The Company and Corporate Law

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Table of Contents

Problem 1 Duty of care
Problem 2 Business Ethics
Problem 3 corporate opportunity doctrine
Problem 4 contract and partnership law

Problem 1 Duty of care

The constraints regarding the first scenario comprise highly intricate problems. The issues, in this scenario, concern costs, profits, logistics, and criminal consequences. There exists the option of complying with the 45,000 minimum weight limits at the expense of the profits that the company obtains by the 60,000 minimum weights limits. In another perspective, if the company uses the 60, 000 pounds minimum weights limit, it can use the same cost to transport a higher weight. This is a profitable option because the firm enjoys economies of scale. However, the trucks department can employ the 60,000 minimum weights before the trucks reach Pennsylvania and engage other trucks to transport the excess weight across the border.

In the first case, in the first problem, the directors face a few possible alternatives. In this situation, a director should make independent decisions. The scope of protection covers employees, such as truck drivers, from any form of harm due to company activities. When truck drivers receive bribes from the company to violate laws concerning weight, the company exposes them to notable risks. First, the company exposes its drivers to the risks of arrests by the Pennsylvanian authorities. This is because the Pennsylvanian laws ascribe incarceration, as a punitive measure, to the breach of minimum weight rules on trucks. The drivers would be caught by authorities and charged with sentences that, consequently, would jeopardize their own lives. There are possible ways to respond to this situation without compromising on the profits of the company.

First, the company can set up a warehouse beyond the borders of Pennsylvania. According to this plan, my piece of advice to the company board is to sell some of the larger trucks and replace them with smaller ones. The work of smaller trucks would be to ship smaller quantities of liquidated products to the Pennsylvanian border for loading onto larger trucks. These larger trucks will employ the use of a warehouse that, simultaneously, would serve as a garage for the trucks. This plan would help to save on costs of transport by saving sizeable amounts of fuel that the former large trucks used.

In addition, these smaller trucks facilitate faster shipping at minimal fuel. This eliminates the need for bribes and helps maintain safe standards on the quality of liquidated products. This falls under the consumer protection law that requires that customers purchase products that are safe for their health and places where they habit. This choice achieves a double effect of avoiding the contravening of laws as well as ensuring the maintenance of the company’s profits.

In the second case, we examine the implications of avoidance of payment of a fine. Since law enforcers work in different places for a limited time, a payment of bribes would chronically a situation of conflicts between the drivers and police officers. It would also be expensive, in the end, to pay ever-changing police officers. In turn, every group of officers, possibly, would come up with stringent standards to meet for a bribe. This complicates the logistics for the transport of liquidated products to customer bases. The issue of bribes would place drivers at a risky platform for arrest and possible incarceration due to a decision by legal courts. I would recommend that the business should confine with the minimum weight restriction and accept a fine in case of a breach.

The third scenario concerning the first problem relates to a different situation whereby the directors have ordered the CEO to stop the payment of bribes. In turn, this reduces the company’s revenue since the company is only able to transport a fewer quantity of its products. This position, in addition, gives the competitors a competitive edge if they pay bribes to the authorities. The company can no longer hold much profit.

In response to this, the CEO recommends that the company sells all its tractors and, simultaneously, hire independent tractor owners to help in hauling the company’s trailer. This position has two-faced implications. First, it transfers the constraints of transporting to the independent company. In addition, it improves in its profits. However, the law of the agency restrains the position since the contract is legal. The proposition is feasible. I would propose that the company makes the other company aware of the constraints that transporters face on road transport.

Problem 2 Business Ethics

The second problem, in the first case, involves Susan Alexander who is an opera singer. She is supposed to decide to sing with Chicago Inquirer. Chicago Inquirer has contributed its shares to the building of an Opera in the Chicago community. Susan is not supposed to sing with the Opera simply because her husband is a significant shareholder in the corporation. However, it would be a social responsibility if she participates in the communal development by utilizing the opera facility.

Susan retains the discretion to decline the offer by the music director because she participates in communal welfare if she sings without pay. If Susan holds 100 percent shares in a corporation, she retains the discretion not to accept the singing offer because she retains her independence as an individual. The payoffs in this situation create conflict because she will be paying herself to sing. However, if the opera music panel offers her an award, she stands to receive long-term benefits that she should not decline.

In the second part to the second problem, the conflict regards the issue of shares. The prospects do not synchronize with the company’s shares. The company does not violate its fiduciary rights to the shareholders because it does not compromise on the benefits of selling and non-selling shareholders. The buying of shares, in turn, increases the company’s profitability by additional capital in terms of shares. The selling shareholders receive harm because the company uses the capital that they utilize for the sale of shares.

Problem 3 corporate opportunity doctrine

The third problem concerns the issue of a vice president at the marketing of ZAPCO enterprises. ZAPCO enterprises, incorporated under Delaware Inc, have sued George for violating the corporate opportunity doctrine. This relates to the events that George accepted an offer in the form of the commission and common shares for marketing for WORDCO enterprises. In the question, George has not breached the corporate opportunity doctrine. This is because the two engineers do not approach ZAPCO for a merger or acquisition. In turn, the records do not show that ZAPCO could purchase the model. Even though the model is in the same zone of business with ZAPCO dealings, this does not necessarily indicate that the engineers were interested in selling the model to ZAPCO.

In the second question, if the engineers approached ZAPCO at the computer trade fair, then George was liable for corporate insider responsibility. This is because the company has an interest in trading the model. If the company went ahead to form their own company, George is not liable to transact any dealings with WORD. In the third question, WORDCO holds the right to decline the offer made by ZAPCO if they deem ZAPCO to be dealing in an entirely different business.

Being that it was a game company; the company jeopardizes the logistics of the engineers’ business. In the fourth scenario, if the engineers approached ZAPCO for a merger in their dealings, then George was not liable for a breach of corporate opportunity doctrine. The statement indicates that the engineers have approached the ZAPCO Company. The company, in turn, declines the offer. This suggests that they do not place responsibility on George for the benefits of accepting or declining the WORDCO offer.

The fifth dilemma involves George forming his own company out of the two engineers’ ideas. This is an opportunity for investment for George. He has a right to form his own business. Therefore, he does not remain liable for breaching the corporate insider responsibility when he retains his position as the vice president for ZAPCO enterprises. This is; even though he forms a competitor company that will compete for ZAPCO revenues. Since the board accepted his venture, he receives his new company’s benefits, as long the duties do not compromise on the activities of ZAPCO.

Problem 4 contract and partnership law

The fourth problem concerns a contract scenario. There are three incidences of a contract in this case. In the initial part, there exists a contract among Mouse, Dick, and Flinstone companies. The second incidence of contract involves DTI and Flinstone Company in a production of a movie. In the third contract, Flinstone enters into a contract with Stone, the main actor, on a villainous role. In the first scenario, two out of the three partners to DTI agree to accept the Stone contract. Mouse, however, objects to the agreement and engages a suit to enjoin the contract. It is essential to recognize that the contract is legal under the Delaware provisions.

This is because two-thirds of the members of this contact vote for the same. The contract is not subject to dissolution if Mouse initiates a court process to invalidate the contract. This is because he is not a party to the initial contract. Therefore, Mouse possesses no right to enjoin a contract it did not participate in forming.

The second scenario involves two of the three partners accepting the Flinstone contract while Mouse objects to the arrangement. Mouse enjoys the privy of contract since he is a party to the cost and benefits that will arise out of the contract. Although he does not sign the contract, Mouse will contribute to the cost that DTI will incur to Flinstone for directing the movie. The mouse is a party to the contract because he is part of the merger with DTI.

In the third question, Flinstone Company possesses the right to object to Stone using the movie for his political intentions. This occurs because; politics do not form part of the initial contract. Flinstone Company possesses the right to object to Stone’s proposal if the political ends compromise on the prospects of the contract. In the fourth question, the contract becomes invalid in the absence of Mouse because it is part of DTI and; therefore, it has a right to be informed of any DTI activities and vote for contracts.

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The Company and Corporate Law

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