​ When Does a Corporation Become a Party to Contracts

question 19

Multiple Choice

​ When does a corporation become a party to contracts made by the person forming a corporation?

• A)When the corporation is incorporated.
• B)When the 50% of the stock is sold.
• C)When the corporation approves contracts made by the person forming the corporation.
• D)When the other parties to the contracts approve the corporation's existence.

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Definitions:

Shares Issued

Refers to the total number of shares that a company has allocated to shareholders as part of its capital structure, including those owned by the public and the company itself.

Par Common Stock

The nominal or face value of a share of common stock, as stated in the corporate charter, which has minimal effect on its market value.

Market Value

The existing rate at which a service or asset is available for purchase or sale on the marketplace.

Paid-In Capital

Funds raised by a company from investors through the issuance of securities such as stocks, representing the capital contributed by shareholders in excess of the par value of the shares.