CLA/CP Exam Business and Corporate Law 4

Question 1

Under the Statute of Frauds, which of the following contracts MUST be in writing to be enforceable?

Accepted Answer

A contract for the sale of goods worth $600

Answer

The UCC requires contracts for the sale of goods of $500 or more to be evidenced by a signed writing.

Question 2

The business judgment rule protects corporate directors from liability for their decisions when the director:

Accepted Answer

Acts on an informed basis, in good faith, and in the honest belief the action is in corporate interests

Answer

The business judgment rule shields directors who act in good faith, on an informed basis, in the honest belief it serves the corporation's best interests.

Question 3

When one corporation acquires another through a 'merger,' what happens to the acquired company?

Accepted Answer

It ceases to exist as its assets and liabilities are absorbed by the surviving entity

Answer

In a statutory merger, the acquired corporation is extinguished and the surviving corporation assumes all its assets and liabilities.

Question 4

A principal who approves an unauthorized act that an agent already performed is said to have:

Accepted Answer

Ratified the agent's act

Answer

Ratification occurs when a principal expressly or impliedly confirms an agent's previously unauthorized act, making it binding.

Question 5

A 'buy-sell agreement' between shareholders of a closely held corporation is typically used to:

Accepted Answer

Control the transfer of shares and provide exit mechanisms for owners

Answer

Buy-sell agreements govern what happens when a shareholder wants to leave, dies, or becomes disabled, preventing unwanted outside parties from acquiring shares.

CLA/CP Exam Practice Test

CLA/CP Exam Practice Test

CLA/CP Exam Business and Corporate Law 4