1. Doctor Howard and Doctor Fine occupied office space in the Uptown Medical Building. They shared rental expenses, secretarial and medical support personnel and costs and profits. Dr. Howard's son, Dr. Howard, Jr., desired to join his father in his very lucrative practice (plastic surgery!). Dr. Howard, Jr. was given an office adjoining his father's office and the lobby directory and office stationery reflected his presence as follows: Howard, Fine and Howard, M.D.s". Doctors Howard and Fine met with Howard, Jr. and informed him that he would have to earn his place there, and, there would be a nine-month probationary period where only Drs Howard and Fine would have check-writing and decision-making authority. Three months later, Dr. Howard, Jr. met with a sales representative from Superman X-ray Equipment Corp. and contracted with Superman to purchase their new, state-of-the art (translates into expensive!) x-ray equipment. When Drs. Howard and Fine return from their medical convention in Beverley Hills they refuse to take delivery or pay for the equipment. Superman X-ray Equipment Corp. sued Drs. Howard and Fine individually and, Drs Howard and Fine produces a written partnership agreement between each other and, argued that Dr. Howard, Jr. was personally liable and that they had nothing to do with this contract. • Who will Superman Corp. successfully bring an action for breach of contract? Explain in detail.

2. You, Frick and Frack entered into a general partnership building sailboats under contract with area business people. In a freak (not to be confused with Frick or Frack) accident, Frack falls off a prototype vessel during testing and drowns. The death of Frack has thus caused a dissolution of the partnership while the firm is under contract to build three boats under construction. There are various materials at the boatyard, supplies on location and additional supplies needed to complete the boats under contract.

You and Frick agree that you will be the partner in charge of the winding up process. What must you do? Boston Sailing Academy comes to you and wants to contract for a very expensive sailboat. Can you enter into this contract on behalf of the partnership? During the winding up process, you accidentally injure a supplier with a boat trailer. A legal representative of Frack's estate argues in court that Frack's estate is not liable for such injury. What response do you give the court?

3. Roadrunner Performance, a Limited Partnership, was organized in accordance with the laws of state of Massachusetts. Tim Cruisecontrol was the general partner and Enzo Targa and Dr. Farfignugen were limited partners. Roadrunner Performance, L.P. was in the business of designing, building and racing performance electric sports cars. Tim Cruisecontrol was a race car driver prior to the formation of the limited partnership. Targa and Farfignugen came to the production facility twice a week, Targa was employed as an engine designer, both consulted with Cruisecontrol about technical design requirements of the vehicle. Cruisecontrol wanted to build a mid-engine design but he was overruled by Targa and Farfignugen, and the vehicle designed was a rear-engine design. Upon completion of the million dollar vehicle, Farfignugen arranged to race the car at the local test track. During the test the vehicle crashed and suffered extensive damage. Roadrunner Performance, L.P. suffered heavy financial losses and the business was placed in bankruptcy. The trusteee in bankruptcy sued all three for the business losses and the trail court ruled that only the general partner, Cruisecontrol, was personally liable. Cruisecontrol comes to you and requests your opinion on the relative success of having the decision reversed on appeal. How would you advise him?

4. Worldwind Tours, Inc. was organized under the laws of the state of Delaware in 2010 as a sports vacation company. Robert Redrock was one of the four incorporators, owner forty percent of the stock, was the president and made most of the management decisions. Worldwind Tours, Inc. operated two travel offices and required the approval of Redrock on all major expenditures and purchases. Redrock used corporate funds to buy a company car (Mercedes Benz) and a company boat (Cigarette ocean racing boat). Redrock's personal tax returns showed a small personal income from his salary as president of Worldwind Tours, Inc., however, he was known locally as having accumulated one of the areas most valuable art collections (valued at several million dollars). Redrock had no additional income producing businesses other than Worldwind yet he purchased a vacation home on Nantucket Island in 2012. Resorts international brought suit against Worldwind Tours, Inc. for unpaid hotel accommodations. Resorts' attorneys learned that Worldwind had made an honest error in its filing of the articles of incorporation and was not a "dejure" corporation. Who will be liable to Resorts International? Explain in detail.

5. Enzyte, Inc. has five hundred shareholders. Its board of directors consists of three members (Levitra, Cialis and Viera). At a regular board meeting, the board selected Steve Horshak as president of the corporation by a two-to-one vote with Viera dissenting. The minutes of the meeting did not register the dissenting vote of Viera. Later, an audit reveals that Horshak had fabricated his resume (he had not graduated from BSU) and he embezzled $500,000 from the corporation and is not covered by insurance. Can the corporation hold the directors, Levitra, Cialis and Viera personally liable? If so, on what basis?

6. Benjamin Franklin, a banker with 25 years experience, opened the Franklin National Bank in Delaware in 2010. Franklin was the president, chief executive officer and a member of the board of directors. None of the other seven directors, including Homer Simpson, had any significant banking experience. Franklin decided that the bank would focus on lending to used auto buyers. Chip Fooze, an experienced high-level employee in the Bank of North America's auto loan department came to work for Franklin Bank in 2011. Franklin died unexpectedly in December of 2012. The state and federal bank examiners investigated Franklin Bank and found many problems. The board of directors hired a new president and told her to implement better procedures for lending and collecting. The board also hired outside consultants for advice. In early 2013, the directors fired Fooze and hired a national accounting firm to look more closely at the bank's lending practices. Problems continued, however, and the accounting firm, Dewey, Cheetum & Howe's reports were found to be invalid. In January 2014 the state banking examiners found the board's supervision to be "lacking" and the bank's condition to be "critical". Meanwhile the directors personally contributed over $4 million to the bank in an attempt to save it. On April 15, 2015 the Delaware Commission of Banking ordered Franklin Bank to close. The Federal Deposit Insurance Corporation (FDIC-a federal agency that insures the deposits in member banks and savings and loan associations) filed a lawsuit in federal court against Homer Simpson and the other directors, contending that they were negligent and personally liable for the bank's losses.

As the judge hearing this case what will your ruling be and, more importantly, how will you justify your decision? What factors will you consider in determining who will be liable? Explain your ruling in detail, Your Honor.

7. Jon Taffer ran a nightclub known as the Soft Stone Café. The business was Incorporated with Taffer and his wife as the dominant shareholders. The corporation leased the premises in which the club was located. Taffer hired Leo Berk as general manager of the club. Two years later, Berk was made vice president and given 10% of the corporation's shares. Tanner became a cable television show host and moved to Hollywood, leaving Berk to manage the daily affairs of the business. Four years later, the ownership of the building where the Café was located changed hands. Shortly thereafter, the Café's lease expired and Tanner instructed Berk to negotiate a new lease. Berk arranged a month-to-month lease and had the lease agreement drawn up in his name instead of the corporation. When Tanner learned of Berk's actions he fired him. Berk continued to lease the building in his name and opened his own club, the Hard Rock Café, there. Tanner files an action seeking an injunction to prevent Berk from leasing the building. Who will be successful in this lawsuit and why? Explain.

Answer rating: 100% (QA)

Question 1 Superman Corp has the right to sue the three partners since all that he knew was the contract between him and the company Even though he was contacted by the third partner who had not been ... View the full answer