Question 1

Which statement best exemplifies the standard of care expected of directors?

Accepted Answer

Directors are expected to meet the standard of care of a "reasonably prudent person" in their role, which involves making decisions with the care, diligence, and skill that someone in their position, with their responsibilities, would reasonably be expected to exercise. This standard is broader and more applicable to the varied decisions directors must make than the more specific standards mentioned in the other options.

Question 2

Ingel is a director in MIV Inc.,a large,successful software development company.He entered into a contract involving the sale of software he developed to MIV Inc.In law,this is a self dealing contract.Why is it enforceable?

Accepted Answer

Self-dealing contracts can be enforceable if there is full disclosure by the interested director and they abstain from voting on the transaction, ensuring it is treated fairly and reasonably within the company's governance structures.

Question 3

What is the authority an individual must possess to trigger an organization's criminal liability?

Accepted Answer

A

Question 4

In litigation involving a promoter,one of the parties named in a contract is described as an entity yet to be incorporated.Under what circumstances will a court find the promoter NOT to be personally liable?

Accepted Answer

A promoter can be relieved from personal liability if the contract specifically includes a provision that expressly relieves the promoter of such liability. This would need to be a clear and explicit term within the contract itself.

Question 5

The senior vice president of marketing surprised everyone at the meeting with his decision to use the initials "HjW" on the labels of T Shirt Corp.'s toddlers' T shirt line.The likelihood of ensuing confusion with a competitor's products in that market was obvious to all present.If asked to assess responsibility for liability for wrongdoing in these circumstances,would a court apply the theory that holds a corporation directly at fault for the commission of this wrongful act?

Accepted Answer

The identification theory holds that certain key individuals' actions and intentions within a corporation (such as senior executives) are directly attributable to the corporation itself. In this case, the senior vice president's decision directly impacts the corporation's actions, making the corporation liable under the identification theory.

Question 6

What is the role of the fiduciary principle in matters with respect to corporate law relating to governance?

Accepted Answer

The fiduciary principle in corporate law primarily imposes duties on directors and officers to act in the best interest of the corporation itself, rather than in their own interests or the interests of any particular group of shareholders or other stakeholders.

Question 7

The directors of ABC Corporation have voted to form a strategic alliance with Atlas Supplies Ltd.,a corporation owned by a block of ABC's shareholders.They plan to pay a premium over the market rate for the services of Atlas in recognition of their close relationship.Which statement best describes this situation?

Accepted Answer

The directors have breached their fiduciary duties by favouring one particular group of shareholders.

Question 8

Why is it preferable for risk management to use a shelf company as the vehicle for taking prompt advantage of a valuable business opportunity?

Accepted Answer

Shelf companies are already established entities, which means they can immediately engage in contracts and business activities without the delays associated with setting up a new corporation. This allows for quick action on business opportunities.

Question 9

Which of the following individuals might be classified as a 'directing mind' of a corporation?

Accepted Answer

A 'directing mind' of a corporation typically refers to individuals who have the authority and responsibility to make decisions on behalf of the corporation. Corporate officers, such as CEOs or CFOs, are often considered the directing minds because they have the power to make significant decisions affecting the direction and operations of the company. Shareholders, supervisors, and agents usually do not have this level of decision-making authority.

Question 10

Which of the following is a requirement of the CSA?

Accepted Answer

The answer of Which of the following is a requirement...

Question 11

What type of liability is imposed by a court where it is not open to the accused to show he was without fault?

Accepted Answer

Absolute liability is the type of liability imposed by a court where the accused cannot escape liability by showing they were without fault. It applies in cases where activities conducted are so hazardous that the entity involved is held liable for any harm caused, regardless of fault.

Question 12

Which of the following describes a role of the Canadian Securities Administrators (CSA)?

Accepted Answer

The Canadian Securities Administrators (CSA) is primarily involved in establishing best practices for corporate governance among other responsibilities related to securities regulation in Canada.

Question 13

Under what circumstances will a court find that a corporation is bound by a contract entered into by an agent of the corporation?

Accepted Answer

A court will find that a corporation is bound by a contract entered into by an agent of the corporation if the agent was acting with actual or apparent authority. This means the agent was either genuinely authorized by the corporation (actual authority) or acted in a way that a reasonable third party would believe they were authorized (apparent authority), regardless of the actual authorization.

Question 14

Which statement best describes a corporation's liability in criminal law?

Accepted Answer

Corporations can be held liable for both intentional crimes and crimes of negligence. This is because the law recognizes the concept of "corporate personhood," allowing corporations to be treated as individuals in many legal contexts. This means they can be found guilty of crimes if their representatives, acting within the scope of their employment, engage in criminal activities for the benefit of the corporation.

Question 15

What do primary liability and vicarious liability have in common?

Accepted Answer

Both primary liability and vicarious liability involve a corporation being held accountable for actions. Primary liability pertains to the corporation's direct actions, while vicarious liability involves the corporation being held responsible for the actions of its employees or agents.

Question 16

Which statement best describes the 'directing mind' of a corporation?

Accepted Answer

The 'directing mind' of a corporation refers to individuals who have the authority to make decisions and act on behalf of the corporation, typically senior executives or directors. There can be more than one person who fulfills this role.

Question 17

Remy is the president of Envirotox Inc.,a corporation that specializes in the storage of toxic waste.One of Envirotox's trucks was in an accident while transporting toxic waste,and the corporation is expecting prosecution under environmental protection legislation.Which of the following describes Remy's personal liability under environmental legislation?

Accepted Answer

As an officer of the corporation, Remy could potentially face personal liability under environmental legislation if it is determined that he had a role in the decision-making or oversight that led to the violation.

Question 18

What are the two distinct forms of corporate tort liability?

Accepted Answer

Corporate tort liability can be categorized into primary liability, where the corporation is directly responsible for the tort, and vicarious liability, where the corporation is held responsible for the actions of its employees or agents.

Question 19

Which of the following is a distinguishing feature of self dealing contracts?

Accepted Answer

Self-dealing contracts are characterized by situations where a conflict of interest arises because an individual in a position of authority in a corporation (such as a director or officer) stands to benefit personally from the contract, potentially at the expense of the corporation's best interests.

Question 20

Which statement best describes the relationship between directors and officers in a corporation?

Accepted Answer

Officers are appointed by directors. Directors form the governing body of a corporation and make major decisions including the appointment of officers who manage the day-to-day operations.

Quiz 16: The Corporate Form: Operational Matters