CT Bar Business Organizations & Contracts 3

Question 1

A Connecticut corporation's board of directors wants to declare a dividend. Which of the following tests must the corporation satisfy?

Accepted Answer

The corporation must be solvent and able to pay its debts as they come due

Answer

Connecticut follows an insolvency test: a corporation may not make a distribution if it would be unable to pay its debts as they become due in the ordinary course of business.

Question 2

Which of the following best describes a material breach of contract?

Accepted Answer

A breach significant enough to excuse the non-breaching party's further performance

Answer

A material breach defeats the essential purpose of the contract and discharges the non-breaching party from its remaining obligations.

Question 3

Two parties enter into a written contract for the sale of land. They later orally agree to modify the price. Under the Statute of Frauds, this oral modification is:

Accepted Answer

Unenforceable because the underlying contract was required to be in writing

Answer

A contract subject to the Statute of Frauds must be modified in writing; an oral modification of a land contract is unenforceable.

Question 4

A limited partner in a Connecticut limited partnership actively manages the business. What is the likely consequence?

Accepted Answer

The limited partner becomes personally liable to third parties who reasonably believed the partner was a general partner

Answer

Under Connecticut LP law, a limited partner who participates in control of the business may be liable to third parties who reasonably believed the limited partner was a general partner.

Question 5

Which doctrine allows a court to reform a written contract that does not reflect the actual agreement of the parties due to a mutual mistake in drafting?

Accepted Answer

Reformation

Answer

Reformation allows a court to rewrite a contract to conform to the parties' true intent when the written instrument fails to express that intent due to mutual mistake.

(CT Bar) Connecticut Bar Exam Practice Test

(CT Bar) Connecticut Bar Exam Practice Test

CT Bar Business Organizations & Contracts 3