3.

Sayre learned that Adams, Boone, and Chase were planning to form a corporation for the purpose of manufacturing and marketing a line of novelties to wholesale outlets. Sayre had patented a self-locking gas tank cap but lacked the financial backing to market it profitably. He negotiated with Adams, Boone, and Chase, who agreed to purchase the patent rights for $5,000 in cash and 200 shares of $100 par value preferred stock in a corporation to be formed.

The corporation was formed and Sayre's stock issued to him, but the corporation has refused to make the cash payment. It has also refused to declare dividends, although the business has been very profitable because of Sayre's patent and has a substantial earned surplus with a large cash balance on hand. It is selling the remainder of the originally authorized issue of preferred shares, ignoring Sayre's demand to purchase a proportionate number of these shares. Sayre is going to sue the corporation."

1. "Will Sayer win his lawsuit for the $5,000, why or why not?"

1. "Will Sayer win his lawsuit for dividends the corporation refused to declare, why or why not?"

1. "Will Sayer win his lawsuit to purchase a proportionate share of the remaining preferred shares, why or why not?"