Author Question: Because of their special position within the securities industry, specialist firms may trade for ... (Read 51 times)

Davideckstein7 · **on:** Jun 24, 2018

Because of their special position within the securities industry, specialist firms may trade for their own account.
a. True
b. False
Indicate whether the statement is true or false

Question 2

Corporate Dissolution. Jerry Yarmouth incorporated J&R Interiors, Inc, and was its president, secretary, and sole shareholder. J&R failed to file annual reports and pay annual fees, however, and was involuntarily dissolved by the state. More than a year later, Yarmouth bought a workbench in J&R's name from Equipto Division of Aurora Equipment Co When the price was not paid, Equipto filed a suit in a Washington state court against Yarmouth, claiming that he was personally liable for payment. Yarmouth argued that he was not personally liable because he had acted as an agent for J&R. Does a corporation continue to exist after it is dissolved? If so, can it continue to conduct business? In whose favor should the court rule in this case, and why?

juwms · **Reply #1 on:** Jun 24, 2018

Answer to Question 1

FALSE

Answer to Question 2

Corporate dissolution
Equipto moved for summary judgment. The Washington state trial court granted Equipto's motion. Yarmouth appealed. The state appellate court affirmed. J&R, and any corporation that is dissolved, continues to exist for the purpose of winding up its affairs and liquidating itself. It does not have the capacity to contract for any other purpose. The purchase of the work bench was not part of J&R's winding up, but part of its ongoing business. For this purpose, J&R did not have the capacity to contract. Yarmouth claimed that he acted merely as an agent for J&R. The court applied the common law principles of agency. A person who purports to contract in the name of a principal that exists but lacks capacity to contract may be liable on the contract if he or she knows or should know of the principal's lack of capacity, and the other contracting party does not. Would a reasonable person in Yarmouth's shoes have known of J&R's lack of capacity to contract with Equipto? The answer is yes. Yarmouth was president, secretary, and sole shareholder of J&R. More importantly, a reasonable person standing in his shoes would have known of J&R's administrative dissolution.