Bernie Nohave Is Operating a Scheme Whereby Investors' Money Is

question 33

Multiple Choice

Bernie Nohave is operating a scheme whereby investors' money is purportedly utilized to buy AIDS drugs in Africa. The money is then deductible as a charitable donation for tax purposes. Tom invests in this scheme to generate tax losses knowing that medicine is not being purchased. Is the contract valid?

• A) No, everyone knows that Bernie is bankrupt.
• B) No, this transaction is ultra vires Bernie Nohave's corporation.
• C) No, there is no consideration.
• D) No, there is no capacity.
• E) No, the subject matter of the contract is illegal.

---

Definitions:

Physiological Arousal

The condition of having one's body in a heightened state of alertness and physical readiness, often as a response to stimuli.

Cognitive Experience

The processes involved in acquisition, organization, and use of knowledge, including perception, memory, and reasoning.

Cannon-Bard Theory

A psychological theory proposing that emotions and physiological reactions such as sweating and trembling occur simultaneously, not sequentially.

Schachter Two-factor Theory

A psychological theory suggesting that emotion comes from a combination of a state of arousal and a cognitive label that specifies the emotion.