Client a Has Equity Interests in Several Affiliates

question 35

Multiple Choice

Client A has equity interests in several affiliates. In addition, Client A sits on the Board of Directors for Company B, one of the affiliates. If Client A decides to appoint his spouse as the managing director at Company B, then which of the following would be an example of a related-party transaction?

• A) Sales between Client A and all of its affiliates.
• B) Sales between Client A and Company B.
• C) Sales from Company B to another of Client A's affiliates.
• D) All of the above.

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Definitions:

Gratuitous Bailment

A bailment where the bailor lends an item to the bailee without expecting payment, the bailee is thus under a duty to return the item.

Consideration

The value, which could be in the form of money, a promise, or effort, given in exchange for a contractual agreement.

Strict-Liability

A legal concept where a party is liable for damages caused by their actions, regardless of fault or intent, often applied in product liability cases.

Common Law

Also known as case law.