Exam 16: The Corporate Form: Operational Matters

In assessing a claim for oppression,a court must determine (i)whether the evidence supports the reasonable expectation of the stakeholder,and( ii)whether the reasonable expectation of the stakeholders was violated by the oppressive conduct.Identify the factors that must be considered by the court in order to answer both of these questions.

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Question 1

Correct Answer:

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To determine whether a reasonable expectation exists,courts must consider the following factors:
i)general commercial practice
ii)nature of the corporation
iii)relationship between the parties
iv)past practice
v)steps the claimant could take to protect itself
vi)representations and agreements
vii)resolution of conflicting interests between corporate stakeholders.
To answer the second question,a claimant must show that the failure to meet reasonable expectations was the result of unfair conduct.

Identify the source of and briefly discuss the present standard of care with respect to the duty of competence owed to a corporation.

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Question 2

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The present standard contained in corporate legislation requires directors and officers to display the care,diligence,and skill that a reasonably prudent person would exercise in comparable circumstances.This is an objective standard,and,while directors are not expected to be perfect,they are to act prudently and on a reasonably informed basis.

Briefly discuss statutory derivative actions,including what they permit and what is required for their commencement.

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Question 3

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A statutory derivative action permits a shareholder to obtain leave from the court to bring an action on behalf of the corporation,where the shareholder is able to establish the following:
i)the corporation's directors are unwilling to bring an action
ii)the shareholder is acting in good faith
iii)it appears to be in the interests of the corporation that the action proceed.

Why is it preferable for risk management to use a shelf company as the vehicle for taking prompt advantage of a valuable business opportunity?

(Multiple Choice)

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Question 4

Which of the following is a distinguishing characteristic attributable to preferred shares?

(Multiple Choice)

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Question 5

The directors' fiduciary duty changes when the corporation moves into the vicinity of insolvency.

(True/False)

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Question 6

Why would a court consider an accounting of profits to be an appropriate remedy for breach of the corporate opportunity doctrine?

(Multiple Choice)

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Question 7

Which of the following common law decisions provides the leading analysis of the principles underlying the corporate opportunity doctrine?

(Multiple Choice)

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Question 8

The senior vice president of marketing surprised everyone at the meeting with his decision to use the initials "HjW" on the labels of T-Shirt Corp.'s toddlers T-shirt line.The likelihood of ensuing confusion with a competitor's products in that market was obvious to all present.If asked to assess responsibility for liability for wrongdoing in these circumstances,would a court apply the theory that holds a corporation directly at fault for the commission of this wrongful act?

(Multiple Choice)

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Question 9

In what way do primary liability and vicarious liability share a commonality?

(Multiple Choice)

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Question 10

If a corporation fails to file its annual corporate returns,which of the following is most likely to be the result?

(Multiple Choice)

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Question 11

Identify and briefly describe the circumstances that would permit enforcement of a self-dealing contract under the Canada Business Corporations Act.

(Essay)

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Question 12

In Peoples Department Stores v.Wise (2004),244 DLR (4th)564 (S.C.C.),the court noted that it may be legitimate for directors to consider inter alia the interests of shareholders,employees,suppliers,creditors,consumers,governments,and the environment.How does this ruling affect the fiduciary duty owed by directors to act in the best interests of the corporation?

(Multiple Choice)

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Question 13

A dispute has arisen between the various factions of shareholders over the proposed change of name of SunEnergy4U Inc.,a publicly traded company.In circumstances such as these,which of the following would a corporate lawyer indicate to be important to each of the competing shareholder groups?

(Multiple Choice)

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Question 14

With respect to liability for contractual obligations,which of the following would a law professor most likely say operates in such a way that a corporation is liable to the outsider as opposed to the directors who acted on the corporation's behalf?

(Multiple Choice)

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Question 15

Ingel is a director in MIV Inc.,a large,successful software development company.He entered into a contract involving the sale of software he developed to MIV Inc.In law,this is a self-dealing contract.Why is it enforceable?

(Multiple Choice)

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Question 16

Identify the elements that the court has recommended be examined in order to determine whether the appropriation of a corporate opportunity by a director or officer is a breach of fiduciary duty.

(Essay)

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Question 17

Assessing a corporate entity's responsibility is complicated by the necessity of human agents to direct the acts of corporations.To resolve such complications,rules were developed to determine the legal consequences of corporate behaviour in which areas of law?

(Multiple Choice)

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Question 18

Isabella and Emily both attended a recent seminar for directors regarding corporate governance.The seminar focused on the recent departure of certain courts from the traditional shielding of directors from personal liability where their actions were taken in furtherance of their duties to the company and their conduct was justifiable.What type of liability are Emily and Isabella concerned with?

(Multiple Choice)

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Question 19

In what way are a duty of competence and a fiduciary duty similar?

(Multiple Choice)

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Question 20

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Exam 16: The Corporate Form: Operational Matters

Identify the source of and briefly discuss the present standard of care with respect to the duty of competence owed to a corporation.

Briefly discuss statutory derivative actions,including what they permit and what is required for their commencement.

Why is it preferable for risk management to use a shelf company as the vehicle for taking prompt advantage of a valuable business opportunity?

Which of the following is a distinguishing characteristic attributable to preferred shares?

The directors' fiduciary duty changes when the corporation moves into the vicinity of insolvency.

Why would a court consider an accounting of profits to be an appropriate remedy for breach of the corporate opportunity doctrine?

Which of the following common law decisions provides the leading analysis of the principles underlying the corporate opportunity doctrine?

In what way do primary liability and vicarious liability share a commonality?

If a corporation fails to file its annual corporate returns,which of the following is most likely to be the result?

Identify and briefly describe the circumstances that would permit enforcement of a self-dealing contract under the Canada Business Corporations Act.

A dispute has arisen between the various factions of shareholders over the proposed change of name of SunEnergy4U Inc.,a publicly traded company.In circumstances such as these,which of the following would a corporate lawyer indicate to be important to each of the competing shareholder groups?

With respect to liability for contractual obligations,which of the following would a law professor most likely say operates in such a way that a corporation is liable to the outsider as opposed to the directors who acted on the corporation's behalf?

Ingel is a director in MIV Inc.,a large,successful software development company.He entered into a contract involving the sale of software he developed to MIV Inc.In law,this is a self-dealing contract.Why is it enforceable?

Identify the elements that the court has recommended be examined in order to determine whether the appropriation of a corporate opportunity by a director or officer is a breach of fiduciary duty.

Assessing a corporate entity's responsibility is complicated by the necessity of human agents to direct the acts of corporations.To resolve such complications,rules were developed to determine the legal consequences of corporate behaviour in which areas of law?

In what way are a duty of competence and a fiduciary duty similar?

Knowledge of Law as a Business Asset

The Canadian Legal System

Managing Legal Risks

Dispute Resolution

An Introduction to Contracts

Forming Contractual Relationships

The Terms of a Contract

Non-enforcement of Contracts

Termination and Enforcement of Contracts

Introduction to Tort Law

The Tort of Negligence

Other Torts

The Agency Relationship

Business Forms and Arrangements

The Corporate Form: Organizational Matters

Personal Property

Intellectual Property

Real Property

The Employment Relationship

Terminating the Employment Relationship

Professional Relationships

Sales and Marketing: The Contract, Product, and Promotion

Sales and Marketing: Price, Distribution, and Risk Management

Business and Banking

The Legal Aspects of Credit

Bankruptcy and Insolvency

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