Which Statement Best Describes the Circumstances in Which a Court

question 32

Multiple Choice

Which statement best describes the circumstances in which a court will disregard the separate existence of a corporation and impose liability on a shareholder for obligations owed by the corporation to a creditor? A court will impose liability on a shareholder

• A) when a business has been incorporated to do something or facilitate the doing of something which is illegal or improper, like fraud.
• B) when a corporation does not have sufficient assets to meet its reasonably foreseeable liabilities resulting from carrying on its business.
• C) when the creditor is an individual who really needs the money and imposing liability on the shareholder is the only way to ensure that the individual obtains relief.
• D) when the corporation has breached its contract with the creditor.
• E) in no circumstances.

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Definitions:

Frustration Aggression Hypothesis

A psychological theory suggesting that aggression is often the result of frustration, or the blockage of achieving a desired goal.

Freudian Theory

A set of psychoanalytic theories developed by Sigmund Freud that center on unconscious desires, childhood experiences, and the structure of the psyche.

Catharsis

A release of tension or anxiety.

Delivered Shocks

In psychological experiments, a method used to assess obedience or aggression where participants are instructed to administer electric shocks to others.