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Duty Of Loyalty Outline

Law Outlines > Business Associations Outlines

This is an extract of our Duty Of Loyalty document, which we sell as part of our Business Associations Outlines collection written by the top tier of Thomas Jefferson School Of Law students.

The following is a more accessble plain text extract of the PDF sample above, taken from our Business Associations Outlines. Due to the challenges of extracting text from PDFs, it will have odd formatting:

DUTY OF LOYALTY VII. Duty of Loyalty (don't take money from corp. and put in pocket, deals with self interest transactions) A. Good faith (third prong to duty which is not subjective bad faith- can't stand

on its own) a. Good faith requirement looks for intentional dereliction of duty, or

conscious disregard for one's responsibilities, or deliberate indifference and inaction in the face of a duty to act (Disney) i. Bad faith is not only actions motivated by intent to harm and

not just a failure to meet the duty of care (good faith is something more than just the standard duty of care negligence, but not so narrow as to only include intent to harm) ii. If can't bring claim under duty of care or loyalty then use good

faith where loyalty is either conflict of interest or corporate opportunity and good faith can be brought under loyalty standard b/c part of loyalty (Stone) iii. Insert Caremark into the part for analysis because was brought

in under Stone

B. Corporate Opportunity (officers and directors cannot divert corporate

opportunities to themselves for their own gain) a. Officers and directors should not be in direct competition with the

corporation where they regularly engage in business transactions (corporate property when opportunity comes to company) i. Officers and directors are free to engage in business activities

unless the event was a corporate opportunity where there are 3 tests to determine if it is a corporate opportunity:

1. Interest/ Expectancy (can't acquire opportunity out of

legal interest or expectancies of corp.)

2. Line of business (can't acquire opportunity out of

activities closely associated w/ existing or prospective corporate activities)

3. Fairness (can't acquire opportunity out of instance

where it would not be fair and equitable)

Buy the full version of these notes or essay plans and more in our Business Associations Outlines.