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MMLU / A bank loaned a company …

Problem

Answer published by the source. Consult the official source to check your work against its answer.

question

A bank loaned a company $1,500,000 for the manufacture of a widget control system. As a condition of the loan, a majority shareholder in the company agreed in writing to personally guarantee the loan. Thereafter, the company defaulted on the loan and entered into a repayment agreement with the bank. This agreement provided that the bank would "use maximum efforts in selling the company's assets at the highest possible price. " The bank proceeded to sell the company's assets, discharging the indebtedness of the widget company. Later, it was ascertained that the bank did not realize the "highest possible price" in administering the sale of the company's assets. Consequently, the shareholder was forced into bankruptcy and lost her entire investment in the company. The shareholder brings an appropriate action against the bank to recover her investment in the company. She will most likely

choices

  1. not prevail, because the shareholder was an incidental beneficiary of the bank's sale of the company's assets.
  2. not prevail, because the bank's sale of the company's assets discharged whatever contractual relationship existed between the shareholder and the bank.
  3. prevail, because the bank did not realize the highest possible price from the sale of the cornpany's assets.
  4. prevail, because the bank breached its fiduciary duty to the shareholder under the terms of the contract between the bank and the company.

subject

professional_law

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Source and history

task_id
614b3d25-7d5b-5173-96fe-1c8ad63bff23
task_key
all--test--614b3d25-7d5b-5173-96fe-1c8ad63bff23
task_revision_id
1
config / split
all / test

Official source

initial import