1. David Walker and Robert Hudson were best friends and business partners. They paid $500,000 in cash for an old warehouse. Later, they received an appointment as promoters for a new corporation that would manufacture artificial arms. The corporation need a large production facility, and David and Robert sold the warehouse they owned for $800,000 worth of stocks in the new corporation once it was formed.

Later, the corporation was formed and the shareholders discovered just how much David and Robert paid for the facility. How much of the $800,000 in stocks is the new corporation entitled to cancel. Discuss.

1. Jeff Case, Mary McDonald, and Jen McManus tried to create a corporation in order to produce electric scooters. They satisfied all of the requirements, but did not file the corporate charter with the state of California. They believed that a valid corporation had been formed and conducted business as a corporation.

After seven years, the corporation became bankrupt. The creditors of the corporation would like to hold each of the three owners of the business personally liable. Can they? Discuss.