CT Bar Business Associations: Formation/Liability 3

Question 1

A limited partnership files its certificate but lists one limited partner as a general partner by mistake. That limited partner unknowingly took part in management. What is her liability exposure?

Accepted Answer

Unlimited only to creditors who relied on the erroneous certificate

Answer

Under the ULPA, a limited partner who participates in management is liable only to creditors who reasonably believed she was a general partner and relied on that belief.

Question 2

Corp A agrees to merge with Corp B. After merger, Corp B is the surviving entity. Which statement is correct?

Accepted Answer

Corp B automatically assumes all of Corp A's liabilities by operation of law

Answer

In a statutory merger, the surviving corporation automatically succeeds to all assets and liabilities of the absorbed corporation by operation of law.

Question 3

A Connecticut general partnership dissolves. After paying all partnership debts, a surplus remains. How is the surplus distributed?

Accepted Answer

First to return each partner's capital contribution, then equally unless agreed otherwise

Answer

On dissolution, surplus is distributed first to return capital contributions, then profits are shared according to the partnership agreement or equally by default.

Question 4

An officer of a corporation executes a lease on behalf of the corporation without board authorization, but within the scope of prior similar transactions. The landlord had no knowledge of any limitations. What doctrine protects the landlord?

Accepted Answer

Apparent authority / inherent authority

Answer

Apparent or inherent authority protects a third party who reasonably relies on an agent's apparent scope of authority based on the principal's past conduct.

Question 5

A de jure corporation cannot be formed because the incorporators made a good-faith error in the filings. Which doctrine may protect shareholders from personal liability?

Accepted Answer

De facto corporation

Answer

The de facto corporation doctrine shields shareholders from liability when they made a good-faith attempt to incorporate under a valid statute and exercised corporate powers.

(CT Bar) Connecticut Bar Exam Practice Test

(CT Bar) Connecticut Bar Exam Practice Test

CT Bar Business Associations: Formation/Liability 3