Unobtainium Corporation, has a fiduciary duty to: - Answer-Both
the other promoters and the initial shareholders of Unobtainium Corporation
Use of "Evans & Hall, Ltd." as a corporate name would be: - Answer-permissible as long
as it is distinguishable from the nae of any other domestic corporation or any foreign
corporation authorized to do business within the state
Wyatt, the sole stockholder of International Travel Corporation, wrongfully used the
corporation to avoid a personal liability. A court's disregarding the corporate entity and
holding Wyatt personally liable is called: - Answer-piercing the corporate veil
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
permanent 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 Act, what would be the result? - Answer-Jack would not be
personally liable, but Claire would
The president of Hi-Glow Cosmetics sends his top chemist to Hi-Glow's competitor's
labs to steal its formula for shiny lipstick. The chemist gets caught and is sent to jail.
Can Hi-Glow be found to be criminally liable? - Answer-Yes, since the president
authorized the crime
Deer Haven, Inc. is a corporation incorporated in Arkansas and has its principal office in
San Antonio, Texas. Which of the following is true of Deer Haven, Inc.'s citizenship
status? - Answer-Deer Haven, Inc. is a citizen of Arkansas and Texas, for the purpose
of determining diversity of citizenship
Carlos is a promoter of Debonair Enterprises, Inc. To whom, if any, does Carlos owe a
fiduciary duty? - Answer-Carlos owes a fiduciary duty to any other promoters of
Debonair Enterprises.
Robert approaches you and seeks to form a corporation. He asks you which document
should he create to govern the corporation. What do you tell him? - Answer-Create
Articles of Incorporation
Shareholders of Tridential, Inc. are worried that the court will "pierce" its corporate veil
and hold the shareholders liable. Which of the following factors will a court consider in
deciding whether to pierce Tridential, Inc.'s corporate veil?
a. Tridential, Inc. did not follow the formalities of corporate procedures.
b. Tridential, Inc. did not provide an adequate financial basis for the business.
c. Tridential, Inc. did used the corporation to defraud others. - Answer-ALL OF THESE
ARE CORRECT
Michael is truck driver employed by Simmons Construction Corporation. While operating
the truck during business hours, Michael negligently crashes into Peter. Is Simmons
Construction Corporation liable? - Answer-Yes, Simmons Construction Corporation is
liable under the doctrine of respondeat superior
Barbara, a self-made millionaire, wants to start a corporation exclusively for charitable
and educational purposes. What type of corporation should Barbara form? - Answer-
Non-profit corporation
In the case of Harold Lang Jewelers, Inc. v. Johnson, the court found that: - Answer-
Lang's business was regular, continuous and substantial such that it was transacting
business in North Carolina
