Question 1

Until the 19th century, all corporations were created by

Accepted Answer

A)  royal soliloquy. 
B)  charter. 
C)  deed. 
D)  grant. 
E)  crown document. 
A)  royal soliloquy. 
B)  charter. 
C)  deed. 
D)  grant. 
E)  crown document. B

Question 2

When a corporation is liquidated, the first group of persons to be paid are the preferred creditors.

Accepted Answer

A) True 
 B)False  False

Question 3

In comparison with a partnership, which of the following is NOT considered to be an advantage of the corporate form of business?

Accepted Answer

A)  limited liability 
B)  professional management 
C)  transfer of ownership 
D)  continuous existence 
E)  duty of good faith 
A)  limited liability 
B)  professional management 
C)  transfer of ownership 
D)  continuous existence 
E)  duty of good faith E

Question 4

Which of the following will NOT end the existence of a corporation?

Accepted Answer

A)  a failure to comply with statutory regulations 
B)  a dissolution order by the court 
C)  by death of all shareholders in a single accident 
D)  by failure to pay the annual corporation franchise fee 
E)  by resolution of the shareholders 
A)  a failure to comply with statutory regulations 
B)  a dissolution order by the court 
C)  by death of all shareholders in a single accident 
D)  by failure to pay the annual corporation franchise fee 
E)  by resolution of the shareholders

Question 5

The law requires directors to consult with shareholders before they borrow money on behalf of the corporation.

Accepted Answer

A) True 
 B)False

Question 6

Explain the principle enunciated in Salomon v. Salomon & Co. Ltd.

Accepted Answer

The principle of Salomon's case is that

Question 7

Elvin inherited 1000 shares of 7% preferred. She has been assured by her broker that the company is in sound financial health even though it did not pay any dividends this year. Elvin should next find out whether

Accepted Answer

A)  the preferred stock is included under the registered class rights. 
B)  there is any collateral for these shares. 
C)  rights are cumulative. 
D)  rights are participating. 
E)  this preferred stock qualifies for the dividend tax credit. 
A)  the preferred stock is included under the registered class rights. 
B)  there is any collateral for these shares. 
C)  rights are cumulative. 
D)  rights are participating. 
E)  this preferred stock qualifies for the dividend tax credit.

Question 8

A par value is a value, derived from the game of golf, that is attached to the assets of a corporation.

Accepted Answer

A) True 
 B)False

Question 9

Explain the difference between the rights of a shareholder and a bondholder.

Accepted Answer

A corporation can borrow money by issuin

Question 10

In the articles of incorporation jurisdictions, the concept of authorised capital has been abolished. Now, what's important is

Accepted Answer

A)  whether a new issue can be sold to current owners. 
B)  whether the distinction can be maintained between the preferred and the common shares. 
C)  the total number of shares issued and consideration received for each of those shares. 
D)  the difference between issued capital and paid- up capital. 
E)  whether there is a par value or a no par value on the shares sold. 
A)  whether a new issue can be sold to current owners. 
B)  whether the distinction can be maintained between the preferred and the common shares. 
C)  the total number of shares issued and consideration received for each of those shares. 
D)  the difference between issued capital and paid- up capital. 
E)  whether there is a par value or a no par value on the shares sold.

Question 11

What capacity and powers does a corporation have in the eyes of the law?

Accepted Answer

According to the federal Canada Business

Question 12

A parent corporation will be liable to creditors of a subsidiary corporation:

Accepted Answer

A)  only if the parent corporation owns more than 50% of the shares in the subsidiary corporation 
B)  only if the parent corporation and the subsidiary corporation have exactly the same directors 
C)  only if the parent corporation owns 100% of the shares in the subsidiary corporation 
D)  only if the subsidiary corporation is a private (non- distributing) corporation 
E)  none of the above 
A)  only if the parent corporation owns more than 50% of the shares in the subsidiary corporation 
B)  only if the parent corporation and the subsidiary corporation have exactly the same directors 
C)  only if the parent corporation owns 100% of the shares in the subsidiary corporation 
D)  only if the subsidiary corporation is a private (non- distributing) corporation 
E)  none of the above

Question 13

The doctrine of ultra vires, as applied to corporations, has now been abolished throughout Canada. This means Canadian corporations

Accepted Answer

A)  cannot act beyond their constitutional powers. 
B)  do not have the capacity and all the rights, powers, and privileges of a natural person. 
C)  have broadened powers and capacity to contract. 
D)  cannot be held to contracts entered into that are outside of their charter. 
E)  can only act through the authority vested in their agents. 
A)  cannot act beyond their constitutional powers. 
B)  do not have the capacity and all the rights, powers, and privileges of a natural person. 
C)  have broadened powers and capacity to contract. 
D)  cannot be held to contracts entered into that are outside of their charter. 
E)  can only act through the authority vested in their agents.

Question 14

The attribute of negotiability of bond and share certificates has increased the problem of forged and stolen certificates. Explain.

Accepted Answer

Since an innocent holder for value can o

Question 15

Until the 19th century, all corporations were created by grant.

Accepted Answer

A) True 
 B)False

Question 16

Preferred shares are so called because they are usually preferred by most persons over other kinds of shares.

Accepted Answer

A) True 
 B)False

Question 17

What are two disadvantages of carrying on a business as a corporation?

Accepted Answer

Disadvantages of incorporating include t

Question 18

Which of the following is TRUE?

Accepted Answer

A)  The law recognises every natural person as a legal person. 
B)  The limited company is no longer a dominant feature of the modern business world. 
C)  A corporation is a legal person in the eyes of the law. 
D)  A corporation is actually not a legal person. 
E)  The most important non- legal person is the limited partnership. 
A)  The law recognises every natural person as a legal person. 
B)  The limited company is no longer a dominant feature of the modern business world. 
C)  A corporation is a legal person in the eyes of the law. 
D)  A corporation is actually not a legal person. 
E)  The most important non- legal person is the limited partnership.

Question 19

Which of the following best describes the function of the by- laws of a corporation?

Accepted Answer

A)  They regulate the rights of creditors who hold a secured equity position. 
B)  They contain the licensing statutes of the jurisdiction(s) where the corporation operates. 
C)  They provide the general operating rules to run the business of the corporation. 
D)  They describe acts which are illegal and for which the directors of a corporation can be punished by law. 
E)  They are filed with the incorporating papers and take a special shareholders resolution to change their contents. 
A)  They regulate the rights of creditors who hold a secured equity position. 
B)  They contain the licensing statutes of the jurisdiction(s) where the corporation operates. 
C)  They provide the general operating rules to run the business of the corporation. 
D)  They describe acts which are illegal and for which the directors of a corporation can be punished by law. 
E)  They are filed with the incorporating papers and take a special shareholders resolution to change their contents.

Question 20

Jack, who recently retired, wants to invest in a new upstart local company. As part of the deal for investing in The Turmoil Corp., the company has agreed to give Jack "...some sort of maintenance or security job for as long as he feels able". This agreement would best be placed

Accepted Answer

A)  in a separate side agreement as to avoid clutter and confusion. 
B)  in the by- laws, since it will need changing. 
C)  in the charter. 
D)  under seal since it lacks consideration. 
E)  in writing since it falls under the Statute of Frauds. 
A)  in a separate side agreement as to avoid clutter and confusion. 
B)  in the by- laws, since it will need changing. 
C)  in the charter. 
D)  under seal since it lacks consideration. 
E)  in writing since it falls under the Statute of Frauds.

Exam 27: The Nature of a Corporation and Its Formation

Until the 19th century, all corporations were created by

When a corporation is liquidated, the first group of persons to be paid are the preferred creditors.

In comparison with a partnership, which of the following is NOT considered to be an advantage of the corporate form of business?

Which of the following will NOT end the existence of a corporation?

The law requires directors to consult with shareholders before they borrow money on behalf of the corporation.

Explain the principle enunciated in Salomon v. Salomon & Co. Ltd.

Elvin inherited 1000 shares of 7% preferred. She has been assured by her broker that the company is in sound financial health even though it did not pay any dividends this year. Elvin should next find out whether

A par value is a value, derived from the game of golf, that is attached to the assets of a corporation.

Explain the difference between the rights of a shareholder and a bondholder.

In the articles of incorporation jurisdictions, the concept of authorised capital has been abolished. Now, what's important is

What capacity and powers does a corporation have in the eyes of the law?

A parent corporation will be liable to creditors of a subsidiary corporation:

The doctrine of ultra vires, as applied to corporations, has now been abolished throughout Canada. This means Canadian corporations

The attribute of negotiability of bond and share certificates has increased the problem of forged and stolen certificates. Explain.

Until the 19th century, all corporations were created by grant.

Preferred shares are so called because they are usually preferred by most persons over other kinds of shares.

What are two disadvantages of carrying on a business as a corporation?

Which of the following is TRUE?

Which of the following best describes the function of the by- laws of a corporation?

Jack, who recently retired, wants to invest in a new upstart local company. As part of the deal for investing in The Turmoil Corp., the company has agreed to give Jack "...some sort of maintenance or security job for as long as he feels able". This agreement would best be placed

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 Internal Affairs of Corporations

The External Responsibilities of a Corporation

Secured Transactions

Creditors Rights

Government Regulation of Business

International Business Transactions

Electronic Commerce

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