E02 fully answered questions GRADE A
Following the formation of a corporation, which of the following terms best describes the
process by which the promoter is released from, and the corporation is made liable for,
preincorporation contractual obligations?
A. Assignment.
B. Novation.
C. Delegation.
D. Accord and satisfaction. - (correct answer)B
Davis, an inventor, developed a new product but lacked money to get the product to the
marketplace. Before creating a corporation to raise capital, Davis leased office space
and equipment, entered into contracts with third parties, and identified investors. Who
has liability for preincorporation debts?
A. Davis is liable until the corporation assumed the debts in novation.
B. Davis is liable until the articles of incorporation were filed.
C. If this corporation is never formed, Davis is not liable.
D. If this corporation is never formed, the unpaid third parties must write off the debt
because no corporate entity existed at the time the debt was incurred. - (correct
answer)A
Which of the following is not necessary to create an express partnership?
A. Execution of a written partnership agreement.
B. Agreement to share ownership of the partnership.
C. Intention to conduct a business for profit.
D. Intention to create a relationship recognized as a partnership. - (correct answer)A
, Generally, Articles of Incorporation must contain all of the following except the
A. Names of the incorporators.
B. Name of the corporation.
C. Number of shares authorized.
D. Names of initial officers and their terms of office. - (correct answer)D
Stearn was one of the promoters of Lehman Company which was not yet incorporated.
On January 2, Stearn made a contract with Stanley Corporation to have Stanley provide
6,000 electrical parts for Lehman Company at fixed prices beginning on July 15 and
lasting for 5 more months. Stanley was not told and was unaware that Lehman
Company had not been formed. On April 10, Lehman Company was formed under the
relevant statutes. On July 15, Stanley delivered 1,000 of the 6,000 parts as agreed and
Lehman accepted them. On August 15, when Stanley tried to deliver another batch,
Lehman refused, saying that the prices of other suppliers had dropped. Which of the
following is correct?
A. Lehman is in breach of this contract since its agent, Stearn, made this contract with
Stanley.
B. Lehman cannot be liable on this contract for any of the 6,000 parts because Lehman
never orally or in writing adopted the contract.
C. Stanley may n - (correct answer)D
Hart and Ruck formed a limited partnership in which Hart was a general partner and
Ruck was a limited partner. A certificate of limited partnership was filed with the
secretary of state. Which of the following is correct under the Revised Uniform Limited
Partnership Act?
A .Both Hart's and Ruck's names must appear on the certificate of limited partnership
unless a waiver is granted.
B. Ruck's name need not appear on the certificate of limited partnership as long as his
name appears in the partnership name.
Following the formation of a corporation, which of the following terms best describes the
process by which the promoter is released from, and the corporation is made liable for,
preincorporation contractual obligations?
A. Assignment.
B. Novation.
C. Delegation.
D. Accord and satisfaction. - (correct answer)B
Davis, an inventor, developed a new product but lacked money to get the product to the
marketplace. Before creating a corporation to raise capital, Davis leased office space
and equipment, entered into contracts with third parties, and identified investors. Who
has liability for preincorporation debts?
A. Davis is liable until the corporation assumed the debts in novation.
B. Davis is liable until the articles of incorporation were filed.
C. If this corporation is never formed, Davis is not liable.
D. If this corporation is never formed, the unpaid third parties must write off the debt
because no corporate entity existed at the time the debt was incurred. - (correct
answer)A
Which of the following is not necessary to create an express partnership?
A. Execution of a written partnership agreement.
B. Agreement to share ownership of the partnership.
C. Intention to conduct a business for profit.
D. Intention to create a relationship recognized as a partnership. - (correct answer)A
, Generally, Articles of Incorporation must contain all of the following except the
A. Names of the incorporators.
B. Name of the corporation.
C. Number of shares authorized.
D. Names of initial officers and their terms of office. - (correct answer)D
Stearn was one of the promoters of Lehman Company which was not yet incorporated.
On January 2, Stearn made a contract with Stanley Corporation to have Stanley provide
6,000 electrical parts for Lehman Company at fixed prices beginning on July 15 and
lasting for 5 more months. Stanley was not told and was unaware that Lehman
Company had not been formed. On April 10, Lehman Company was formed under the
relevant statutes. On July 15, Stanley delivered 1,000 of the 6,000 parts as agreed and
Lehman accepted them. On August 15, when Stanley tried to deliver another batch,
Lehman refused, saying that the prices of other suppliers had dropped. Which of the
following is correct?
A. Lehman is in breach of this contract since its agent, Stearn, made this contract with
Stanley.
B. Lehman cannot be liable on this contract for any of the 6,000 parts because Lehman
never orally or in writing adopted the contract.
C. Stanley may n - (correct answer)D
Hart and Ruck formed a limited partnership in which Hart was a general partner and
Ruck was a limited partner. A certificate of limited partnership was filed with the
secretary of state. Which of the following is correct under the Revised Uniform Limited
Partnership Act?
A .Both Hart's and Ruck's names must appear on the certificate of limited partnership
unless a waiver is granted.
B. Ruck's name need not appear on the certificate of limited partnership as long as his
name appears in the partnership name.
