Which of the Following Is Not True About Promoters of a Corporation

question 17

Multiple Choice

Which of the following is not true about promoters of a corporation?

• A) A promoter can be relieved of liability on a contract entered into on behalf of a corporation with a third party if, after the corporation is formed, there is a novation.
• B) A promoter can be relieved of liability on a contract entered into on behalf of a corporation with a third party if, at the time the contract is entered into, the third party agrees to a novation to occur automatically upon the valid creation of the corporation.
• C) The creation of the corporation does not automatically release the promoter from contracts entered into on behalf of the corporation.
• D) If the corporation fails to come into existence, the promoter cannot be held liable on a contract entered into on behalf of the corporation.
• E) If the corporation is formed, it becomes liable on a promoter's contract only if the promoter agrees to be bound by the contract.

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Definitions:

Deceived

Refers to being misled or fooled into believing something that is not true.

Obedience Experiments

Psychological tests that study the extent to which a person can be made to comply with orders, often in conflict with personal conscience.

Visual Perception

The brain's process of interpreting and making sense of visual information received from the environment through the eyes.

Perceived Authority

The extent to which an individual is viewed as a source of knowledgeable or legitimate power by others.