LAW 531
Final Exam
As of August 2016
University of
Phoenix 25/30
(83.3%)
1. Ted is the president of Soprano Corporation (SC). Ted decided to have SC manufacture large, gas-
guzzling SUV automobiles just before gasoline prices rose dramatically. As a result, SC lost billions of
dollars. The shareholders of SC want to sue Ted for this bad decision that cost them billions. However,
Ted had made a reasonable investigation before making this decision, he had a rational basis for it, &
he had no conflicts of interest regarding this decision. What would be the probable outcome if the
shareholders file a suit?
Ted is not liable under the business judgment rule.
Ted is not liable under the corporate protection
rule. Ted is liable under the various liability rule.
Ted is liable under the ultra vires rule.
2. A limited partnership:
May be created by default.
May not have a corporation as a general
partner. Dissolves when a partner dies.
May be taxed either as a partnership or as a corporation
3. The board of directors of Filex Corporation, at a regular meeting of the board, entered into a contract
with Ginger Grant, one of the directors. This contract called for Filex to purchase 120 acres of land
from Ginger. Of the ten members on the board, eight were present at the meeting. One of the directors
present was Ginger. All the other directors were disinterested in the transaction & not related to Ginger.
After a lengthy discussion, six directors voted in favor of the contract & two voted against it. Ginger
voted for the contract. Which of the following is true?
The contract is voidable unless Ginger proves that the contract is fair to the corporation.
The contract is valid since it was approved by a majority of a quorum of the board.
The contract between Ginger & the corporation is illegal & invalid.
The contract becomes void if the corporation proves that the contract was unfair to it.
4. Which of the following is also called “judgemade”
law? Equity
, Uniform acts
Final Exam
As of August 2016
University of
Phoenix 25/30
(83.3%)
1. Ted is the president of Soprano Corporation (SC). Ted decided to have SC manufacture large, gas-
guzzling SUV automobiles just before gasoline prices rose dramatically. As a result, SC lost billions of
dollars. The shareholders of SC want to sue Ted for this bad decision that cost them billions. However,
Ted had made a reasonable investigation before making this decision, he had a rational basis for it, &
he had no conflicts of interest regarding this decision. What would be the probable outcome if the
shareholders file a suit?
Ted is not liable under the business judgment rule.
Ted is not liable under the corporate protection
rule. Ted is liable under the various liability rule.
Ted is liable under the ultra vires rule.
2. A limited partnership:
May be created by default.
May not have a corporation as a general
partner. Dissolves when a partner dies.
May be taxed either as a partnership or as a corporation
3. The board of directors of Filex Corporation, at a regular meeting of the board, entered into a contract
with Ginger Grant, one of the directors. This contract called for Filex to purchase 120 acres of land
from Ginger. Of the ten members on the board, eight were present at the meeting. One of the directors
present was Ginger. All the other directors were disinterested in the transaction & not related to Ginger.
After a lengthy discussion, six directors voted in favor of the contract & two voted against it. Ginger
voted for the contract. Which of the following is true?
The contract is voidable unless Ginger proves that the contract is fair to the corporation.
The contract is valid since it was approved by a majority of a quorum of the board.
The contract between Ginger & the corporation is illegal & invalid.
The contract becomes void if the corporation proves that the contract was unfair to it.
4. Which of the following is also called “judgemade”
law? Equity
, Uniform acts
