Fiducairy Duties Flashcards
Who do fiduciary duties apply to
majority rule: Directors and officers, shareholders, employees
dalton rule: only those who can exert domion and control (directors and officers)
What are the potential sources for fiduciary duties
common law, statute, contractual
What fiduciary duties do directors and officers owe?
Duty of Loyalty and duty of care
Duty of Loyalty
must act in **good faith **in a manner they reasonably belief to be the best interest of the corporation.
RB is both subjective and objective, best interest is discretionary
Actions prohibited by duty of loyalty
- competing with corporation
- taking business opportunities from corporations
- voting in transactions with a C/I
- Insider trading
- profitting improperly
Duty of Care
Must behave in a manner that a person in a similar position would behave in similar circumstances. Must take steps to inform themselves. Can rely on those who they have a reason to trust.
Negligence standard is objective.
What are the two types of Employment Relationships
At Will and Contract
At will employment
mutually volitional agreement of both parties. Either party can terminate at any point and for any reason*
*protected classes cannot be THE reason of termination
Contractual Employment
durational term, outlines duties and responsibilities, stipulates compensaion, sets terms and conditions for cause of termination, consequences* for termination
employer* : severance package
employee* : Restrictive covenants
FD of Employees During Employment
common law duty of loyalty. Can prepare to compette but cannot:
* appropriate TS
* solicit employer’s customers while still working there
* solicit employees to leave while still working there
* carry away CI
Post Employment FD of employees
maintain CI, and absent a valid NC may seek and obtain employment with competitor
