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Outline

  • Corporate opportunities
    • doctrine / remedy
    • balance
      •  corporation's interests in expansion
      • entrepreneurial interests in diversification
  • definition of "corporate opportunity"
    • corporate expectancies
      •  misappropriate assets
      •   misappropriate information
      •   interfere with expansion plans
    • line of business
      • current operations
      • anticipated operations
  • corporate consent
    • rejection / acquiescence
    • corporate incapacity
  • ALI § 5.05
    • mandatory rejection
    • definition: expectancy+line of business

Daily Thoughts

Bubba was bragging to his boss one day, "You know, I know everyone there is to know. Just name someone, anyone, and I know them." Tired of his boasting, his boss called his bluff, "OK, Bubba how about Tom Cruise?"

"Sure, yes, Tom and I are old friends, and I can prove it." So Bubba and his boss fly out to Hollywood and knock on Tom Cruise's door, and sure enough, Tom Cruise, shouts, "Bubba! Great to see you! You and your friend come right in and join me for lunch!" Although impressed, Bubba's boss is still skeptical. After they leave Cruise's house, he tells Bubba that he thinks Bubba's knowing Cruise was just lucky. "No, no, just name anyone else," Bubba says.

"President Clinton, "his boss quickly retorts.

"Yes," Bubba says, "I know him, let's fly out to Washington." And off they go. At the White House, Clinton spots Bubba on the tour and motions him and his boss over, saying, "Bubba, what a surprise, I was just on my way to a meeting, but you and your friend come on in and let's have a cup of coffee first and catch up." Well, the boss is very shaken by now, but still not totally convinced.

After they leave the White House grounds, he expresses his doubts to Bubba, who again implores him to name anyone else.

"The Pope," his boss replies.

"Sure!" says Bubba. "My folks are from Poland, and I've known the Pope a long time." So off they fly to Rome. Bubba and his boss are assembled with the masses in Vatican Square when Bubba says, "This will never work I can't catch the Pope's eye among all these people. Tell you what, I know all the guards so let me just go upstairs and I'll come out on the balcony with the Pope." And he disappears into the crowd headed toward the Vatican. Sure enough, half an hour later Bubba emerges with the Pope on the balcony. But by the time Bubba returns, he finds that his boss has had a heart attack and is surrounded by paramedics. Working his way to his boss' side, Bubba asks him, "What happened?" His boss looks up and says, "I was doing fine until you and the Pope came out on the balcony and the man next to me said, "Who's that on the balcony with Bubba?"

Problems

Two airline pilots, Sam and Brenda, go into business to offer charter flights to Sarajevo.  They incorporate their business as Excitement Air, Inc.  The business does not get many bookings.  One day Sam learns that Mega Tours is looking for a charter airline to take tours to Athens.  Sam figures that Excitement lacks the financial resources to expand to Athens, so he forms his own corporation (Sam's Own Airline Corp. -- SOAC) and arranges for financing.  When Brenda learns of this, she sues Sam for usurping a corporate opportunity.

Party A (Brenda) Argue that Sam has violated his fiduciary duties under New York law and the ALI Principles of Corporate Governance.

Party B (Sam) Argue that Sam has not violated his fiduciary duties under either New York law or the ALI Principles of Corporate Governance.

Readings