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Source Common MPT Mistakes Complete MPT and Lawyering Skills List Showing the closest available flashcard practice.

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0 tracked cards Business Associations

A corporation's articles include a provision limiting directors' monetary liability to the fullest extent permitted by the corporation statute. A shareholder alleges that directors made an ordinary negligent business decision and also alleges that one director secretly took a personal payment from a vendor.
Which statement best describes the effect of the provision?

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An articles provision can eliminate officer apparent authority in contracts with outsiders who have no notice of it. An articles provision affects only shareholders who bought stock before the corporation was formed. An articles provision may limit or eliminate monetary liability for some duty-of-care claims, but it generally cannot eliminate liability for bad faith, intentional misconduct, knowing violations of law, or improper personal benefit. An articles provision automatically bars all injunctive relief against directors.

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