Clark_11e-AM-Ch40 - C HAPTER 4 0 C ORPORATIONS M ERGER...

315
C
HAPTER
40
C
ORPORATIONS
—
M
ERGER
, C
ONSOLIDATION
,
AND
T
ERMINATION
A
NSWERS TO
Q
UESTIONS
AT THE
E
NDS OF THE
C
ASES
C
ASE
40.1—(P
AGE
821)
W
HAT
I
F THE
F
ACTS
W
ERE
D
IFFERENT
?
Suppose that the document under which Tech acquired LTV was not titled,
“Agreement of Merger” and that it did not refer to the transaction as a merger.
Would the result have been different? Explain. Yes. As the court indicated, even if
the document had not characterized the transaction as a merger, “the transaction
would fit under the exception to the rule that a buyer does not acquire the liabilities of
the seller because this would be a de facto merger, inasmuch as LTV, the predecessor
corporation, no longer exists.”
T
HE
E-C
OMMERCE
D
IMENSION
How might the Internet prevent a prospective acquiring company from
unknowingly assuming the liabilities of a disappearing firm on their merger?
It should be—and generally is—easier to research the history of a company online. In
many cases, an acquiring company can delve deeply and thoroughly into the legal and
financial background of a potential target through the resources of the Internet.
C
ASE
40.2—Q
UESTIONS
(P
AGE
828)
1A. A corporation might do business under a variety of names—the name of
one of its owners or officers, the name under which it is incorporated, or the
name on a sign at its business premises, for example. How strictly should the
law require a judgment to be issued against a corporation in its “true” name?
This case involved a small claim pursued by a plaintiff without the aid of a lawyer. The
court acknowledged that “laymen often do not know the formal corporate name of
commercial businesses who sell to consumers under ... [‘doing business as’] names.” In
recognition of this situation, New York and other states allow a plaintiff to file an action
against the trade name of a commercial entity and obtain a judgment against “such

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UNIT EIGHT: BUSINESS ORGANIZATIONS
other entities as the Court determines is actually doing business.” For this purpose,
New York defines “conducting business” to include “but not be limited to maintaining
signs at business premises or on business vehicles; advertising; entering into contracts;
and printing or using sales slips, checks, invoices or receipts.”
2A. Could a corporation’s former directors or shareholders, or its successors,
avoid liability following its informal dissolution by claiming that they did all
they felt was necessary to protect its creditors? Why or why not? No, because it is
the failure to afford a creditor a sufficient opportunity for a review of his or her claim
against a corporation on which these parties’ liability is based. It is no defense to argue
that a party did whatever he or she thought was enough.