Question

Marilyn entered into a contract and sold equipment to Sam who claimed to be acting on behalf of ABC Corporation. Marilyn was not paid, and upon investigation, she learned that while the articles of incorporation were filed for ABC Corporation, they were never issued. Which of the following is the applicable law in regard to her position in a majority of states?

a. The majority of states follow the old MBCA which follows the approach that only promoters who assume to act as a corporation when the certificate of incorporation has not been issued are jointly and severally liable for the business debts.
b. The majority of states follow the old MBCA which follows the approach that all persons who assume to act as a corporation when the certificate of incorporation has not been issued are jointly and severally liable for the business debts.
c. The majority of states follow the revised MBCA under which the filing of the articles of incorporation, regardless of whether there is a return copy stamped by the secretary of state, is conclusive proof of incorporation; and the corporation itself is liable for business debts from that point forward.
d. The majority of states follow the revised MBCA under which the filing of the articles of incorporation, evidenced by the return of the copy stamped by the secretary of state, is conclusive proof of incorporation; and the corporation itself is liable for business debts from that point forward.

Answer 1

The applicable law in regard to her position in a majority of states is:

b. The majority of states follow the old MBCA which follows the approach that all persons who assume to act as a corporation when the certificate of incorporation has not been issued are jointly and severally liable for the business debts.

Step-by-step explanation:

MBCA means the Model Business Corporation Act. It is noteworthy that majority of the states have not adopted fully the Revised Model Business Corporation Act, 2016. This is because some of their Corporation Acts still rely on the old MBCA. This implies that Marilyn has a favorable position and can recover from ABC Corporation the value of the equipment sold to Sam.