CLA/CP Exam Business and Corporate Law 3

Question 1

Under federal securities law, which of the following transactions is EXEMPT from registration under Regulation D, Rule 506(b)?

Accepted Answer

A private placement to up to 35 non-accredited sophisticated investors without general solicitation

Answer

Rule 506(b) exempts offerings to up to 35 non-accredited but sophisticated investors with no general solicitation.

Question 2

Which element is NOT required for a legally binding contract?

Accepted Answer

Written form

Answer

Most contracts are valid without being in writing; the written form is required only for certain contracts under the Statute of Frauds.

Question 3

An LLC member's ownership interest is typically represented by:

Accepted Answer

Membership units or interests

Answer

LLCs issue membership interests or units, not stock certificates, which are specific to corporations.

Question 4

Which doctrine holds that a corporation cannot enter contracts that exceed the powers granted in its articles of incorporation?

Accepted Answer

Ultra vires doctrine

Answer

The ultra vires doctrine historically voided contracts beyond a corporation's chartered purposes, though its application has been limited by modern statutes.

Question 5

A covenant not to compete in an employment contract is generally enforceable if it is:

Accepted Answer

Reasonable in scope, geography, and time

Answer

Courts enforce non-compete covenants only when they are reasonable in duration, geographic area, and the activity restricted.

CLA/CP Exam Practice Test

CLA/CP Exam Practice Test

CLA/CP Exam Business and Corporate Law 3