Chapter 42 – Organization and Financial Structure of Corporations
V. ANSWERS TO PROBLEMS AND PROBLEM CASES
1. Zoltar and McCrory could sign a contract in which McCrory agrees to look only to the future
corporation for performance. The problem with this option is that because the corporation is
not in existence and Zoltar is not liable on the contract, McCrory is not yet bound as well.
2. Nebraska follows the MBCA. Under MBCA section 2.04, Pietra has liability on the contract
made for the nonexistent corporation only if she acts for the corporation knowing it is not in
3. Yes. By making contracts on behalf of a corporation that was dissolved and, therefore, did
4. The court held that WDM adopted the contract by accepting its benefits, such as having Crye-
5. There are several options, but one good one is to create two classes of shares. The two
colleagues will receive shares of one class that may be called common shares or Class A
shares, and the eight associates will receive shares in another class of shares that may be
called preferred shares or Class B shares. Only the colleagues’ shares will have the right to
6. Yes. Under Washington law, shares may be issued for consideration consisting of any tangible
or intangible property or benefit to the corporation, including cash, promissory notes, services
7. Yes. South Carolina has adopted the MBCA. Under MBCA section 6.21, a corporation may
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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 42 – Organization and Financial Structure of Corporations
8. The Pennsylvania Supreme Court held that the merger was a corporate act, not a shareholder
act, and therefore did not fall within the buy-sell agreement’s restrictive provision on a
9. No. The court held that the share-transfer restriction applied only if the shareholders sold
10. To ensure they get a return on their investments while they are shareholders before
EZStreet.com goes public or is sold to another company, Josh, Jack, and Will could ask for a
To ensure they can obtain capital appreciation of their shares when the company goes public
or is sold, they could have a buy-and-sell agreement, which requires EZStreet.com or the
company that purchases EZStreet.com to purchase their shares for a price reflecting their
percentage ownership of the company. Their shares should be valued at 30% of the market
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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.