Which Statement Best Describes the Circumstances in Which a Court

question 29

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 the corporation has breached its contract with the creditor.
• B)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.
• C)when a business has been incorporated to do something or facilitate the doing of something that is illegal or improper,such as fraud.The business is being used as a cloak for a fraudulent or illegal purpose.
• D)when a corporation does not have sufficient assets to meet its reasonably foreseeable liabilities resulting from carrying on its business.
• E)When the court decides in its unfettered discretion that it would be just,fair,and equitable to all parties to do so.

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Definitions:

Copula

A verb used to link the subject of a sentence with a predicate (a subject complement), such as the verb "to be."

Standard Form

A conventionally agreed-upon format for presenting arguments or expressions to simplify identification and analysis of logical structure.

Motto

A short sentence or phrase that encapsulates the beliefs or ideals guiding an individual, family, or institution.

Standard Form

A prescribed or agreed format or approach that is widely accepted and used for a particular purpose.