CT Bar Business Associations: Formation/Liability 2

Question 1

A promoter enters a contract on behalf of a corporation not yet formed. After incorporation, the board expressly adopts the contract. Who remains liable?

Accepted Answer

Both the promoter and the corporation

Answer

The promoter only

Answer

The corporation only

Answer

Neither, because adoption releases all parties

Question 2

Under the Connecticut LLC Act, which of the following statements about member liability is correct?

Accepted Answer

Members are generally not personally liable for LLC obligations

Answer

Members are always personally liable for LLC debts

Answer

Members are personally liable only if they actively manage the LLC

Answer

Members are liable up to the amount of their capital contribution

Question 3

A corporation's articles of incorporation contain an ultra vires provision. A third party seeks to enforce a contract the corporation lacked authority to make. What is the modern majority rule?

Accepted Answer

The state may sue to enjoin the act, but third parties may generally enforce the contract

Answer

The contract is void and unenforceable

Answer

Only shareholders can raise ultra vires as a defense

Answer

Ultra vires is a complete defense available to the corporation

Question 4

Two partners operate a general partnership without a written agreement. One partner makes an unauthorized contract binding the partnership for $50,000. Which rule applies?

Accepted Answer

Each partner has apparent authority to bind the partnership in the ordinary course of business

Answer

The unauthorized partner bears sole liability

Answer

Partners must vote before any contract binds the partnership

Answer

A partner's authority requires express written authorization from all other partners

Question 5

A sole proprietor converts her business to a corporation but continues to operate without observing corporate formalities. A creditor seeks to pierce the corporate veil. Which factor is LEAST relevant?

Accepted Answer

The corporation's profitability

Answer

Commingling of personal and corporate funds

Answer

Failure to hold annual shareholder meetings

Answer

Use of the corporation as an alter ego

Question 6

Under Connecticut law, which document formally creates a corporation upon filing?

Accepted Answer

Certificate of incorporation filed with the Secretary of the State

Answer

Bylaws

Answer

Shareholders' agreement

Answer

Minutes of the organizational meeting

Question 7

An LLC operating agreement is silent on a matter. Under the Connecticut Uniform Limited Liability Company Act, what governs?

Accepted Answer

The default rules of the Connecticut Uniform LLC Act apply

Answer

The majority vote of members decides

Answer

The articles of organization control

Answer

Federal law fills the gap