Question

26.The Business Judgment Rule

a.is an obsolete 19^th Century corporate legal principle.

b.protects corporate directors from liability.

c.does not apply to directors of close corporations.

d.requires the application of hindsight to decisions made by corporate directors.

27.Bill signed a promissory note for $10,000 to Mary in payment of 1,000 boxes of girl scout cookies. Mary negotiated the note to Sally, a holder in due course, for $9,000. Sally comes to Bill to collect on his note. What defenses are NOT successful against Sally, the HDC?

a.The defense that the cookies were never delivered.

b.Fraud in the inducement.

c. Fraud in the execution.

d.a. and b.

28.Which of the following ways do you convert a bearer negotiable instrument to an order negotiable instrument?

a.Indorse “without recourse” and sign the indorsement.

b.Indorse with “Pay to Lester Moore” and sign the instrument.

c.Indorse with signature only.

d.None of the above.

29.Failure to perfect a security interest in an item of collateral leads to the following groups having priority over the unperfected party.

a.Buyers in the ordinary course of business

b.Judgment lien creditors.

c.Creditors with a perfected security interest.

d.All of the above.

Answer 1

Answer:

26) b is the answer : protects corporate directors from liability.

Reason:

The business Judgment rule presumes the directors or executives have acted to the greatest interest of the organization.

27) a is the answer : The defense that the cookies were never delivered.

Reason:

The promissory note implies the merchandise have been delivered and just the assortment of the real money is pending

28) b is the answer : Endorse with “Pay to Lester Moore” and sign the instrument.

Reason:

Endorsing with Pay to the next individual is the way it very well may be changed over to Order Instrument

29) d is the answer : All of the above(Buyers in the ordinary course of business,Judgment lien creditors,Creditors with a perfected security interest)

Reason:

Creditors with idealized security interest will have the most noteworthy case, trailed by Lien Creditors and afterward the Buyers in the normal course of business. The unperfected gathering will be last.