RI Bar Business Associations 3

Question 1

A promoter who enters into a contract on behalf of a corporation not yet formed is personally liable on that contract unless:

Accepted Answer

The third party agrees to a novation substituting the corporation for the promoter after formation

Answer

The corporation files articles of incorporation within 90 days

Answer

The contract contains a clause releasing the promoter upon incorporation

Answer

The promoter discloses that they are acting on behalf of a future corporation

Question 2

Under agency law, the doctrine of ratification allows a principal to become bound by an unauthorized act of an agent if the principal:

Accepted Answer

Affirms the act with full knowledge of the material facts, and the act was done on the principal's behalf

Answer

Merely fails to repudiate the agent's act within a reasonable time

Answer

Notifies the third party of the unauthorized nature of the agent's actions

Answer

Provides written authorization to the agent after the fact

Question 3

A shareholder's inspection right under most state corporation statutes requires the shareholder to:

Accepted Answer

Have a proper purpose related to their interest as a shareholder

Answer

Own at least 5% of the outstanding shares for at least six months

Answer

Obtain a court order before any inspection can occur

Answer

Present their request at a duly noticed annual shareholder meeting

Question 4

In a closely held corporation, a shareholder agreement that restricts share transfers is enforceable against a prospective transferee if:

Accepted Answer

The restriction is noted conspicuously on the share certificate or the transferee has actual knowledge of it

Answer

The restriction is approved by the board each time a transfer is proposed

Answer

The restriction is filed as a financing statement under the UCC

Answer

All remaining shareholders consent to the restriction each time it is invoked

Question 5

Which of the following statements best describes the duty of care owed by corporate directors under the Model Business Corporation Act?

Accepted Answer

Directors must act with the care a person in a like position would reasonably exercise under similar circumstances

Answer

Directors must guarantee the corporation's financial success

Answer

Directors are required to personally investigate all information before making decisions

Answer

Directors must follow the business judgment of majority shareholders in all material decisions

Question 6

Under partnership law, which of the following is a 'dissociation' event that does NOT automatically dissolve a general partnership under the Revised Uniform Partnership Act (RUPA)?

Accepted Answer

A partner gives notice of their express will to withdraw

Answer

The partnership's stated term expires

Answer

All partners agree to dissolve the partnership

Answer

A court orders dissolution based on a partner's misconduct

Question 7

A manager-managed LLC differs from a member-managed LLC primarily in that:

Accepted Answer

In a manager-managed LLC, authority to bind the LLC is vested in designated managers rather than all members

Answer

Only member-managed LLCs can have operating agreements

Answer

Manager-managed LLCs are required to file as corporations for tax purposes

Answer

Members in a manager-managed LLC lose their right to share in profits