Read the hypothetical case and answer the accompanying questions.
Mike Jones had been living at the same address in Springfield, California, for more than 30 years when he discovered that his water was emitting a strong odor. When he brought this observation to the attention of many of his neighbors, they complained of a similar odor. After some investigating, Mike discovered that a large corporation, the hypothetical Springfield Gas & Electric, had been dumping chromium 6, a possible carcinogen, into the water supply for decades. Mike then went to a lawyer with this discovery. The lawyer then filed suit against Springfield Gas & Electric in the name of the nearly 1,000 residents in Springfield with contaminated water.
1. Because corporations are legal entities
- They must register with the selective service
- They do not exist separately from their shareholder
- They can sue others, but not be sued because they are not individuals
- They cannot be found liable for mistake of their officers
- They can sue or be sued by others
2. If the plaintiffs were successful in suing Springfield G&E, how would liability for corporations work?
- Only the employee that made a mistake is liable for any mistakes of the corporation
- Corporations do not assume liability for corporate actions.
- Shareholder has full personal liability
- Shareholders are not liable at all for any misdeeds of the corporation.
- Shareholder would be liable for their investment in the corporation
3. Suppose that the corporate officers who were responsible for dumping the chemicals discussed in the case withdrew from the corporation. How does the withdrawal of corporate officers affect the existence of a corporation?
- The corporation dissolves.
- The corporation must renew its articles of incorporation
- The corporation has exceeded its maximum length of life for corporations
- The corporation does not dissolve
- The corporation must file for corporate status again once it finds new officers
4. What if the courts determined that certain Springfield G&E high-ranking officers committed a tort when they engaged in their dumping chemicals with the corporation? In other words, could the corporation itself be held liable for the torts of the officers?
- No, the officers are not agents of the corporation.
- Yes, because shareholder are taxed for their profits
- Not unless it specifically says the corporation can be found liable in the articles of incorporations.
- Yes, due to the doctrine of respondeat superior.
- No, due to the doctrine of respondeat superior.
5. Suppose that Springfield G&E Corporation is incorporated within the state of California. What type of corporation is discussed in the case example?
- S corporation
- Nonprofit corporation
- Domestic corporation
- Foreign corporation
- Alien corporation
6. Suppose after hearing about the scandal the shareholders are upset with the actions of the corporate officers and wish to sell their shares in the company. Can them
- No, this is an example of an S corporation
- No, the company is closely owned
- No, shareholder cannot sell their shares
- Yes, with corporations there is the free transfer of corporate share.
- It depends on how huge of an error the corporate officer made.