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Which Statement Best Describes the Circumstances in Which a Court

Question 32

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.
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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