Lincoln Corporation purchases all of the assets of Matlock Corporation and, in writing, states that it does not take responsibility for the liabilities of Matlock Corporation. Lincoln services many of Matlock's former customers and employs many of Matlock's former employees. If an individual with a claim against Matlock files a lawsuit against Lincoln, a court would most likely:

A. Dismiss the lawsuit because Lincoln did not own Matlock when the individual was injured by Matlock.
B. Allow the lawsuit because the purchase of assets was evidenced in writing.
C. Allow the lawsuit because the purchase of assets and continuation of Matlock's business amounted to what is basically a merger.
D. Dismiss the lawsuit because there was no merger.

If an individual with a claim against Matlock files a lawsuit against Lincoln, a court would most likely allow the lawsuit, because the purchase of assets and continuation of Matlock's business amounted to what is basically a merger.

In the case of the purchase of all the assets of Matlock Corporation by the Lincoln Corporation, the former has a legal obligation to the individuals who had a claim against it. Even if Lincoln explicitly stated that it would not take responsibility for the liabilities of Matlock Corporation in writing, the court is more likely to allow the lawsuit. This is because the purchase of assets and the continuation of Matlock's business can be seen as a type of merger.This legal obligation would not have been avoided by Lincoln Corporation through the purchase of Matlock Corporation's assets. Therefore, the lawsuit filed against the Lincoln Corporation by the individual who has a claim against Matlock is valid and will most likely be allowed by the court.

Thus, it can be concluded that the lawsuit filed by the individual against the Lincoln Corporation is likely to be allowed by the court because the purchase of assets and continuation of business of Matlock Corporation amount to what is essentially a merger.

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ElvisAaronPresley ElvisAaronPresley · Answer 2 · 2023-07-20T15:29:09-04:00

Final answer:

The court would most likely allow the lawsuit because the purchase of assets and continuation of Matlock's business can be interpreted as a de facto merger, making Lincoln liable for Matlock's obligations. The correct answer is c.

Explanation:

Even though Lincoln explicitly stated in writing that it does not take responsibility for Matlock's liabilities, the court may still consider the situation as if it were a merger based on the substantial continuation of Matlock's business by Lincoln.

By servicing Matlock's former customers and employing its former employees, Lincoln effectively carries on Matlock's operations. Courts often look beyond formalities to determine the substance of transactions, and in this case, the continuation of Matlock's business under Lincoln's ownership could lead to the court holding Lincoln responsible for Matlock's liabilities, including any claims filed against it.