BUSINESS LAW CH 43 MALLOR BARNES BOWER LANGVARDT 15TH EDITION EXAM QUESTIONS AND

BUSINESS LAW CH 43 MALLOR BARNES BOWER LANGVARDT 15TH EDITION EXAM QUESTIONS AND
ANSWERS RATED A+

1.qTheqprimaryqcorporateqobjectiveqisqtoqmakeqmoneyqforqtheqshareholders.q-qCORRECTqANSWERSTrue

2.qAqdirectorqhasqaqrightqtoqinspectqcorporateqbooksqandqrecordsqthatqcontainqcorporateqinformationqesse
ntialqtoqtheqdirector'sqperformanceqofqherqduties.q-qCORRECTqANSWERSTrue

3.qOfficersqandqdirectorsqofqcorporationsqareqpermittedqtoqprofitqwhenqstockqtheyqownqinqtheirqownqcorpo
rationqincreases,qprovidedqthatqtheyqdidqnotqbenefitqfromqundisclosedqinformation.q-
qCORRECTqANSWERSTrue




4.qCorporateqconstituencyqstatutesqpermitqtheqboardqofqdirectorsqtoqconsiderqtheqinterestsqofqpersonsqot
herqthanqtheqcorporation'sqshareholdersqwhenqtheqdirectorsqmakeqcorporateqdecisions.q-
qCORRECTqANSWERSTrue




5.qAqdirectorqofqaqcorporationqisqheldqtoqtheqstandardqofqaqprudentqbusinesspersonqholdingqanqordinaryqle
velqofqbusinessqskill.q-qCORRECTqANSWERSFalse

6.qDirectorsqhaveqtheqhighestqresponsibilityqtoqtheqcorporationqofqensuringqtheqintegrityqofqtheqcorporatio
n'sqoperations.q-qCORRECTqANSWERSTrue

7.qDirectorsqneedqnotqbeqshareholdersqofqtheqcorporationqonqwhoseqboardqtheyqserve.q-
qCORRECTqANSWERSTrue




8.qABCqCorporation'sqBoardqofqDirectorsqisqconsideringqaqresolutionqthatqmayqcauseqsevereqliabilityqtoqtheq
directors.qX,qaqboardqmember,qdisagreesqwithqtheqdecision.qUnlessqheqclearlyqregistersqhisqdissent,qheqma
yqbeqliable.q-qCORRECTqANSWERSTrue

9.qUnlessqtheqarticlesqofqincorporationqstateqotherwise,qdirectorsqmayqbeqremovedqwithqorqwithoutqcause.
q-qCORRECTqANSWERSTrue




10.qOneqimportantqreasonqaqcorporation'sqmanagementqsolicitsqproxiesqfromqshareholdersqisqtoqensureqt
hatqaqquorumqofqshareholdersqwillqvoteqonqaqmatterqsubmittedqtoqshareholders.q-
qCORRECTqANSWERSTrue




11.qTonyqisqtheqpresidentqofqSopranoqCorporationq(SC).qTonyqdecidedqtoqhaveqSCqmanufactureqlarge,qgas-
guzzlingqSUVqautomobilesqjustqbeforeqgasolineqpricesqroseqdramatically.qAsqaqresult,qSCqlostqbillionsqofqdoll
ars.qTheqShareholdersqofqSCqwantqtoqsueqTonyqforqthisqbadqdecisionqthatqcostqthemqbillions.qHowever,qTon
yqmadeqaqreasonableqinvestigationqbeforeqmakingqthisqdecision,qheqhadqaqrationalqbasisqforqitqandqheqhadq
noqconflictsqofqinterestqregardingqthisqdecision.qWhatqisqtheqprobableqoutcomeqofqtheqshareholders'qsuit?



A)qTonyqisqliableqbecauseqheqshouldqhaveqknownqbetter.
q

, B)qTonyqisqliableqbecauseqtheqpresidentqofqaqcorporationqisqstrictlyqliableqforqhis/herqdecisions.
q



C)qTonyqisqnotqliablequnderqtheqbusinessqjudgmentqrule.
q



D)qTwoqofqtheqabove,qAqandqBqareqcorrect.q-
qCORRECTqANSWERSC)qTonyqisqnotqliablequnderqtheqbusinessqjudgmentqrule.




12.qThequltraqviresqdoctrineqstatesqthat:



a.qTheqcorporationqmayqengageqinqanyqlawfulqbusiness.
q



b.qTheqcorporationqhasqnotqbeenqvalidlyqformed.
q



c.qAnyqactionqofqaqcorporationqbeyondqitsqstatedqpowersqisqvoid.
q



d.qTheqboardqofqdirectorsqmustqmanageqtheqcorporation.q-
qCORRECTqANSWERSc.qAnyqactionqofqaqcorporationqbeyondqitsqstatedqpowersqisqvoid.




13.qUltraqviresqisqofqsmallqimportanceqtodayqbecause:
q



a.qCorporationqstatutesqpreventqcorporationsqfromqplacingqself-imposedqlimitsqonqtheirqpurposes.
q



b.qCourtsqdoqnotqpermitqtheqpartiesqtoqaqcontractqtoqusequltraqviresqasqaqdefenseqtoqaqcontract.
q



c.qTheqMBCAqpreventsqshareholdersqfromqusingqultraqviresqtoqenjoinqaqcorporateqactionqthatqisqbeyondqth
eqpowersqofqtheqcorporation.
q



d.qCorporationsqareqwellqadvisedqbyqtheirqlawyersqtoqdraftqspecificqpurposeqclausesqandqnotqtoqactqbeyond
qtheqpurposesqstated.q-


qCORRECTqANSWERSb.qCourtsqdoqnotqpermitqtheqpartiesqtoqaqcontractqtoqusequltraqviresqasqaqdefenseqtoqaq


contract.

14.qTonyqisqemployedqasqaqtruckqdriverqforqSopranoqCorporationq(SC).qWhileqmakingqaqdeliveryqforqSC,qTon
yqnegligentlyqranqoverqaqpedestrian.qWhoqisqliableqforqthisqaccident?