Corporations

Question 1

Liability for preincorporation contracts

Answer 1

Promoter is personally liable unless notation, 3rd party looks to C to perform, or promoter didn’t know C didn’t exist yet

C only liable for preincorporation transaction if accepts benefits or express acceptance

Question 2

Piercing corporate veil

Answer 2

Go after SH assets when totality of circumstances - alter ego or instrumentality

Look to undercap, SH dominance of Corp, fraud.

Question 3

Duty of care

Answer 3

Reasonably prudent under similar circumstances with special knowledge, can rely on others if reliable or competent

Question 4

BJR

Answer 4

Actions in best interest of C

Presumption actions are ok if reasonable belief actions are in best interests or C

Good faith- informed- no conflict

DOES NOT APPLY TO VIOLATIONS OF LOYALTY

Question 5

Duty of Loyalty

Answer 5

Self dealing - financial and material interest in transaction

Safe Harbor - disclosure of all facts and majority approval of disinterested board or SH or transaction fair to corporation

Corporate opportunity

Does c have interest or expectancy?
In current or prospective line of business?
Relationship of party

Competition with C?

Question 6

Indemnify D and O

Answer 6

Mandatory - successful defense

Prohibited - lose for improper benefit - loyalty

Permissive - good faith reasonable belief in best interest and did not believe conduct unlawful- determined by SH or impartial party