Fact Pattern 38-1B
Standard Company and Typical Corporation form United, Inc., a close corporation, and agree to restrict the transfer of its stock to anyone else. SC sells its physical assets, but not its United stock, to Variety, Inc. TC files a suit against SC.
-Refer to Fact Pattern 38-1B. Ac?cording to the court in Case 38.2, Salt Lake Tribune Publishing Co. v. AT&T Corp., a reasonable purpose for a stock transfer re?striction in a close corpora?tion, like the agreement between SC and TC, is

Question

Fact Pattern 38-1B 
Standard Company and Typical Corporation form United, Inc., a close corporation, and agree to restrict the transfer of its stock to anyone else. SC sells its physical assets, but not its United stock, to Variety, Inc. TC files a suit against SC.
-Refer to Fact Pattern 38-1B. Ac?cording to the court in Case 38.2, Salt Lake Tribune Publishing Co. v. AT&T Corp., a reasonable purpose for a stock transfer re?striction in a close corpora?tion, like the agreement between SC and TC, is

Quizplus · Accepted Answer

The court in Salt Lake Tribune Publishing Co. v. AT&T Corp. recognized that a reasonable purpose for a stock transfer restriction in a close corporation is to limit the participation of outsiders in the firm, which is consistent with the agreement between Standard Company and Typical Corporation. This helps maintain a close-knit group of shareholders with a shared vision for the company.