The Fact That a Party Enters into a Contract with Knowledge

question 84

Multiple Choice

The fact that a party enters into a contract with knowledge of special liability if it fails to perform

• A)has a direct effect on the amount of damages that will be awarded against it.
• B)has no material effect on the amount of damages that will be awarded against it.
• C)has the effect of rendering the contract a nullity in the event of a breach.
• D)has a minimal effect on the amount of damages that will be awarded against it.
• E)none of the above

Recognize the rights of shareholders and how these affect corporate governance.

Distinguish between compensatory and noncompensatory stock option plans.

Understand the role and requirements of the Securities and Exchange Commission concerning corporate financial statements.

Understand the accounting treatment for the issuance of common stock above par value.

---

Definitions:

Permanent Trustee

A trustee appointed to manage and administer a trust indefinitely until the trust’s objectives are fulfilled or the trust is legally dissolved.

Chapter 7

A provision under the U.S. Bankruptcy Code allowing for liquidation of a debtor's assets to pay off creditors.

Discharge

A written federal court order signed by a bankruptcy judge stating that the debtor is immune from creditor actions to collect debt; that is, a release from liability.

Federal Court Order

A legally binding directive issued by a federal court, requiring certain actions to be taken or ceased.