9. X, director of Y Corporation, using x\'s best judgment, convinces the corpora
ID: 383153 • Letter: 9
Question
9. X, director of Y Corporation, using x's best judgment, convinces the corporation enter into a contract with z Corporation. Y Corporation loses a ot of money on the contract. The share- holders bring suit against X for the loss. What result? 10· , x, an out-of-state director of Y Corporation, has not attended a directors' meeting for 5 years. The corporation suffers serious 1osses, and the sharehol ders seek to holdXliable. What result? The XYZ Corporation issues 100 shares of no par stock valued at $10,000 to A and B in exchange for 1 and valued in good faith by al parties to be worth $10,000. XYZ goes bankrupt, and the l and is sol d for $6,000. Can A and B be hed liable for the balance of $4,000 by the corporation's creditors? Explain 11.Explanation / Answer
9. X can be tried for the loss. The director is not liable for a company's contracts. If the plaintiff is able to give evidence for fraudulent conduct of business in case the director is knowingly a party to fraudulent carrying out of business, then the director will have unlimited liability. The director is liable when an act of the director is proved harmful. The director's negligence, in the non-vicarious case, cannot make a person pay. It can only lead to a person not accepting the position as a director of an organization. The shareholders will have to prove non-vicarious negligent director liability.
10. Shareholders seek to hold X liable. Directors must attend board meetings. X faces potential liability for actions taken at board meetings X did not attend. Dissent by a director within a week of receiving the minutes of the meeting can help avoid liability.
11. Creditors can hold the shareholders liable if the shares are issued at no par. The corporation makes a loss of $4000 in case of 100 shares sold at no par. Creditors can hold shareholders responsible if they hold watered stock. The land could not be sold for $10000.
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