T/F ___20. In Washington, the concept of “piercing the corporate veil” allows a
ID: 425495 • Letter: T
Question
T/F
___20. In Washington, the concept of “piercing the corporate veil” allows a shareholder or limited liability company member to be held personally liable for his/her/its actions, based on that shareholder or member’s conduct, even though the shareholder or limited liability company member would usually be shielded from liability.
___21. If a contract for the sale of goods does not include a price term or a delivery date, the contract is not enforceable.
___22. In order for a court to confirm that two “partners” have truly formed a partnership through their written agreement to acquire real estate, the partners must prove that they are actively carrying on a business; mere passive ownership of property is not enough to establish the existence of a legal partnership.
___23. Reformation as a contract remedy is available for court order when fraud or mutual mistake (for example, a clerical error) is present.
Explanation / Answer
20. True
Washington practices “piercing the corporate veil” if the shareholders are suspected to be guilty. Corporate veil usually protect shareholders, business owners and limited liability members from wrongdoings of the business.
21. False
Contract for sale of goods are often required in writing (depending on state and the value of goods) for it to be enforceable. However, price and delivery date are not the conditions that are mandatory. While price if often required but the date of delivery is not required.
22. True
Partners are defined by contribution of property, labor, skill and effort to run the business. A mere property owner is not enough to be a partner. One of the key reason is that, in a partnership business, the liability and profits are shared among the partners. If a property owner (who does not contribute otherwise) is considered a partner then he/she will likely be entitled to the liability and profits. This is not correct.
23. True
Reformation of contract happens when there has been a mistake while making the contract. This could be because of clerical error or because either party misunderstood the entire contract. In such case the parties can approach the court and court’s first recommendation is to reform the contract.
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