A contract entered into by a corporation is enforceable:

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BlackTom AI · Accepted Answer

To begin, let's lay out the question and options clearly so we can compare them.
Option 1: Against the corporation as an artificial person. This is the standard principle of corporate law: a corporation is a separate legal entity, so contracts entered into by the corporation are generally enforceable against the corporation itself as the contracting party.
Option 2: Against the directors of the corporation. Typically, contracts are not enforceable against directors merely because they signed or approved them. Directors may be held liable personally in specific circumstances (e.g., personal guarantees, fraud, breach of fiduciary duties), but absent such circumstances, the contract does not bind the directors personally.
Option 3: Against the shareholders of the corporation. Shareholders have limited liability and are generally not responsible for contracts made by the corporation. A contract is not enforceable against shareholders simply because they own shares.
Option 4: Only if the contract is consistent with the corporation's constitution. The corporation’s constitution (articles of incorporation, bylaws) governs governance and powers, but enforceability of a contract is not contingent on it being consistent with the constitution in the sense implied here; rather, a contract is enforceable against the corporation if the corporation had the power to enter into it and the contract is otherwise valid, regardless of constitutional alignment. So this statement misstates the relationship between contract enforceability and corporate constitution.
In summary, the typical rule is that contracts entered into by a corporation bind the corporation as a separate legal entity, not the directors or shareholders, and are not conditioned on alignment with the corporation’s constitution. The reasoning above shows why each alternative is incorrect except the first.

77942 Legal Aspects of Contracts Administration - Autumn 2025 Module 5 Quiz

A contract entered into by a corporation is enforceable:

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