Posted on by Judy

Scenario 2 – Management of Corporations Parker and Phillips incorporated P & P Resorts Inc., a closely held Texas corporation. Parker was president and Phillips served as vice president and director for operations. Parker owned 40% of the stock, while Phillips owned 60%. Both men met with CTA, a group of travel agents from California to discuss special deals for booking groups into the resorts. After the first meeting, all contracts with CTA were made by Phillips, who learned that there was a good chance that CTA would award the contract to P&P Resorts. Phillips incorporated Travel Brokers and was its sole owner. Phillips used P& P Resort’s time to work on proposals for Travel Brokers and managed to keep negotiations with CTA a secret from Parker. When Parker discovered Phillip’s actions, he filed suit against him for wrongfully taking a corporate opportunity from P &P Resorts. Phillips claimed that he did not take a corporate opportunity because Travel Brokers did not have the financial ability to undertake the contract with CTA. Provide the arguments for Parker and Phillips. Determine which party should win and provide support for your selection. Explain any ethical principles applicable to this case.

Parker could sue Philip as Philip held a key management position and he violated his fiduciary duty towards the P&P Corporation by working on a separate project which was in the same business as the P&P. He also violated shareholder trust as Philip only had 60% control and the remaining 40% was controlled by Parker and in engaging in a conflict of interest activity, he violated the interests of the minority shareholders. Parker may also hold that Philip violated the employment agreement, if the employment agreement under which he held the position of Vice President forbade him from in engaging in other businesses.
Philip could defend himself saying that Travel Workers was a small firm and did not have financial capability to undertake any contract. Thus his working for the firm could not be of any material impact to P&P Corporation. Also since there is no conclusion regarding award of contract by CTA, no harm has been done and as a result no remedy is required.
Parker should win the case as Philip was definitely in violation of his fiduciary duty, possible employment agreement and shareholder agreement. This was a case of suppression of facts and being engaged in an activity which constitutes conflict of interest in case of Philip.
In terms of ethics also, Philips was wrong as he violated the trust reposed in him by his co-investor, Parker and also by the P&P Corporation and its employees. A senior management employee who is also an investor is found to work against the interest of the corporation and this would have a negative impact on the motivation and trust level of the employees and this is against ethical conduct of business.
 
“Looking for a Similar Assignment? Get Expert Help at an Amazing Discount!”

What Students Are Saying About Us

.......... Customer ID: 12*** | Rating: ⭐⭐⭐⭐⭐
"Honestly, I was afraid to send my paper to you, but splendidwritings.com proved they are a trustworthy service. My essay was done in less than a day, and I received a brilliant piece. I didn’t even believe it was my essay at first 🙂 Great job, thank you!"

.......... Customer ID: 14***| Rating: ⭐⭐⭐⭐⭐
"The company has some nice prices and good content. I ordered a term paper here and got a very good one. I'll keep ordering from this website."

"Order a Custom Paper on Similar Assignment! No Plagiarism! Enjoy 20% Discount"

Related posts:

  1. Week 4 case scenario: big time toymaker
  2. Ian, a door-to-door salesman, filed a negligence case against Mark. While ringing the doorbell on Mark’s front porch, he was bitten by a venomous snake that Mark kept as a pet. Ian had no previous warning of the snake being loose. In this scenario, Ian is most likely to have filed for damages under _____.
  3. Statute of Frauds and Contractual Characteristics There are specific types of contracts that fall within the scope of the statute of frauds and thus required to be reduced to writing. There are also several different characteristics a contract can have. In this activity we look at a fictional scenario between a customer and a local jewelry store, to determine whether their agreement falls within the statute of frauds as well as the type of characteristics the contract has. Concept Review: Written contracts provide certain advantages that oral contracts lack. Disputes about the specifics of the terms in a contract are easier resolved when the terms are solidified in writing than they would be in an oral contract. There are five categories that describe the characteristics of a contract. The different characteristics arise from the way contracts are written, spoken, implied, and how they are held up in court. Case: Read the mini case and answer the questions that follow. Report: Suppose a local jewelry store is having a Mother’s Day sales event. Sammy, a 14-year-old boy, who looks like he’s over 18, sees the advertisement on his way home from school one day and decides to stop and take a look. He knew Mother’s Day was coming up and wanted to get his mother something special. After looking at several items he finally found what he was looking for, green diamond earrings to match his mother’s eyes. The earrings were $600 including tax. Since he only had $300 he decided to use his parents’ credit card which he had been authorized by his parents to use. He handed the card to the store clerk, signed the receipt, and left. 1. Required information Based on the scenario above, why is this contract voidable? Sammy lacked the capacity to enter into a contract. A contract was not signed prior to the purchase. It is against the law to sell to a minor. The store clerk fraudulently enticed Sammy to purchase the earrings. The scenario lacked an offer and acceptance. 2. Required information Suppose Sammy’s father saw the charge on the credit card and immediately went to the store to get the money back. According to the Statute of Frauds, if Sammy’s father decided to make the purchase himself, does there need to be a written contract? Yes, because the contract can be performed within a year. Yes, because the contract is for the sale of goods more than $500. No, because this is a sales agreement. No, pursuant to Uniform Commercial Code Section 2-201. No, because the contract is for the sale of goods totaling more than $500. 3. Required information Suppose that instead of being able to walk out of the store with the ring the day of the purchase, Sammy and his father must wait 6 weeks because they are out of stock. Since the ring is backordered, the store clerk decides to discount the ring by 20%. Under the Statute of Frauds, does the contract still need to be in writing? No, because the price of the ring is now below $500. No, because the item is backordered. Yes, according to the Statute of Frauds. Yes, according to store policy. Yes, according to Social Contract Theory. 4. Required information Suppose Sammy’s dad decided to make the purchase himself, and all elements of a contract were present. What type of contract would this be? Sales agreement None of these Mutual contract Valid contract Purchase agreement ((( This is a business law question )))
  4. Dr. Bryan Cook is a licensed dentist who fitted and made a set of dentures for Mrs. Iris Downing, a patient of Dr. Cook who was fitted for dentures. After Mrs. Downing received her dentures from Dr. Cook, she said they were ill-fitting and produced sore spots in her mouth. She filed suit against Dr. Cook on the basis of a breach of the UCC Article 2 implied warranty of fitness for a particular purpose. The trial court awarded damages to the Mrs. Downing on the basis of her remedies under the UCC Article 2. Dr. Cook appealed, maintaining that the dentures were not a sale of goods and on the basis that his expert witness testified that Mrs. Downing’s problems were probably due to candidas, an autoimmune reaction, or an allergy to the dental material but that her problems not due to ill-fitting dentures. Is Dr. Cook correct? Is this a common law services contract? {Cook v. Downing, 891 P.2d 611 (Ok. Ct. App. 1995).]