TOP Commercial Law Interview Questions and Answers

Read Latest Commercial Law Interview Questions and Answers for Freshers, 2+ Years Experienced Q and A with Explanation PDF.

Will incorporation avoid or lessen personal liability?

A business that is properly incorporated under law, becomes a legal entity separate from its owners. This insulates the owners so that creditors can reach only the assets of the corporation. The personal assets of the owners usually cannot be reached. In cases where there is fraud, parties may seek to pierce the corporate veil.

What body of law governs a contract for the sale of goods?

A contract for the sale of goods is governed mainly by state law. Most states have adopted Article 2 of the Uniform Commercial Code (UCC) which provides rules for all phases of a sales contract including formation, modification, performance and available remedies in the case of a breach.

What is a non-profit corporation?

A non-profit corporation is a corporation formed to carry out a charitable, educational, religious, literary, or scientific purpose. A nonprofit corporation doesn’t pay federal or state income taxes on profits it makes from activities in which it engages to carry out its objectives. This is because the IRS and state tax agencies believe that the benefits the public derives from these organizations’ activities entitle them to a special tax-exempt status.

How can a properly established business entity such as a corporation shield me from personal liability for business debts and obligations?

Personal liability arising from business obligations can devastate the accumulated wealth of a lifetime of work. Personal liability may extend to business losses, but other obligations may also reach individuals, including:

• Damage awards in lawsuits

• Tax penalties

• Back wages and benefit payments

Limited liability offered by corporations and other business entities shelters business owners from personal liability. Nonetheless, if an owner or director performs certain personal acts, behaves illegally, or fails to uphold statutory requirements for corporate status, he or she may face personal liability despite the corporate shelter.

What body of law governs a lease of goods?

A contract for the lease of goods is also primarily regulated by state law. Most states have adopted Article 2A of the Uniform Commercial Code which pertains to leases of goods.

How often should a corporation hold meetings and update its minutes?

Any time a corporation undertakes a major change or transaction, it should be reflected in its minutes. In addition, meetings of shareholders and directors should take place at least annually if for no other reason than to elect new officers and directors. Failure to adhere to the formality of regular meetings can jeopardize the corporation’s ability to shield its officers, directors and shareholders from personal liability for the corporation’s actions.

What is a secured transaction?

Many lenders require a security interest before they will extend a loan. Therefore, a secured transaction occurs when the borrower conveys a collateral property interest to secure a loan. Should the borrower default on the loan, the lender may take possession of the specified property.

Is it a good idea to have a Buy-Sell Agreement?

Corporations with more than one shareholder should seriously consider a buy-sell agreement. A shareholder’s death, divorce, disability or termination of employment can create serious problems for a corporation and its other shareholders. A buy-sell agreement can help minimize these problems by providing for an orderly succession in such plans. Similar provisions are recommended for partnership.

What is a negotiable instrument?

A negotiable instrument is an unconditioned, signed writing that represents money that is to be transferred to another. Checks, certificates of deposit and promissory notes are examples of negotiable instruments.


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