Promoter liability and pre-organisation contracts — Flashcards

8 flashcards

What fiduciary duty does a promoter owe regarding property or business opportunities offered to the corporation?

When does a promoter remain personally liable on a preincorporation contract?

Distinguish between a corporation's 'adoption' of a pre-incorporation contract, its 'assumption' of duties, and a 'novation' regarding promoter liability.

When does the doctrine of corporation by estoppel apply?

Under ULLCA (2013), how can an operating agreement be formed even without a signed document?

What is the key distinction between an LLC's certificate of organization and its operating agreement?

What are the two primary documents governing an LLC, and what is the function of each?

Under MBCA § 7.32, what conditions allow a purchaser of shares to rescind their purchase due to an undisclosed shareholder agreement?

Promoter liability and pre-organisation contracts Bar Exam Flashcards - Medical Study Cards

Master Promoter liability and pre-organisation contracts with Oncourse flashcards. These spaced repetition flashcards are designed for medical students preparing for NEET PG, USMLE Step 1, USMLE Step 2, MBBS exams, and other medical licensing examinations.

Promoter liability and pre-organisation contracts Flashcard Deck - 8 Cards

Flashcard 1: What fiduciary duty does a promoter owe regarding property or business opportunities offered to the corporation?

Answer: A promoter owes the prospective corporation a fiduciary duty and must disclose material facts, including any profit or interest in a transaction. The promoter may not secretly profit from selling property to the corporation or diverting its opportunity.

Flashcard 2: When does a promoter remain personally liable on a preincorporation contract?

Answer: Under the majority rule, a promoter is personally liable on a preincorporation contract even if the corporation later adopts it, unless the contract expressly or impliedly provides that the promoter is not liable. Adoption alone does not release the promoter.

Flashcard 3: Distinguish between a corporation's 'adoption' of a pre-incorporation contract, its 'assumption' of duties, and a 'novation' regarding promoter liability.

Answer: Adoption (express or implied) makes the corporation liable on the contract. Assumption is the corporation's promise to perform duties, making it also liable. Neither adoption nor assumption alone releases the promoter. A novation is an agreement among the promoter, corporation, and third party to substitute the corporation for the promoter, thereby releasing the promoter.

Flashcard 4: When does the doctrine of corporation by estoppel apply?

Answer: Corporation by estoppel applies when a particular challenger has dealt with an enterprise as a corporation (e.g., contracted with it as 'Inc.') and later tries to deny its corporate existence. The challenger is then estopped from denying corporate status in that dispute.

Flashcard 5: Under ULLCA (2013), how can an operating agreement be formed even without a signed document?

Answer: An operating agreement can be formed through oral agreement or implied by the members' conduct, as long as it concerns internal LLC matters and all members mutually assent to the terms.

Flashcard 6: What is the key distinction between an LLC's certificate of organization and its operating agreement?

Answer: The certificate of organization is a public document filed with the state to form the LLC, while the operating agreement is a private agreement among members concerning internal affairs, which can be written, oral, or implied.

Flashcard 7: What are the two primary documents governing an LLC, and what is the function of each?

Answer: The certificate (or articles) of organization is the public filing document establishing legal existence. The operating agreement is the private internal agreement detailing the parties' economic and organizational bargain.

Flashcard 8: Under MBCA § 7.32, what conditions allow a purchaser of shares to rescind their purchase due to an undisclosed shareholder agreement?

Answer: The purchaser may rescind if, at the time of purchase, they did not have knowledge of the agreement AND the agreement's existence was not conspicuously noted on the share certificates or information statement.

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Promoter liability and pre-organisation contracts Flashcards for Bar Exam

Study 8 flashcards on Promoter liability and pre-organisation contracts for Bar Exam Business Associations and Relationships. These active recall cards cover the key concepts, clinical associations, and high-yield facts from this chapter of Entity formation and promoters. Each card is designed to test your understanding rather than just recognition, building stronger and more durable memories for exam day.

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Are Promoter liability and pre-organisation contracts flashcards free?

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There are 8 flashcards for Promoter liability and pre-organisation contracts, covering the key concepts, clinical correlations, and high-yield facts from this chapter of Entity formation and promoters.

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Read through each prompt and try to answer before revealing the back of the card. This active recall approach builds stronger memories than passive reading. Combine flashcards with the study notes and MCQ practice for the best results.

Are there more flashcards for Entity formation and promoters?

Yes. This page covers one chapter of Entity formation and promoters. Visit the topic page to see all chapters and their flashcards under Business Associations and Relationships.

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