Kent Incorporated Provincially

question 84

Multiple Choice

Kent incorporated provincially. The corporation worked with small businesses in developing graphs and charts from their data for presentation to bankers, partners, shareholders, etc. If Kent, as promoter and agent of the company, had bought the necessary equipment from Ace Computers Ltd. prior to incorporation, which of the following would be true?

• A) At common law, pre-incorporation contracts are binding on the corporation, but only from the moment the corporation comes into existence.
• B) Many jurisdictions have recently enacted statutory provisions preventing a corporation from ratifying pre-incorporation contracts.
• C) Kent may have been able to protect himself by including a provision in the contract with Ace exempting him from personal liability.
• D) A corporation is legally bound to ratify all contracts made prior to incorporation, but only if those contracts were made with the intention that the corporation be bound.
• E) Kent's liability on the contract would be limited to his investment in the corporation.

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Definitions:

Lease

Under Article 2A of the UCC, a transfer of the right to possess and use goods for a period of time in exchange for payment. In the context of real property, an agreement by which a property owner (landlord) agrees to give another party (the tenant) the exclusive right to possess the property for a limited time.

Art Collector

An individual or entity that accumulates artwork, often for personal enjoyment, investment, or cultural preservation.

Transactions

The action of conducting business or an exchange between two or more parties that involves the transfer of goods, services, money, or information.

Merchant

An individual or business engaged in the wholesale or retail sale of goods or commodities.