Bus Orgs- Fiduciary Duties Exam
Questions + Verified Answers 100%
correct, Update 2026
Mandy is a board member of Triple R Industries, Inc. who never
attends board meetings and never reads the corporate reports and,
as a result, is unaware that Triple R Industries entered into a
contract to sell one of Triple R Industries' key technologies to a
competitor. A shareholder who is upset about the transaction sues
everyone on the board. Mandy, who is sued for a breach of her
duty of care relating to this transaction. . .
A Is protected by the Business Judgment Rule because she did not
enter into the contract.
B Will not be liable unless the plaintiff can show intentional
misconduct.
C Is not protected by the Business Judgment Rule.
D Is protected by the Business Judgment Rule because she was
unaware of the Triple R Industries' contract. -
correct answer ✅C Is not protected by the Business Judgment
Rule.
Mandy will not be protected by the Business Judgment Rule since
she was uninformed.
A is a full time employee of P. P runs a clothing store, and A's job is
to purchase all of the inventory for sale in P's store from various
manufactures. Unfortunately, A only likes to buy shoes, not pants,
,Bus Orgs- Fiduciary Duties Exam
Questions + Verified Answers 100%
correct, Update 2026
jackets, sweaters, hats, etc. which P also sells. P instructs A not to
buy any more shoes. P gives A his credit card and writes on a post-it
note on the back, "Do not sell this man any more shoes." A goes
shopping, but just can't help himself; he throws the post-it note
away and buys 500 shoes for the store from Van Rebok. P is furious
and refuses to pay. Is P liable for the shoes?
A No, because P gave specific instructions not to buy shoes and
took reasonable means to assure it.
B Yes, because A had apparent authority to purchase the shoes.
C Yes, because A had implied authority to purchase the shoes.
D No, because P did not ratify the purchase. -
correct answer ✅B Yes, because A had apparent authority to
purchase the shoes.
Even though A did not have actual authority to purchase the 500
shoes, he probably had apparent authority since (i) P gave A P's
credit card; (ii) A had been allowed to buy shoes for P in the past;
and (iii) a post-it note that can be easily removed is not an effect
means of providing notice to third party shoe sellers.
Two days ago, the board of the Morocco Mining Corp., a Delaware
corporation ("MMC"), hired Daniela as a CEO. Daniela has no
connection to, or relationship with, anyone on the MMC board. If
, Bus Orgs- Fiduciary Duties Exam
Questions + Verified Answers 100%
correct, Update 2026
MMC shareholders want to sue the board based on allegations that
the salary being paid to Daniela is excessive, what type of suit
would the shareholders bring?
A A suit alleging a breach of the duty of loyalty.
B A suit alleging a breach of the duty of oversight.
C A suit alleging a breach of the duty of care.
D A suit alleging a breach of the duty of candor. -
correct answer ✅C A suit alleging a breach of the duty of care.
Since the suit involves a claim that the board wasted corporate
assets by paying an excessive salary, it involves a claim for a breach
of the duty of care.
Mad Hatter Corp. is a hat company doing business primarily in
Delaware. Vivian is the chair of the board of Mad Hatter and also
owns 100% of Mad Hatter's preferred stock. Mad Hatter's board of
directors, taking their orders from Vivian, cause Mad Hatter to pay
dividends on only Mad Hatter's preferred stock. If this dividend
were challenged what would be the most likely result?
A The dividend would be allowed because Vivian is a dominant
shareholder.
B The dividend would be disallowed as per se improper.
Questions + Verified Answers 100%
correct, Update 2026
Mandy is a board member of Triple R Industries, Inc. who never
attends board meetings and never reads the corporate reports and,
as a result, is unaware that Triple R Industries entered into a
contract to sell one of Triple R Industries' key technologies to a
competitor. A shareholder who is upset about the transaction sues
everyone on the board. Mandy, who is sued for a breach of her
duty of care relating to this transaction. . .
A Is protected by the Business Judgment Rule because she did not
enter into the contract.
B Will not be liable unless the plaintiff can show intentional
misconduct.
C Is not protected by the Business Judgment Rule.
D Is protected by the Business Judgment Rule because she was
unaware of the Triple R Industries' contract. -
correct answer ✅C Is not protected by the Business Judgment
Rule.
Mandy will not be protected by the Business Judgment Rule since
she was uninformed.
A is a full time employee of P. P runs a clothing store, and A's job is
to purchase all of the inventory for sale in P's store from various
manufactures. Unfortunately, A only likes to buy shoes, not pants,
,Bus Orgs- Fiduciary Duties Exam
Questions + Verified Answers 100%
correct, Update 2026
jackets, sweaters, hats, etc. which P also sells. P instructs A not to
buy any more shoes. P gives A his credit card and writes on a post-it
note on the back, "Do not sell this man any more shoes." A goes
shopping, but just can't help himself; he throws the post-it note
away and buys 500 shoes for the store from Van Rebok. P is furious
and refuses to pay. Is P liable for the shoes?
A No, because P gave specific instructions not to buy shoes and
took reasonable means to assure it.
B Yes, because A had apparent authority to purchase the shoes.
C Yes, because A had implied authority to purchase the shoes.
D No, because P did not ratify the purchase. -
correct answer ✅B Yes, because A had apparent authority to
purchase the shoes.
Even though A did not have actual authority to purchase the 500
shoes, he probably had apparent authority since (i) P gave A P's
credit card; (ii) A had been allowed to buy shoes for P in the past;
and (iii) a post-it note that can be easily removed is not an effect
means of providing notice to third party shoe sellers.
Two days ago, the board of the Morocco Mining Corp., a Delaware
corporation ("MMC"), hired Daniela as a CEO. Daniela has no
connection to, or relationship with, anyone on the MMC board. If
, Bus Orgs- Fiduciary Duties Exam
Questions + Verified Answers 100%
correct, Update 2026
MMC shareholders want to sue the board based on allegations that
the salary being paid to Daniela is excessive, what type of suit
would the shareholders bring?
A A suit alleging a breach of the duty of loyalty.
B A suit alleging a breach of the duty of oversight.
C A suit alleging a breach of the duty of care.
D A suit alleging a breach of the duty of candor. -
correct answer ✅C A suit alleging a breach of the duty of care.
Since the suit involves a claim that the board wasted corporate
assets by paying an excessive salary, it involves a claim for a breach
of the duty of care.
Mad Hatter Corp. is a hat company doing business primarily in
Delaware. Vivian is the chair of the board of Mad Hatter and also
owns 100% of Mad Hatter's preferred stock. Mad Hatter's board of
directors, taking their orders from Vivian, cause Mad Hatter to pay
dividends on only Mad Hatter's preferred stock. If this dividend
were challenged what would be the most likely result?
A The dividend would be allowed because Vivian is a dominant
shareholder.
B The dividend would be disallowed as per se improper.
