CT Bar Business Organizations & Contracts 2 — Questions and Answers
Question 1: Under Connecticut law, which equitable doctrine can pierce the corporate veil when a shareholder uses a corporation as an alter ego to perpetrate fraud?
- Promissory estoppel
- Alter ego / piercing the corporate veil (Correct answer)
- Respondeat superior
- Unjust enrichment
Correct answer: Alter ego / piercing the corporate veil
Courts pierce the corporate veil when the corporate form is used as a mere instrumentality or alter ego to commit fraud or injustice, disregarding the separate entity.
Question 2: A general partnership agreement is silent on profit sharing. Partner A contributed $80,000 and Partner B contributed $20,000. How are profits divided under the Uniform Partnership Act as adopted in Connecticut?
- 80/20 split matching capital contributions
- 60/40 split based on a reasonable standard
- Equally between the partners (Correct answer)
- According to the time each partner devotes to the business
Correct answer: Equally between the partners
Under the UPA, absent an agreement to the contrary, profits and losses are shared equally regardless of capital contribution.
Question 3: Which of the following best describes the 'mailbox rule' in contract formation?
- An offer is effective when received by the offeree
- An acceptance is effective upon dispatch, not receipt (Correct answer)
- A revocation is effective upon dispatch by the offeror
- A counteroffer is effective when mailed
Correct answer: An acceptance is effective upon dispatch, not receipt
Under the mailbox rule, an acceptance is effective the moment it is properly dispatched, even before the offeror receives it.
Question 4: An LLC operating agreement in Connecticut is silent on member voting. A member holding a 30% interest wants to approve a major transaction. What vote is required?
- A simple majority of the members by headcount
- Unanimous consent of all members
- A majority of the membership interests (Correct answer)
- Two-thirds of membership interests
Correct answer: A majority of the membership interests
Connecticut's LLC Act provides that, absent an operating agreement provision, approval requires a majority of the membership interests (not headcount).
Question 5: Which of the following is NOT a required element of promissory estoppel?
- A clear and definite promise
- Justifiable reliance on the promise
- Detriment to the promisee
- Consideration given in exchange for the promise (Correct answer)
Correct answer: Consideration given in exchange for the promise
Promissory estoppel is a substitute for consideration; it applies precisely when there is no bargained-for exchange.
Question 6: A corporate officer enters into a contract on behalf of the corporation without board authorization. The corporation accepts the benefits of the contract. Under what theory may the corporation be bound?
- Apparent authority only
- Ratification (Correct answer)
- Estoppel by deed
- Ultra vires doctrine
Correct answer: Ratification
A corporation that knowingly accepts benefits of an unauthorized contract ratifies it and becomes bound as if it had originally authorized the agreement.
Question 7: Under the UCC Article 2 battle of the forms, if both parties are merchants and the offeree's acceptance includes additional terms, those additional terms:
- Automatically void the acceptance and create a counteroffer
- Become part of the contract unless they materially alter it or the offeror objects (Correct answer)
- Are never incorporated into the contract
- Require written consent of the offeror to be effective
Correct answer: Become part of the contract unless they materially alter it or the offeror objects
Under UCC § 2-207, additional terms in a merchant's acceptance become part of the contract unless they materially alter it, the offer limits acceptance, or the offeror objects.
CT Bar Business Organizations & Contracts 2
Under Connecticut law, which equitable doctrine can pierce the corporate veil when a shareholder uses a corporation as an alter ego to perpetrate fraud?