Construct Constructions, Inc. $($CC$),$ contracted to provide excavation services for Corporate Offices, Inc, but did not complete the job and later filed for bankruptcy. Groucho Marx and Harpo Marx were CC$$s sole shareholders. The Marxes had not misused the corporate form to engage in fraud. The firm had not been undercapitalized, personal and corporate funds had not been commingled, and CC had kept accounting records and minutes of its annual board meetings. Should the corporate veil be pierced because of CC$$s failure to complete its contract?

Question $8$Answer

a$.$

Yes, because their choice to stop the excavation work was not made in good faith and for the best interests of the corporation.

b$.$

No$,$ because the Marxes had not misused the corporate form to engage in misconduct and followed the corporate formalities.

c$.$

No$,$ because filing for bankruptcy negates all fiduciary duties.

d$.$

Yes, because the Marxes were the sole shareholders and actively involved in the business.