Question: Paula, Fred, and Stephanie agree that Paula

> Paul Bunyan is the owner of noncumulative 8 percent preferred stock in the Broadview Corporation, which had no earnings or profits in 2013. In 2014, the corporation had large profits and a surplus from which it might properly have declared dividends. How

> For five years, Henry and James had been engaged as partners in building houses. They owned the equipment necessary to conduct the business and had an excellent reputation. In March, Joyce, who previously had been in the same kind of business, proposed t

> Hyperion Company has an authorized capital stock of 1,000 shares with a par value of $100 per share, of which 900 shares, all fully paid, were outstanding. Having an ample surplus, Hyperion Company purchased from its shareholders 100 shares at par. Subse

> Doris subscribed for 200 shares of 12 percent cumulative, participating, redeemable, convertible, preferred shares of the Ritz Hotel Company with a par value of $100 per share. The subscription agreement provided that she was to receive a bonus of one sh

> XYZ Corporation was duly organized on July 10. Its certificate of incorporation provides for a total authorized capital of $1 million, consisting of ten thousand shares of common stock with a par value of $100 per share. The corporation issued for cash a

> Smith’s Food & Drug Centers, Inc. (SFD) is a Delaware corporation that owns and operates a chain of supermarkets in the Southwestern United States. Jeffrey P. Smith, SFD’s chief executive officer, and his family hold common and preferred stock constituti

> Henry and Mary entered into a written contract whereby Henry agreed to sell and Mary agreed to buy a certain automobile for $8,500. Henry drove the car to Mary’s residence and properly parked it on the street in front of Mary’s house, where he tendered i

> International Distributing Export Company (IDE) was organized as a corporation on September 7, 2008, under the laws of New York and commenced business on November 1, 2008. IDE formerly had existed as a sole proprietorship. On October 31, 2008, the newly

> Wood, the receiver of Stanton Oil Company, sued Stanton’s shareholders to recover dividends paid to them for three years, claiming that at the time these dividends were declared, Stanton was in fact insolvent. Wood did not allege that the present credito

> Olympic National Agencies was organized with an authorized capitalization of preferred stock and common stock. The articles of incorporation provided for a 7 percent annual dividend for the preferred stock. The articles further stated that the preferred

> Amalgamated Corporation, organized under the laws of State S, sends several traveling salespersons into State M to solicit orders, which are accepted only at the home office of Amalgamated Corporation in State S. Riley, a resident of State M, places an o

> Arthur, Barbara, Carl, and Debra decided to form a corporation for bottling and selling apple cider. Arthur, Barbara, and Carl were to operate the business, while Debra was to supply the necessary capital but was to have no voice in the management. They

> Julian, Cornelia, and Sheila petitioned for a corporate charter for the purpose of conducting a retail shoe business. They complied with all the statutory provisions except having their charter recorded. This was simply an oversight on their part, and th

> Wayne signed a subscription agreement for one hundred shares of stock of the proposed ABC Company, at a price of $18.00 per share. Two weeks later, the company was incorporated in a state that has adopted the Revised Act. A certificate was duly tendered

> Todd and Elaine purchased for $300,000 a building that was used for manufacturing pianos. Then, as promoters, they formed a new corporation and resold the building to the new corporation for $500,000 worth of stock. After discovering the actual purchase

> Ronald Nadler was a resident of Maryland and the chief executive officer of Glenmar Cinestate, Inc., a Maryland corporation, as well as its principal stockholder. Glenmar leased certain space in the Westridge Square Shopping Center, located in Frederick,

> C. A. Nimocks was a promoter engaged in organizing the Times Printing Company. On September 12, on behalf of the proposed corporation, he made a written contract with McArthur for her services as comptroller for a one-year period beginning October 1. The

> Sims contracted in writing to sell Blake 100 electric motors at a price of $100 each, freight prepaid to Blake’s warehouse. By the contract of sale, Sims expressly warranted that each motor would develop twenty-five brake horsepower. The contract provide

> Green & Freedman Baking Company (Green & Freedman) was a family-owned Massachusetts corporation that produced and sold baked goods. The terms of a collective bargaining agreement required Green & Freedman Baking Company to make periodic payments on behal

> Frank McAnarney and Joseph Lemon entered into an agreement to promote a corporation to engage in the manufacture of farm implements. Before the corporation was organized, McAnarney and Lemon solicited subscriptions to the stock of the corporation and pre

> Berger was planning to produce a fashion show in Las Vegas. In April, Berger entered into a written licensing agreement with CBS Films, Inc., a wholly owned subsidiary of CBS, for presentation of the show. The next year, Stewart Cowley decided to produce

> MPL Leasing Corporation is a California corporation that provides financing plans to dealers of Saxon Business Products. MPL invited Jay Johnson, a Saxon dealer in Alabama, to attend a sales seminar in Atlanta. MPL and Johnson entered into an agreement u

> Healthwin-Midtown Convalescent Hospital, Inc. (Healthwin), was incorporated in California for the purpose of operating a health care facility. For three years thereafter, it participated as a provider of services under the federal Medicare Act and receiv

> In April, Cranson was asked to invest in a new business corporation that was about to be created. He agreed to purchase stock and to become an officer and director. After his attorney advised him that the corporation had been formed under the laws of Mar

> Oahe Enterprises was formed by the efforts of Emmick, who acted as a promoter and contributed shares of Colonial Manors, Inc. (CM), stock in exchange for stock in Oahe. The CM stock had been valued by CM’s directors for internal stock option purposes at

> Little Switzerland Brewing Company was incorporated on January 28. On February 18, Ellison and Oxley were made directors of the company after they purchased some stock. Then, on September 25, Ellison and Oxley signed stock subscription agreements to purc

> An Arkansas statute provides that if any foreign corporation authorized to do business in the state should remove to the federal court any suit brought against it by an Arkansas citizen or initiate any suit in the federal court against a local citizen, w

> Dr. North, a surgeon practicing in Georgia, engaged an Arizona professional corporation consisting of twenty lawyers to represent him in a dispute with a Georgia hospital. West, a member of the law firm, flew to Atlanta and hired local counsel with Dr. N

> On January 10, Betty, of Emanon, Missouri, visited the showrooms of the Forte Piano Company in St. Louis and selected a piano. A sales memorandum of the transaction signed both by Betty and by the salesman of the Forte Piano Company read as follows: “Sol

> State whether the following provisions impair or preclude negotiability, the instrument in each instance being otherwise in proper form. Answer each statement with either “Negotiable” or “Nonnegotiable” and explain why. a. A note for $2,000 payable in tw

> After part of the shares of a proposed corporation had been successfully subscribed, the promoter hired a carpenter to repair a building that was intended to be conveyed to the proposed corporation. The promoter subsequently secured subscriptions to the

> Dale Fullerton was chairman of the board of Envirosearch and the sole stockholder in Westover Hills Management. James Anderson was president of AGFC. Fullerton and Anderson agreed to form a limited partnership to purchase certain property from WYORCO, a

> Dr. Vidricksen contributed $250,000 to become a limited partner in a Chevrolet car agency business with Thom, the general partner. Articles of limited partnership were drawn up, but no effort was made to comply with the state’s statutory requirement of r

> Albert, Betty, and Carol own and operate the Roy Lumber Company, a limited liability partnership. Each contributed one-third of the capital, and they share equally in the profits and losses. Their LLP agreement provides that all purchases over $2,500 mus

> Gordon is the only limited partner in Bushmill Ventures, a limited partnership whose general partners are Daniels and McKenna. Gordon contributed $10,000 for his limited partnership interest and loaned the partnership $7,500. Daniels and McKenna each con

> Kraft is a limited partner of Johnson Enterprises, a limited partnership. As provided in the limited partnership agreement, Kraft decided to leave the partnership and demanded that her capital contribution of $20,000 be returned. At this time, the partne

> Madison and Tilson agree to form a limited partnership with Madison as general partner and Tilson as the limited partner, each to contribute $12,500 as capital. No papers are ever filed, and after ten months the enterprise fails with liabilities exceedin

> Fox, Dodge, and Gilbey agreed to become limited partners in Palatine Ventures, a limited partnership. In a signed writing each agreed to contribute $20,000. Fox’s contribution consisted entirely of cash; Dodge contributed $12,000 in cash and gave the par

> A limited partnership was formed consisting of Webster as the general partner and Stevens and Stewart as the limited partners. The limited partnership was organized in strict compliance with the limited partnership statute. Stevens was employed by the pa

> John Palmer and Henry Morrison formed the limited partnership of Palmer & Morrison for the management of the Huntington Hotel. The limited partnership agreement provided that Palmer would contribute $400,000 and be a general partner and that Morrison wou

> The plaintiff contracted with the defendant to deliver liquid nitrogen to the defendant’s oil refinery production facility located in Belle Chase, Louisiana. The defendant uses liquid nitrogen to ensure the safe operation of its plant. The contract was a

> Glenn refuses an invitation to become a partner of Dorothy and Cynthia in a retail grocery business. Nevertheless, Dorothy inserts an advertisement in the local newspaper representing Glenn as their partner. Glenn takes no steps to deny the existence of

> Charles and Jack orally agreed to become partners in a tool and die business. Charles, who had experience in tool and die work, was to operate the business. Jack was to take no active part but was to contribute the entire $500,000 capitalization. Charles

> Adams, a consulting engineer, entered into a partnership with three others for the practice of their profession. The only written partnership agreement is a brief document specifying that Adams is entitled to 55 percent of the profits and the others to 1

> Lauren, Matthew, and Susan form a partnership, Lauren contributing $100,000; Matthew $50,000; and Susan her time and skill. Nothing is said regarding the division of profits. The firm later dissolves. No distributions to partners have been made since the

> Jones and Ray formed a partnership on January 1, known as JR Construction Co., to engage in the construction business, each partner owning a one-half interest. On February 10, while conducting partnership business, Jones negligently injured Ware, who bro

> Anthony and Karen were partners doing business as the Petite Garment Company. Leroy owned a dye plant that did much of the processing for the company. Anthony and Karen decided to offer Leroy an interest in their company, in consideration for which Leroy

> Simmons, Hoffman, and Murray were partners doing business under the firm name of Simmons & Co. The firm borrowed money from a bank and gave the bank the firm’s note for the loan. In addition, each partner guaranteed the note individually. The firm became

> In August, Victoria Air Conditioning, Inc. (VAC), entered into a subcontract for insulation services with Southwest Texas Mechanical Insulation Company (SWT), a partnership composed of Charlie Jupe and Tommy Nabors. In February of the following year, Jup

> Davis and Shipman founded a partnership under the name of Shipman & Davis Lumber Company. Seven years later, the partnership was dissolved by written agreement. Notice of the dissolution was published in a newspaper of general circulation in Merced Count

> Bishop Logging Company is a large, family-owned logging contractor formed in the low country of South Carolina. Bishop Logging has traditionally harvested pine timber. However, Bishop Logging began investigating the feasibility of a fully mechanized hard

> L. G. and S. L. Patel, husband and wife, owned and operated the City Center Motel in Eureka. On April 16, Rajeshkumar, the son of L. G. and S. L., formed a partnership with his parents and became owner of 35 percent of the City Center Motel. The partners

> Voeller, the managing partner of the Pay-Out Drive-In Theatre, signed a contract to sell to Hodgea small parcel of land belonging to the partnership. Except for the last twenty feet, which was necessary for the theatre’s driveway, the parcel was not used

> Phillips and Harris are partners in a used car business. Under their oral partnership, each has an equal voice in the conduct and management of the business. Because of their irregular business hours, the two further agreed that they could use any partne

> Adam, Stanley, and Rosalind formed a partnership in State X to distribute beer and wine. Their agreement provided that the partnership would continue until December 31, 2018. Which of the following events would cause the ABC partnership to dissolve? If s

> The articles of partnership of the firm of Wilson and Company provide William Smith to contribute $50,000; to receive interest thereon at 13 percent per annum and to devote such time as he may be able to give; to receive 30 percent of the profits. John J

> Ames, Bell, and Cole were equal partners in the ABC Construction Company. Their written partnership agreement provided that the partnership would dissolve upon the death of any partner. Cole died on June 30, and his widow, Cora Cole, qualified as executo

> Ben, Dan, and Lilli were partners sharing profits in proportions of one-fourth, one-third, and five-twelfths, respectively. Their business failed, and the firm was dissolved. At the time of dissolution, no financial adjustments between the partners were

> Martin, Mark, and Marvin formed a retail clothing partnership named M Clothiers and conducted a business for many years, buying most of their clothing from Hill, a wholesaler. On January 15, Marvin retired from the business, but Martin and Mark decided t

> Hanover leased a portion of his farm to Brown and Black, doing business as the Colorite Hatchery. Brown went upon the premises to remove certain chicken sheds that he and Black had placed there for hatchery purposes. Thinking that Brown intended to remov

> Albert, Betty, and Carol own and operate the Roy Lumber Company. Each contributed one-third of the capital, and they share equally in the profits and losses. Their partnership agreement provides that two partners must authorize all purchases over $2,500

> On December 15, Judy wrote a letter to David stating that she would sell to David all of the mine-run coal that David might need to buy during the next calendar year for use at David’s factory, delivered at the factory at a price of $50 per ton. David im

> In 2005, Gauldin and Corn entered into a partnership for the purpose of raising cattle and hogs. The two men were to share equally all costs, labor, losses, and profits. The business was started on land owned initially by Corn’s parents but later acquire

> Cutler worked as a bartender for Bowen until they orally agreed that Bowen would have the authority and responsibility for the entire active management and operation of the tavern business known as the Havana Club. Each was to receive $300 per week plus

> Horn’s Crane Service furnished supplies and services under a written contract to a partnership engaged in operating a quarry and rock-crushing business. Horn brought this action against Prior and Cook, the individual members of the partnership, to recove

> Teresa, Peter, and Walker were partners under a written agreement made in January that the partnership should continue for ten years. During the same year, Walker, being indebted to Smith, sold and conveyed his interest in the partnership to Smith. Teres

> Sheila owned an old roadside building that she believed could be easily converted into an antique shop. She talked to her friend Barbara, an antique fancier, and they executed the following written agreement: (a) Sheila would supply the building, all uti

> James and Suzanne engaged in the grocery business as partners. In one year they earned considerable money, and at the end of the year they invested a part of the profits in oil land, taking title to the land in their names as tenants in common. The inves

> Charles and L. W. Clement were brothers who had formed a partnership that lasted forty years until Charles discovered that his brother, who kept the partnership’s books, had made several substantial personal investments with funds improperly withdrawn fr

> Virginia, Georgia, Carolina, and Louis were partners doing business under the trade name of Morning Glory Nursery. Virginia owned a one-third interest, and Georgia, Carolina, and Louis owned two-ninths each. The partners acquired three tracts of land for

> Donald Petersen joined his father, William Petersen, in a chicken hatchery business William had previously operated as a sole proprietorship. When the partnership was formed, William contributed the assets of the proprietorship, which included cash, equi

> ABCD Company is a general partnership. It consists of Dianne, Greg, Knox, and Laura, whose capital contributions were as follows: Dianne, $5,000; Greg, $7,500; Knox, $10,000; and Laura, $5,000. The partnership agreement provided that the partnership woul

> Wilson Trading Corp. agreed to sell David Ferguson a specified quantity of yarn for use in making sweaters. The written contract provided that notice of defects, to be effective, had to be received by Wilson before knitting or within ten days of receipt

> Anita and Duncan had been partners for many years in a mercantile business. Their relationship deteriorated to the point where Anita threatened to bring an action for an accounting and dissolution of the firm. Duncan then offered to buy Anita’s interest

> Lynn and Jack jointly own shares of stock of a corporation, have a joint bank account, and have purchased and own as tenants in common a piece of real estate. They share equally the dividends paid on the stock, the interest on the bank account, and the r

> The following contract was executed on August 22: Ray agrees to sell and Shaw, the representative of Todd and acting on his behalf, agrees to buy 10,000 pounds of 0.32 × 15/8 stainless steel strip type 410. (signed) Ray (signed) Shaw On August 26, Ray in

> Cook’s Department Store advertises that it maintains a barber shop in its store and that the shop is managed by Hunter, a Cook’s employee. Actually, Hunter is not an employee of the store but merely rents space in the store. While shaving Jordan in the b

> Driver picked up Friend to accompany him on an out-of-town delivery for his employer, Speedy Service. A “No Riders” sign was prominently displayed on the windshield of the truck, and Driver violated specific instructions of his employer by permitting an

> Helper, a delivery boy for Gunn, delivered two heavy packages of groceries to Reed’s porch. As instructed by Gunn, Helper rang the bell to let Reed know the groceries had arrived. Mrs. Reed came to the door and asked Helper if he would deliver the grocer

> Stone was the agent authorized to sell stock of the Turner Company at $10 per share and was authorized in case of sale to fill in the blanks in the certificates with the name of the purchaser, the number of shares, and the date of sale. He sold 100 share

> Green Grocery Company employed Jones as its manager and gave her authority to purchase supplies and goods for resale. Jones had conducted business for several years with Brown Distributing Company, although her purchases had been limited to groceries. Jo

> Stan sold goods to Bill in good faith, believing him to be a principal. Bill in fact was acting as agent for Nancy and within the scope of his authority. The goods were charged to Bill, and, on his refusal to pay, Stan sued Bill for the purchase price. W

> Paula instructed Alvin, her agent, to purchase a quantity of hides. Alvin ordered the hides from Ted in his own (Alvin’s) name and delivered the hides to Paula. Ted, learning later that Paula was the principal, sends the bill to Paula, who refuses to pay

> Teledyne Industries, Inc., entered into a contract with Teradyne, Inc., to purchase a T-347A transistor test system for the list and fair market price of $98,400 less a discount of $984. After the system was packed for shipment, Teledyne canceled the ord

> Raymond Zukaitis was a physician practicing medicine in Douglas County, Nebraska. Aetna issued a policy of professional liability insurance to Zukaitis through its agent, the Ed Larsen Insurance Agency. The policy covered the period from August 31, 2013,

> Virginia and her husband Ronnie Hulbert were involved in an accident in Mobile County when their automobile collided with another automobile driven by Dr. Murray’s nanny. The nanny’s regular duties of employment included housekeeping, supervising the chi

> Van D. Costas, Inc. (Costas) entered into a contract to remodel the entrance of the Magic Moment Restaurant owned by Seascape Restaurants, Inc. Rosenberg, part owner and president of Seascape, signed the contract on a line under which was typed “Jeff Ros

> Chris Zulliger was a chef at the Plaza Restaurant in the Snowbird Ski Resort in Utah. The restaurant is located at the base of a mountain. As a chef for the Plaza, Zulliger was instructed by his supervisor and the restaurant manager to make periodic trip

> Aretta J. Parkinson owned a two-hundred-acre farm in a state that requires written authority for an agent to sell land. Prior to her death on December 23, Parkinson deeded a one-eighth undivided interest in the farm to each of her eight children as tenan

> Sherwood negligently ran into the rear of Austen’s car, which was stopped at a stoplight. As a result, Austen received bodily injuries and her car was damaged. Sherwood, arts editor for the Mississippi Press Register, was en route from a concert he had c

> Serges is the owner of a retail meat marketing business. Without authority his managing agent borrowed $3,500 from David, on Serges’s behalf, for use in Serges’s business. Serges paid $200 on the alleged loan and on several other occasions told David tha

> While crossing a public highway in the city, Joel was struck by a horse-drawn cart driven by Morison’s agent. The agent was traveling between Burton Crescent Mews and Finchley on his employer’s business and was not supposed to go into the city at all. Ap

> Harris, owner of certain land known as Red Bank, mailed a letter to Byron, a real estate broker in City X, stating, “I have been thinking of selling Red Bank. I have never met you, but a friend has advised me that you are an industrious and honest real e

> Alice was Peter’s traveling salesperson and was authorized to collect accounts. Before the agreed termination of the agency, Peter wrongfully discharged Alice. Peter did not notify anyone of Alice’s termination. Alice then called on Tom, an old customer,

> Mrs. French was the highest bidder on eight antique guns at an auction held by Sotheby & Company. Mrs. French made a down payment on the guns but subsequently refused to accept the guns and refused to pay the remaining balance of $24,886.27 owed on them.

> Wilson engages Ruth to sell Wilson’s antique walnut chest to Harold for $2,500. The next day, Ruth learns that Sandy is willing to pay $3,000 for Wilson’s chest. Ruth nevertheless sells the chest to Harold. Wilson then discovers these facts. What are Wil

> Timothy retains Cynthia, an attorney, to bring a lawsuit upon a valid claim against Vincent. Recently enacted legislation has shortened the statute of limitations for this type of legal action. Cynthia fails to make herself aware of this new statute. Con

> In October 2010, Black, the owner of the Grand Opera House, and Harvey entered into a written agreement to lease the opera house to Harvey for five years at a rental of $300,000 a year. Harvey engaged Day as manager of the theater at a salary of $1,175 p

> Piedmont Electric Co. gave a list of delinquent accounts to Alexander, an employee, with instructions to discontinue electric service to delinquent customers. Among those listed was Todd Hatchery, which was then in the process of hatching chickens in a l

> Palmer made a valid contract with Ames under which Ames was to sell Palmer’s goods on commission from January 1 to June 30. Ames made satisfactory sales up to May 15 and was about to close an unusually large order when Palmer suddenly and without notice