DUTIES

Question 1

DUTY OF DUE CARE (APPROACH)

Answer 1

1. Breach resulting in liability
2. Injury and proximate causation
3. Joint / several liability (responsible directors)
4. Defenses

Question 2

DUTY OF LOYALTY (APPROACH)

Answer 2

1. Conflicts of interests
2. Burden of proof on P
3. Transaction fair? Burden on D

Question 3

Duty of Loyalty - Interested Director Transaction

Answer 3

Where director sells or buys property or
services to or from the corporation

Question 4

Duty of Loyalty - Interlocking Directorates

Answer 4

contract between corporations having common directors

Question 5

Duty of Loyalty - Corporate Opportunity Doctrine

Answer 5

The duty of loyalty bars a director or
officer from personally taking any business opportunity that properly belongs
to the corporation (right of first refusal).

Question 6

Duty of Loyalty (Definition)

Answer 6

Officers and directors have a duty to promote the interests of the corporation above personal gain.

Question 7

DUTY OF DUE CARE (DEFINITION)

Answer 7

Officers/Directors owe a fiduciary duty to the corporation and must discharge their duties with the same degree of DILIGENCE, CARE, AND SKILL, which the ORDINARY PRUDENT PERSON would exercise in the management of his own affairs.

Question 8

Business Judgment Rule

Answer 8

Directors are not liable for losses flowing from their business decisions provided that decisions were the result of a WELL-INFORMED, INDEPENDENT, GOOD FAITH DECISION.

(Examine the decision making process to determine if this standard is satisfied)