Question 1

Under criminal law, corporations are subject to be punished. Punishment can take place by

Accepted Answer

A)  heavy fines on the corporation itself. 
B)  finding the "directing mind" behind the offence and fining and/or imprisoning this person. 
C)  imprisonment of the directors. 
D)  dissolving the corporation. 
E)  all of the above 
A)  heavy fines on the corporation itself. 
B)  finding the "directing mind" behind the offence and fining and/or imprisoning this person. 
C)  imprisonment of the directors. 
D)  dissolving the corporation. 
E)  all of the above

Question 2

Mandy had his securities license suspended by the securities commission, yet she continues to buy and sell stock as an investment dealer. Mandy certainly

Accepted Answer

A)  will face private discipline by the investment house where he is an agent. 
B)  will have all his stock trades cancelled and/or reversed. 
C)  has committed a criminal offence. 
D)  will be barred for life from working in the securities industry in Canada. 
E)  must go up before the discipline committee of the securities commission. 
A)  will face private discipline by the investment house where he is an agent. 
B)  will have all his stock trades cancelled and/or reversed. 
C)  has committed a criminal offence. 
D)  will be barred for life from working in the securities industry in Canada. 
E)  must go up before the discipline committee of the securities commission.

Question 3

Explain the general purpose of securities legislation in Canada. How are these purposes achieved?

Accepted Answer

The general purpose of securities legisl

Question 4

In trying to protect corporate creditors, what is the solvency test?

Accepted Answer

The solvency test requires that the dire

Question 5

The indoor management rule means that a third party who enters into a contract with a corporation, is obliged to make an inquiry into the internal management of the corporation to ensure that the contract, when signed, would be a properly authorized contract.

Accepted Answer

A) True 
 B)False

Question 6

In Canada, the jurisdiction over the securities industry is

Accepted Answer

A)  divided between federal and provincial governments. 
B)  with the federal Securities and Exchange Commission. 
C)  with the federal Parliament. 
D)  with each of Canada's four stock exchanges. 
E)  substantially within provincial jurisdiction. 
A)  divided between federal and provincial governments. 
B)  with the federal Securities and Exchange Commission. 
C)  with the federal Parliament. 
D)  with each of Canada's four stock exchanges. 
E)  substantially within provincial jurisdiction.

Question 7

What is meant by the indoor management rule?

Accepted Answer

Corporations enter into contracts with t

Question 8

Several years back Dean Pigeon with two friends invested $300,000 equity capital into a new corporation. As it turns out, they have more capital in the business than they can profitably use. Will the CBCA allow them to take out the excess capital?

Accepted Answer

A)  No, since the excess is not accumulated retained earnings. 
B)  Yes, as long as the corporation can satisfy both parts of the solvency test. 
C)  Yes, provided the corporation has no creditors. 
D)  No, because a "capital fund" is not available to shareholders. 
E)  Yes, provided the corporation can satisfy the court that the capital is truly unutilised. 
A)  No, since the excess is not accumulated retained earnings. 
B)  Yes, as long as the corporation can satisfy both parts of the solvency test. 
C)  Yes, provided the corporation has no creditors. 
D)  No, because a "capital fund" is not available to shareholders. 
E)  Yes, provided the corporation can satisfy the court that the capital is truly unutilised.

Question 9

The basic purpose of securities legislation is to

Accepted Answer

A)  make the capital market an efficient medium for allocating available funds among competing investment opportunities. 
B)  register and license those engaged in the various aspects of the securities business. 
C)  require the issuer of securities to the public to file a prospectus and other related information to the securities commission. 
D)  require full disclosure of financial information to prospective buyers of stocks and bonds offered to the public. 
E)  prevent and punish fraudulent practices in the securities industry. 
A)  make the capital market an efficient medium for allocating available funds among competing investment opportunities. 
B)  register and license those engaged in the various aspects of the securities business. 
C)  require the issuer of securities to the public to file a prospectus and other related information to the securities commission. 
D)  require full disclosure of financial information to prospective buyers of stocks and bonds offered to the public. 
E)  prevent and punish fraudulent practices in the securities industry.

Question 10

Ward Bond was the sole director of Able Contractors and Hauling Ltd. The corporation entered into a contract to dig up and remove a below- ground storage tank which contained a residue of pesticides. The Corporation dug up the tank and placed it on a flat- bed truck for transportation to an approved disposal facility. While being transported it started to rain and the driver called Ward to ask what he should do as he had no tarpaulin to cover the tank. Ward knew that a tarpaulin would be useful but the cost would be several thousand dollars so Ward instructed the driver to park the truck until the rain stopped. The driver did so in a restaurant parking lot and the rain washed out the pesticide residue from the tank. It leaked onto the parking lot below the truck. The driver noticed this and called Ward to find out what to do and Ward told him to leave immediately and go to the disposal facility. The pesticide residue was ultimately discovered and led to a clean- up at a cost of
$35,000. What potential liability is there as a result of this situation? Who do you think will be liable and what is the nature of their liability?

Accepted Answer

The corporation has civil liability whic

Question 11

The principle of limited liability protects directors from liability for the torts and breaches of fiduciary duties they commit.

Accepted Answer

A) True 
 B)False

Question 12

Who are "outside" directors and what roll do they play in a corporate offence?

Accepted Answer

Outside directors are elected to the boa

Question 13

Describe three classes of criminal offences in Canada.

Accepted Answer

1) Mens rea offences-where the court mus

Question 14

Mandy and Donald wish to form a corporation to develop a $1,000,000 piece of property they own jointly. Prior to incorporation they hire an architect to design a building for their site. Upon completion of incorporation Mandy and Donald, who are the sole directors of the corporation, pass a directors' resolution ratifying the contract with the architect and seeking to make the corporation liable there under. Will they have any legal problems with this procedure?

Accepted Answer

Under the old common law rules, their ra

Question 15

Corporations may incur civil liability as principals for acts or omissions of its agents and employees.

Accepted Answer

A) True 
 B)False

Question 16

Under what circumstances may a corporation purchase its own shares?

Accepted Answer

Under the CBCA, a corporation

Question 17

In determining responsibility for environmental harm, ordinarily _ ought NOT to be held personally liable for the offence.

Accepted Answer

A)  the official in charge 
B)  an inside director 
C)  the corporate executive officer 
D)  an outside director 
E)  the enterprise itself 
A)  the official in charge 
B)  an inside director 
C)  the corporate executive officer 
D)  an outside director 
E)  the enterprise itself

Question 18

Explain how directors and senior officers can be held liable when the corporation commits a criminal offence.

Accepted Answer

The courts have found the actions of dir

Question 19

There are no circumstances that will prevent a corporation from paying a dividend to its shareholders.

Accepted Answer

A) True 
 B)False

Question 20

No defence will be available if a director commits an offence that imposes strict liability.

Accepted Answer

A) True 
 B)False

Exam 29: The External Responsibilities of a Corporation

Under criminal law, corporations are subject to be punished. Punishment can take place by

Mandy had his securities license suspended by the securities commission, yet she continues to buy and sell stock as an investment dealer. Mandy certainly

Explain the general purpose of securities legislation in Canada. How are these purposes achieved?

In trying to protect corporate creditors, what is the solvency test?

The indoor management rule means that a third party who enters into a contract with a corporation, is obliged to make an inquiry into the internal management of the corporation to ensure that the contract, when signed, would be a properly authorized contract.

In Canada, the jurisdiction over the securities industry is

What is meant by the indoor management rule?

Several years back Dean Pigeon with two friends invested $300,000 equity capital into a new corporation. As it turns out, they have more capital in the business than they can profitably use. Will the CBCA allow them to take out the excess capital?

The basic purpose of securities legislation is to

The principle of limited liability protects directors from liability for the torts and breaches of fiduciary duties they commit.

Who are "outside" directors and what roll do they play in a corporate offence?

Describe three classes of criminal offences in Canada.

Corporations may incur civil liability as principals for acts or omissions of its agents and employees.

Under what circumstances may a corporation purchase its own shares?

In determining responsibility for environmental harm, ordinarily _ ought NOT to be held personally liable for the offence.

Explain how directors and senior officers can be held liable when the corporation commits a criminal offence.

There are no circumstances that will prevent a corporation from paying a dividend to its shareholders.

No defence will be available if a director commits an offence that imposes strict liability.

Law and Society

The Machinery of Justice

The Law of Torts

Professional Liability

Formation of a Contract: Offer and Acceptance

Formation of a Contract: Consideration, and Intention to Create Legal Relations

Formation of a Contract: Capacity to Contract and Legality of Object

Grounds Upon Which a Contract May Be Impeached: Mistake

Grounds Upon Which a Contract May Be Impeached: Misrepresentation, Undue Influence, and Duress

The Requirement of Writing

The Interpretation of Contracts

Privity of Contract and the Assignment of Contractual Rights

The Discharge of Contracts

The Effect of Breach

Remedies for Breach

Sale of Goods

Leasing and Bailment

Insurance and Guarantee

Agency and Franchising

The Contract of Employment

Negotiable Instruments

Intellectual Property

Interests in Land and Their Transfer

Landlord and Tenant

Mortgages of Land and Real Estate Transactions

Sole Proprietorships and Partnerships

The Nature of a Corporation and Its Formation

The Internal Affairs of Corporations

Secured Transactions

Creditors Rights

Government Regulation of Business

International Business Transactions

Electronic Commerce

Filters