Final Exam - Cases

Question 1

Gorton v. Doty
Agency

Answer 1

Rule: AGENCY RELATIONSHIP RULE: Agency: the relationship which results from the manifestation of consent by one person (P) to another (A) that A shall:
- Act on P’s behalf
- And subject to P’s control
- And A consents to so act

Question 2

Cargill
Agency

Answer 2

Rule: A principal is liable on contracts made by an agent on the principal’s behalf. Here, on behalf, control, consent. Web of control.

Question 3

Mill Street Church
Authority

Answer 3

Implied actual authority - manifestation of consent from P to A, A reasonably believes that has authority. Can be implied from past practice, lack of clear instructions to the contrary, belief by T that properly hired. Here, implication from history and circumstances. Do things that usually accompany or are reasonably necessary for the task

Question 4

370 Leasing
Authority

Answer 4

implied apparent authority: RULE: an agent has apparent authority sufficient to bind the principal when the principal acts in such a manner as would lead a reasonably prudent person to suppose the agent had the authority he purports to exercise.
Absent knowledge on the part of 3rd parties to the contrary, apparent authority to do the things usual and proper to the conduct of the business which he is employed to conduct.

Question 5

Watteau v. Fenwick
Authority

Answer 5

Rest. § 8A: Inherent authority
Not apparent because undisclosed principal, but transacting as usual in business and on P’s account was enough to find inherent authority

Question 6

Botticello v. Stefanovizc
Marriage

Answer 6

Marital status cannot in and of itself prove agency. For ratification, must know or have reason to know all of the relevant facts.

Question 7

Hoddeson v. Koos Bros
Agency/authority

Answer 7

Agency/authority by estoppel
1. Acts or omissions by the principal, either intentional or negligent, which created the appearance of authority in the purported agent
2. The third party reasonably and in good faith acts in reliance on such appearance of authority
3. The third party changed her position in reliance upon the appearance of authority

Question 8

Atlantic Salmon
Partially disclosed P

Answer 8

“unless otherwise agreed, a person purporting to make a contract with another for a partially disclosed principal is a party to the contract” § 321.

Question 9

Humble and Sun
IC or Employee?

Answer 9

when determining if IC or employee relationship, look to level of risk and control
More control and less risk is more like employee

Question 10

Holiday Inns

Answer 10

Agency relationship but no liability. Control over the instrumentality that caused the harm

Question 11

Clover v. Snowbird

Answer 11

Skiing between restaurants quickly was not a frolic and detour, and thus was within the scope of employment, because not total abandonment, stayed on grounds, not substantial deviation.

Question 12

Bushey v. US
sailor case
Scope of employment

Answer 12

Tests for scope of employment:
1. purpose to serve master (here not used)
2. economic - least cost avoider
(here not used)
3. foreseeability - was the conduct foreseeable by P.
Here yes foreseeable because drunk sailers do stupid things.

Question 13

Manning v. Grimsley
intentional torts

Answer 13

RULE: about purpose to serve the master
“employee’s assault was in response to conduct which was presently interfering with the employee’s ability to perform his duties successfully” Throwing ball at crowd was in purpose to serve the master - to pitch in the game. Not about foreseeability.

Question 14

Majestic Realty v. Tori
IC

Answer 14

A P is not generally liable for the negligent acts of an IC in performance of the contract unless:
- P retains control
- incompetent independent contractor
- performance of contractor’s task is inherently dangerous
- non-delegable duty
Here, breaking down building is inherently dangerous and negligent - P liable

Question 15

Reading

Answer 15

Disgorgement of secret profits made in connection with transactions conducted on behalf of the P.
Duty of Loyalty: “An agent has a duty not to acquire a material benefit from a third party in connection with transactions conducted or other actions taken on behalf of the principal or otherwise through the agent’s use of the agent’s position.”

Question 16

Rash v. J.V. Intermediate

Answer 16

Duty not to compete with one’s P.
Duty not to act as adverse party. Failure to reveal was a problem.

Question 17

Fenwick v. Unemployment Compensation Commission

Answer 17

Factors to determine whether partnership are sharing in loss and profits and control of operation.
agreement with obligation to share in profits created prima facie case, but not partnership.
No shared control. Also consider share in losses, property, conduct, rights on dissolution.
Not partnership.

Question 18

Young v. Jones
bank Bahamas PW case

Answer 18

Partnership by estoppel: “A person who represents himself, or permits another to represent him, to anyone as a partner in an existing partnership or with others not actual partners, is liable to any such person to whom such a representation is made who has, on the faith of the representation, given credit to the actual or apparent partnership”
Here, yes representation, but P did not rely on it when making decision.

Question 19

Meinhard v. Salmon
Apartment Case

Answer 19

Partners have a duty to inform of business opportunity (even if not to share it) in order for the other party to be able to compete.
Consider closeness of product, geography, and time to determine if partnership opportunity or outside scope

Question 20

Sandvick v. LaCrosse
JV

Answer 20

investment in leases. Similar to partnership, more limited in scope and duration.
“for a business enterprise to constitute a joint venture,” must have:
1. Contribution by the parties of money, property, time, or skill in some common undertaking (not necessarily the same)
2. Proprietary interest and right of mutual control over the engaged property
3. Express or implied agreement for the sharing of profits, and usually…of losses
4. Express or implied contract showing a joint venture was formed
People needed to inform others in the joint venture

Question 21

Meehan v. Shaughnessy
Lawyers leaving P

Answer 21

Can plan to compete with entity to which owes allegiance, but can’t violate fiduciary duties. Left the partnership but lied to partners and didn’t give clients choice.

Question 22

Putnam v. Shoaf
Leaving Partnership - PROPERTY

Answer 22

Selling partnership interest contains partnership property, including legal claims.
A partner does not personally own any specific property of the partnership and therefore cannot retain any rights to the partnership after she conveys it to another. No right to share in gain after conveying interest in the business.

Question 23

National Biscuit v. Stroud
bread

Answer 23

Every partner is agent of the partnership for apparently carrying on the business in the usual way.
Resolution of difference as to ordinary course of business requires majority. One could not restrict purchase of bread when two disagreed. Carrying on the business of the partnership binds the partnership, partner retained authority.

Question 24

Summers v. Dooley
garbage men

Answer 24

Dooley hires and pays new employee. Seeks reimbursement from partner. Nope. Change in business must be decided by the majority

Question 25

Owen v. Cohen
bowling

Answer 25

Partnership was for term because Owen was to be repaid by partnership out of profits “as soon as it could reasonably do so” - continue until profitable. But court says its fine to dissolve - rightful - dude was making it hard to carry on a business.

Question 26

Page v. Page
brothers

Answer 26

Not for term based only on need to repay loan. [While there was an agreement to repay one partner, no evidence as to whether that had to be done before the partnership was dissolved.] At will. Can’t seek to resolve to take advantage of other partner.

Question 27

Prentiss v. Sheffel
partnership auctions

Answer 27

Winding up = auction for the business. Partners may vote with that auction, even with paper dollars.
When a partnership is going through dissolution, the partners may bid during the judicial sale of partnership property

Question 28

Kovacik v. Reed
service provider

Answer 28

In pure service partnership, service provider not liable for capital losses (eliminated mostly in RUPA)

Question 29

Southern Gulf Marine v. Camcraft

Answer 29

Corporation by estoppel. Promised to create court in particular jurisdiction, but then went somewhere else. Other party wanted to renege on the contract.
Court will treat a firm improperly incorporated as a corporation if third parties:
i. Thought was a corporation
ii. Would earn a windfall if they were now allowed to deny that the business was a corporation.
protect corporation

Question 30

Walkovszky v. Carlton
taxis

Answer 30

Attempt to pierce the veil, which would have allowed suing the owner because the owner owned many additional companies. Not allowed. Not alter ego because formalities were followed. It was okay to create small taxicab companies with limited liability and assets. Not fraudulent to incorporate for the purpose of limited liability. Damages are the same.

Question 31

Sea-Land Services
Piercing Veil

Answer 31

Reverse veil piercing - after initial piercing to owner, get to other companies owned by the same. To pierce the corporate veil, a court must find: a unity of interest and ownership, determined by looking at four factors:
i. the lack of corporate formalities,
ii. the commingling of funds and assets,
iii. under-capitalization, and
iv. the use by one corporation of assets of another, and
AND a situation where failing to PCV would either
i. sanction fraud or
ii. promote injustice.
[unjust enrichment]
Here, failure to maintain records, commingling of funds, undercapitalization = unity of interest and ownership BUT no demonstration of fraud or injustice

Question 32

Roman Catholic Archibishop v. Sheffield
dogs

Answer 32

No respondeat superior between archdiocese and monetary.
Head of the business cannot be reached by veil piercing - ONLY OWNER.
Enterprise liability. Where parent controls several subsidiaries, each does not become liable for the acts of the other. No exchange of assets or shared accounts between San Fran people and Swiss monks.
court looks for injustice - here P could sue in Switz.

Question 33

Bristol Myers/Silicone gel

Answer 33

Parent company fails to follow formalities with its wholly owned subsidiary.
Sub went for long periods without board meetings, and parent sometimes directly made made decisions for the subsidiary
[DE courts do not necessarily require showing of fraud for veil piercing if subsidiary found to be mere instrumentality/alter ego.]

Question 34

Frigidaire Sales v. Union Properties
LP

Answer 34

When the general partner of a LP is a corporation, the limited partners do not become liable just by virtue of being directors/officers of the GP.
Individuals must make clear the context in which they are acting.

Question 35

Cohen v. Beneficial
Derivative lawsuits choice of law

Answer 35

• Posting bond: corporation demanded that P post security
• Such requirements are perfectly constitutional
• substantive law for Erie purposes so state law.
• choice of state law that this state uses here considers the issue to be procedural and therefore applies its own law
  Choice of law in derivative case in NJ - state law under Erie, home law because procedural question

Question 36

Medtronic
merger and shareholder suit

Answer 36

To determine whether direct or derivative, focus on the injury. When injuries to corporation itself/shared by all SHs, then derivative. When injury of shareholders not shared by corporation, direct. Also consider if recovery would be the same for all shareholders.
1. Waste is always derivative
2. Dilution - direct. In this case, only old Medtronic shareholders were diluted, others were not. About relative power of shareholders (in relation to others within the corporation).
3. shareholder tax consequences - direct. all shareholders treated differently in damages, pay taxes based on how many shares they own

Question 37

Grimes v. Donald
Demand

Answer 37

Demand requirement excused if P shows reasonable doubt (pretty easy showing) that either:
a. A majority of the board has a material financial or familial interest,
b. A majority of the board is incapable of acting independently for some other reason such as domination or control,
c. OR the underlying transaction is not the product of a valid exercise of business judgment.
Here, that test doesn’t apply because filed a demand. Demand refusal doctrine means decision protected by BJR.

Question 38

Zapata v. Maldonado
Special litigation committee (SLC)

Answer 38

Designed to give corporation another chance to reject a suit. Corp asks court to apply BJR
Two-step test when corp or committee files pre-trial motion to dismiss [when demand excused]
1. Court should inquire into the independence and good faith of the committee and bases supporting committee’s recommendation. Corporation has burden proving independence, good faith, and reasonable investigation
2. Court may apply its own independent business judgment as to whether the case should be dismissed (opposite of BJR)

Question 39

Dodge v. Ford Motor Co.

Answer 39

Ford was being too charitable denying dividends to build a factory to help the community. run as charitable institution. Need bigger dividend.

Question 40

Shlensky v. Wrigley
Baseball case

Answer 40

Business Judgment Rule: Court does not deeply probe explanation for a decision that may have been motivated by some desire other than profit. [will not resolve questions of policy and management for a corporation unless tainted with fraud. Presume that in good faith and designed to promote best interests. Authority of directors is absolute when acting within the law. It was fine to decide not to install lights for night baseball games.]

Question 41

Kamin v. Amex
stupid business decision

Answer 41

Amex made stupid choice to distribute shares instead of selling, which would have saved them millions of dollars. Even though decision based on accounting, court will deferentially apply BJR. Majority are disinterested and board acted after deliberation on basis of expert advice. Just because imprudent or misjudgment does not mean overcomes BJR.

Question 42

Cinerama
like VG
what to look at to determine if fair?

Answer 42

CEO was pretty diligent but could be problem. BJR rebutted because did not make informed decision, but fine because agreement was entirely fair. Able to meet entire fairness test = NO BREACH OF DUTY. Look at timing, initiation, negotiation, structure, disclosure to and approval by directors and shareholders.

Question 43

Francis v. United Jersey Bank
mom ignores sons

Answer 43

A failure to act rebuts the BJR. Lillian violated duty of care to creditors (because tasked with holding funds of others in trust) because she did not pay attention to the affairs of the corporation

Question 44

Bayer v. Beran
radio contract

Answer 44

Company hires chairman’s wife as opera singer. The BJR is rebutted when there is a conflict of interest. But apply entire fairness test, and transaction here was fair. Even if conflict of interest, not necessarily violation of duty of loyalty.

Question 45

Benihana of Tokyo v. Benihana, Inc.
interested transactions and DE

Answer 45

Sometimes a Board initially sloppy may revisit an issue to show that has carefully consider
Test: whether primary purpose is entrenchment.
Majority of disinterested directors approved the advertising campaign/contract believing in good faith that it was the best way to finance necessary improvements. No breach of duty.

Question 46

Broz v. Cellular Information Systems, Inc.
cell service licensing opportunity

Answer 46

Illustrates problems from being board member of a competitior.
An officer/director violates the DoL by embracing a business opportunity if:
Corporation financially able to take it,
Opportunity is in corporation’s line of business,
Corporation has interest or expectancy in the opportunity, and
By embracing the opportunity, the officer/director would create a conflict between self-interest and that of the corporation.
Here, while the licensing deal offered to B was in CIS’s line of business, the other elements were not met. Fine to take the opportunity.

Question 47

Ebay

Answer 47

Line of business = investing in securities yes because eBay invests a lot. Needed to give eBay opportunity to buy discounted IPO offerings. Doesn’t matter if risky. Conflict of interest because the offers who got the IPOs made the quick profit, not the corporation.

Question 48

Beam [Martha Stewart]

Answer 48

Selling of shares by individual officer might compete with the firm’s own sales of shares, but not in the line of business so no violation

Question 49

Sinclair

Answer 49

Parent coporation obligations
Excessive dividends were fine - no duty of loyalty problem even if some wanted them for than others (also dangerous to keep money in VZ)
Preventing expansion of operations/choosing one subsidiary over another was not self-dealing - Sinven couldn’t get Alaska’s jobs anyway - geographic limitations
Breach of contract was a self-dealing issue, so entire fairness applied and parent company could not meet its burden

Question 50

Zahn
tobacco

Answer 50

Directors redeemed preferred (convertible) shares because they discovered that there was serious opportunity for profit and shares would be worth more.
With full disclosure of facts of tobacco store, stockholders would have made informed decision (and likely converted class A stock to class B, rather than allowing it to be redeemed by board).
BJR rebutted because conflict of interest. Breach of duty of loyalty because for personal gain, did not adequately inform the shareholders. Needed to disclose.
[Shareholders entitled to damages for loss of ability to convert.
Preferring some shareholders is fine as long as all shareholders given all information needed to make their own decision.]

Question 51

Wheelaborator - effect of ratification

Answer 51

Effect of ratification on duty of loyalty claims:
Against directors: Ratification invokes the BJR and limits review to issues of gift or waste with burden of proof on the party attacking the transaction
Against shareholders: Ratification by shareholders shifts burden of proof to P to show unfairness.

Question 52

Disney
excessive severance package?

Answer 52

To demonstrate bad faith, must show either:
1. Subjective – actual intent to harm corporation (enough)
2. Intentional dereliction of duty, conscious disregard for one’s responsibilities. Extreme violation of duty of care (enough)
3. [Gross negligence not sufficient on its own]Here, board members were informed, no violation of duty of good faith.

Question 53

Stone v. Ritter
corporation didn’t monitor compliance with securities laws?

Answer 53

Breach of oversight duty? NO. Received and approved relevant policies and procedures delegated to certain employees and departments, relied on reports
Breach of duty of good faith? GOOD FAITH PART OF DUTY OF LOYALTY.
Conditions for director oversight liability:
CAREMARK:
1. Directors utterly failed to implement any reporting or information system of controls OR
2. Having implemented such system or controls, consciously failed to monitor or oversee its operations thus disabling themselves from being informed of risks or problems requiring their attention
Focus is on whether reasonable, not necessarily effective

Question 54

Robinson v. Glynn
Geophone and field test

Answer 54

(from Howey) An investment contract is:
1. an investment of money
2. in a common enterprise (horizontal or SOMETIMES vertical - investor with promoter)
3. with profits to come solely from the efforts of others.
Here Robinson not passive investor but knowledgeable executive actively protecting interest and position.
A stock
must be called a stock, and bear usual characteristics:
- receipt of dividends based on profits
- negotiability
- voting rights in proportion to shares.
Not a security.

Question 55

Escott v. BarChris
misrepresentation liability - experts/nonexperts

Answer 55

misrepresentation in registration statement under SA §11/due diligence requirements:
Experts are:
- not liable for nonexpertised part
- defense for expertised part, if after reasonable investigation, reasonable ground to believe and did believe that statements were true OR statements did not reflect work
Nonexperts are:
- defense for expertised part if no reasonable ground to believe and did not believe that statements were misleading
- defense for nonexpertised part, if after reasonable investigation, reasonable ground to believe and did believe that statements were true

Question 56

Goodwin
mining company and copper

Answer 56

Common law of insider trading:
When directors of corporation bought a shareholder’s shares on the securities market after discovering there may be copper deposits under the land, they had no duty to disclose to shareholder.
- Duty is to the corporation, not the shareholders
- in the “nebulous” stage/highly speculative
- unclear buyer and seller/on open securities market

Question 57

Chiarella v. US
traditional theory of insider trading
printer employee

Answer 57

Employee at financial printer gets info about acquirer in merger transaction and trades in target. Under the traditional theory, since not an insider of the target company, no duty to abstain from trading - no relationship of trust/breach of fiduciary duty.
If hired by acquirer, can still trade in target
A violation is trading by an insider of material, nonpublic information. Not an insider.

Question 58

Dirks v. SEC
trying to publish problems with company

Answer 58

1. Two elements of 10b-5 violation:
   - The existence of a relationship affording access to inside information intended to be available only for a corporate purpose
   - The unfairness of allowing a corporate insider to take advantage of that information by trading without disclosure.

Tippee Liability:
2. Tippee receiving tip from insider is liable if:
- The insider/tipper breached their fiduciary duty by disclosing the information AND
[ must be violation of duty of loyalty, liability only if disclosure for personal benefit, carelessness not enough]
- The tippee knows or should know that there has been a breach

Question 59

Salman v. US
info to brother

Answer 59

gifting information can be breach of fiduciary duty - for personal benefit

Question 60

Carpenter and Chestman - misappropriation?

Answer 60

WSJ reporter telling friends was not enough.
Husband did not participate in confidential business discussions and familial relationship standing alone did not create fiduciary relationship to be breached by trading

Question 61

Rosenfield v. Fairchild Engine & Airplane Corp.
insurgents v. incumbents compensation

Answer 61

In proxy fights that are bona fide policy contests:
- For incumbents: management may look to the corporate treasury for the reasonable expenses incurred in good faith of soliciting proxies to defend its position
- For insurgents: same but can only be reimbursed if they win

Question 62

Seinfeld v. Bartz
calculation not done

Answer 62

Including enough information for sophisticated investors to calculate the value of the options but not the calculations was not a material omission. Only material if “there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote.”

Question 63

Stroh v. Blackhawk Holding

Answer 63

IL state constitution prohibited non-voting common stock, but court allows stock with no economic rights. Unless one share, one vote principle, any allocation of power (economic and voting rights) between different shareholders is possible.

Question 64

Espinoza v. Zuckerberg

Answer 64

In a close corporation, after the fact approval by disinterested controlling shareholder was not proper ratification of interested board’s decisions - must adhere to the corporate formalities specified in law for taking stockholder action to give minority shareholders the chance to raise objections.
Entire fairness applies because interested vote and no valid ratification

Question 65

CA v. AFSCME
shareholder proposals

Answer 65

While a bylaw can be a proper subject for a shareholder proposal in DE if procedural, but in this case it related to compensation, which restricted fiduciary duties of the board with no fiduciary out. Not allowed. Grounds for excusal of shareholder proposal.

Question 66

Lovenheim
foie gras

Answer 66

When a shareholder proposal has a low economic significance, it may still have sufficient noneconomic[ethical/social] significance to require inclusion in the proxy. Here, animal welfare.

Question 67

Trinity Wall Street v. Walmart
guns

Answer 67

To determine if a proposal is excludable on the basis of relating to a company’s ordinary business operations, ask:
1. what is the subject matter of the proposal
2. is that related to normal business operations?
3. if yes, is this a significant policy issue that transcends ordinary business operations, or is it entanged?

Question 68

Ringling
shareholder agreements - circus

Answer 68

SH Agreements in close corps - voting pool agreement valid but no specific performance. Votes in violation of the agreement were simply not counter

Question 69

McQuade
NY Giants

Answer 69

When stockholders of closely held corp agreed to do their best to elect one another as directors and keep as officers, the agreement was void against public policy, because Board must be able to exercise business judgment on behalf of the shareholders.

Question 70

Clark v. Dodge
IP v. capital

Answer 70

Distinguished from McQuade because no minority shareholders. Here the agreement between shareholders to keep one on as director was valid. No fiduciary duty to other SHs
To create homemade McQuade, could have created minority shareholders

Question 71

NetJets
piercing veil of LLC

Answer 71

A court will pierce the veil of an LLC, but harder because an LLC generally follows less formalities than a corporation. Less emphasis on observance of formalities - look to fraud/injustice. Corp was owner’s piggybank/pocket

Question 72

New Horizons

Answer 72

Since Haack did not prove that amounts distributed to her on dissolution were less than the amount of the debt owed to NH, she was liable for the entire amount. Need to follow formalities in dissolution/distribution of remaining assets

Question 73

Farris v. Glen Alden Corp.

Answer 73

PA: De Facto Merger Doctrine - a transaction that has the form that’s not a merger but substantively results in a merger must receive the procedural protections of a merger. Here, purchase of assets was equivalent to merger, which would have granted appraisal rights and shareholder vote.
“essential nature test”

Question 74

Terry

Answer 74

PA legislature overturned doctrines but it might exist in minnow swallowing the whale case

Question 75

Hariton

Answer 75

No de facto merger doctrine - each form of organization is of equal dignity.

Question 76

Coggins
Patriots

Answer 76

MA - A legitimate business purpose for freeze-out mergers is required, and cannot simply be that of controlling SH. Just wanting to get rid of minority shareholders not valid business purpose

Question 77

Rauch
De facto merger in DE?

Answer 77

DE:
Preferred shareholders were not given $100 redemption for their shares during triangular merger, Ps say that merger was in effect a redemption. Court respects form of transaction - if structured as a merger, not something else. Opposite of de facto merger.

Question 78

VGS
LLC merger
Director who defects

Answer 78

Majority owner gets to pick 2 of 3 managers. One elected defects, those two agree to merger that would make majority owner not majority owner.

Operating agreement says majority is fine, which is normally alright (default is unanimous).

Court says that this was breach of fiduciary duties, because needed to disclose to other member (who would have removed the guy). Upon disclosure, never would have happened.

Question 79

Cheff
greenmail

Answer 79

Greenmail = corporation buys back shares from would-be acquirer at a premium.
Court says okay if proper business purpose - here yes because reputation as liquidator and employee unrest

Standard for evaluating defensive tactic:
- must show reasonable grounds to believe danger to corporate policy and effectiveness exists. Show good faith and reasonable investigation

Question 80

Omnicare

Answer 80

When lock-up included provision submitting offer to SHs even when board disagreed, it was void, because it violated the board’s fiduciary duties. Promise by majority shareholders to support the deal would prevent shareholders from taking a better one. Needed fiduciary out.

Question 81

CTS v. Dynamics
anti-takeover law of IN

Answer 81

IN law gave shareholders the power to refuse to give an entity whose ownership rose above certain levels voting power.
Does not violate Williams Act or Commerce Clause because
1. allows shareholders to discuss together the fairness of an offer. Reduces coercive nature. Protects independent shareholder.
2. Commerce clause protects from out-of-state discrimination. Here the law applied whether acquirer was in or not in IN.

Different than IL law with hearing without deadline, preference for board not acquirer, and review by state secretary of state.

Question 82

Sharon Steel
successor obligor clause

Answer 82

In case of merger or sale of assets, surviving corp assumes issuer’s debt. BUT in liquidation, must pay off.

No assignment of debt to another party unless all or substantially all are transferred at the time the plan of liquidation is determined to a single purchaser.

If all assets are sold as the last stage of a planned liquidation, that counts as a liquidation, not a sale of assets. In liquidation, debt callable.

Question 83

Nabisco
indentures and covenants

Answer 83

No implied covenant in indenture. When debtholder knew of risky business and did not amend covenant, that was its own problem