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. Under the reasoning of the court in Case 38.2, Salt Lake Tribune Publishing Co. v. AT&T Corp., SC's sale of its assets

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. Under the reasoning of the court in Case 38.2, Salt Lake Tribune Publishing Co. v. AT&T Corp., SC's sale of its assets

Quizplus · Accepted Answer

According to the court's reasoning in Salt Lake Tribune Publishing Co. v. AT&T Corp., the sale of physical assets by a shareholder does not invalidate a stock transfer restriction unless the sale is made with the intent to circumvent or evade the restriction. In this case, SC did not sell its United stock, and there is no indication that the sale was made to evade the restriction, so the restriction remains valid and enforceable. Therefore, choice A is the best answer.