Question

Mark Burnett and Kamran Pourgol were the only shareholders in a corporation that built and sold a house. When the buyers discovered that the house exceeded the amount of square footage allowed by the building permit, Pourgol agreed to renovate the house to conform to the permit. No work was done, however, and Burnett filed a suit against Pourgol. Burnett claimed that, without his knowledge, Pourgol had submitted incorrect plans to obtain the building permit, misrepresented the extent of the renovation, and failed to fix the house.

1. A close corporation is one whose shares are held by: (members of a family, the public at large, a substantial number of shareholders) and (relatively few persons, the public at large, a substantial number of shareholders).

2. In practice, a close corporation is often operated like a (limited liability, company, partnership, sole proprietorship).

3. Burnett is a (member, partner, shareholder) in the corporation.

4. Pourgol held a (majority, minority, unclear) amount of shares in the close corporation.

5. After the buyers discovered that the house exceeded the square footage allowed by the building permit, they contacted (Burnett, Pourgol).

6. Is a court likely to find Pourgol liable for his actions? (Yes, No)

7. Assume that Pourgol and Burnett agreed to the plans submitted to the town and Burnett and was made aware beforehand of the promise to fix the buyer's home. Would Pourgol most likely be held liable in this instance? (Yes, No)

8. Would the buyers still be able to recover the costs of renovation to conform the house allowed by the building permit? (Yes, No)

Answer 1

As per policy only first four questions will be answered

1. A close corporation is one whose shares are held by: members of a family, and relatively few persons.

(A closed corporation is a company whose shares are held by a select few individuals who are usually closely associated with the business.)

2. In practice, a close corporation is often operated like a partnership.

(Many small-business owners find this benefit invaluable. In essence, a close corporation is a corporation whose shareholders and directors are entitled to operate much like a partnership)

3. Burnett is a Shareholder in the corporation.

(Shares are often held by the owners/managers of the business and sometimes even their families. When a shareholder dies or has a desire to liquidate his or her position, the business or remaining shareholders will buy back the shares.)

4. Pourgol held a majority amount of shares in the close corporation. (because he granted permission).