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Word Count: 2,188
The legal issues that arise in this case before the Appellate court arediscussed along with the facts as follows1 Andy and Brad who owned the three related companies came into acontroversy for supposed use of corporate assets by Andy for his ownpersonal benefitThe duty of loyalty of the officers of the corporation prevents themfrom taking opportunities for themselves that should belong to thecorporation A Director may not use corporate property or assets forhis own personal use Moreover an officer may not assume for herselfproperties or interests in which the corporation is interested However Andy may argue that he did not usurp corporate opportunities asinformation came to him in an individual capacity and the company wasnot considering it as was held in Broz v Cellular Information SystemInc But this case is not directly involved and hence Brad can claim forbreach of duty of loyalty by Andy for use of corporate assetsKnowledge of business The companies were rightly divided between Andy and Brad based on theknowledge they had about the business of the company In Francis vUnited Jersey Bank the court held that duty of care by a directorrequires that director be familiar with business and exercise thereasonable supervision and control over policies Directors should havebasic understanding of the corporations business and knowledge of itsongoing activities Hence Brad cannot claim a breach of duty by Andy 3 The claim of Brad against Alfred Able and Dewey Cheatham Howefor negligence negligent misrepresentation of accounts and breach offiduciary duty and fraud might be sustainable by Brad on the ground thatthey were experts ie they were the accountants and lawyers InMeinhard v Salmon Justice Cardozo held Many forms of conduct permissible in a workaday world for thoseacting at arms length are forbidden to those bound by fiduciary ties A trustee is held to something stricter than the morals of the marketplace Not honesty alone but the
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