Jerry Received a Check from McGregory Corporation as a Dividend

question 56

Multiple Choice

Jerry received a check from McGregory Corporation as a dividend on his preferred shares.Two days later, one of the corporate directors called him and said he would have to return the check since it was erroneously declared and the company would not be able to pay its day-to-day expenses.Jerry would:

• A) not have to return the check because Jerry acted innocently.
• B) have to return the check because the company would be insolvent.
• C) have to return the check since it was erroneously declared.
• D) not have to return the check because the board acted in good faith.

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Definitions:

Statute

A written law passed by a legislative body at the federal or state level.

Mental Capacity

The ability of an individual to make informed decisions and understand the consequences of those decisions.

Intoxicated

A condition of being under the influence of alcohol or drugs to a degree that impairs a person's physical and cognitive functions.

Void

A void agreement or contract has no legal effect, thus it's as if it never existed due to illegality or impossibility.