Question: Arthur, Barbara, Carl, and Debra decided to form a corporation for bottling and selling apple cider. Arthur, Barbara, and Carl were to operate the business,
Arthur, Barbara, Carl, and Debra decided to form a corporation for bottling and selling apple cider. Arthur, Barbara, and Carl were to operate the business, and Debra was to supply the necessary capital but was to have no voice in the management. They went to Jane, a lawyer, who agreed to organize a corporation for them under the name A–B–C Inc., and paid her funds sufficient to accomplish the incorporation. Jane promised that the corporation would definitely be formed by May 3. On April 27, Arthur telephoned Jane to inquire how the incorporation was progressing, and Jane said she had drafted the articles of incorporation and would send them to the Secretary of State that very day. She assured Arthur that incorporation would occur before May 3.
Relying on Jane’s assurance, Arthur, with the approval of Barbara and Carl, on May 4 entered into a written contract with Grower for the latter’s entire apple crop. The contract was executed by Arthur on behalf of ‘‘A–B–C Inc.’’ Grower delivered the apples as agreed. Unknown to Arthur, Barbara, Carl, Debra, or Grower, the articles of incorporation were never filed, through Jane’s negligence. The business subsequently failed. What are Grower’s rights, if any, against Arthur, Barbara, Carl, and Debra as individuals?
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a Common Law Approach 1 ABC Inc is not a corporation de jure Filing of the articles of incorporation with the Secretary of State is generally essentia... View full answer
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