1.Joe Corporation moved into new offices under a five year lease. Joe’s Vice President of Marketing signed the lease with Mark, the Landlord, without being expressly authorized to do so by the board of directors. Joe Corp occupied the premises and paid rent for six months, but now wants to rescind the lease. The Chairman of the Board of Directors, calls Lawyer and asks advice. The Lawyer correctly replies:
a. No, you may not rescind the lease because the Vice President had the implied authority to enter into leases for the corporation.
b. No, you may not rescind the contract because the Board ratified the vice president’s unauthorized act.
c. Yes, you may rescind the lease because the vice president was not expressly authorized to enter that lease.
d. Yes, you may rescind the lease because only the president of the corporation is authorized to enter into contracts for the corporation
e. None of the above are correct.
2.Which of the following corporate activities, if any, require shareholder approval?
a. authorization to borrow money
b. authorization to purchase corporate investments in stocks and bonds
c. authorization to issue/sell shares of common stock or preferred stock in a public or private offering
d. two of the above are correct
e. none of the above are correct
3.Unless otherwise provided by a corporation’s Articles of Incorporation or Bylaws, a Board of Directors may act without a meeting if written consent setting forth the action to be taken is signed by:
a. a quorum of the directors
b. a majority of the director
c. 2/3 of the directors
d. all of the directors
4.A court is most likely to pierce the corporate veil and hold its shareholders personally liable if
a. a sole proprietor incorporates his or her business solely to limit his or her personal liability.
b. a corporation had elected under Chapter S of the IRC not to pay any corporate tax on its income
c. The shareholders have commingled their personal funds with those of the corporation
d. the shareholders are also corporate officers, directors or employees
e. two of the above are correct
5.Teddy tells Leo that “Leo, if you wash my car today, I will give you 10 dollars.” Later that the same day, while Teddy is out playing football, Leo sees Teddy’s car in the driveway and washes it. It is an example of :
a. an implied contract
b. a typical bilateral contract
c. a typical unilateral contract
d. none of the above are correct
6.Peter executed a valid security agreement with First Time Bank covering Peter’s new purchase of machinery and equipment for his new factory. However, First Time Bank failed to perfect (by filling or possession) its security interest in the equipment and machinery. Six months later, Peter defaults on the loan with First Time Bank. Peter did not sell the machinery or use it as collateral for another loan. Based solely upon the facts provided:
A.First Time Bank may not attempt to enforce its interest in the collateral because it failed to perfect
B. First Time Bank must first immediately file a financing statement to be able to proceed against Robert and repossess the collateral
C. First Time Bank’s failure to perfect its security interest does not affect the validity of its interest in the collateral as against the debtor
D. two of the above are correct
E. None of the above are correct
7.Mary bought a $8,000 car from the Neo Motor Company by making a $3,000 down payment and by signing a security agreement which required monthly payments for four years until the remaining $5,000 was paid off. After two years of making payments, Mary defaulted still owing $3,000. Neo gave Mary notice that it intended to repossess the car, did so, and subsequently sold it for $1,800 at a private sale. The expenses of the repossession and sale of the car amounted to $300 so that Neo credited Mary’s account with $1,500. This left Mary owing Neo $1,500. Which of the following statement is correct?
A. Neo can hold Mary for the $1500 deficiency
B. The expenses of retaking and selling the collateral shouldn’t have been credited to Mary’s account. Thus, Mary was left owing only $1200
C. Because the collateral was not sold at a public auction, the sale was not conducted in a “commercially reasonable manner” and therefore subject to challenge by Mary.
D. all of the above are correct.
8.Which of the following pretrial testimony is taken under oath, out of court, and maybe used at trial:
e. all of the above