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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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316 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.
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