The Duty of Loyalty Self-Quiz

 

 

 

 

 

 

 

George is a director of Washington Corporation. Which of the following describes George’s position with regards to Washington?
Choice 1 Agent
Choice 2 Principal
Choice 3 Fiduciary
Choice 4 Trustees
Bob is a city councilman and board member of Xault, Co. Bob, while acting in his capacity for the city, learns that a division of Xault is about to purchase a fairly sizeable tract of land in his town including a small piece of property that Bob owns and placed up for sale two years ago. Bob does nothing in either of his jobs to help promote that his land be purchased in the company’s deal except to vote that the deal go forward. Subsequently, the land is purchased by Xault, and a shareholder sues the firm for wasting assets after the firm discovers that the property adjacent to the one that Bob owned that was included in the purchase, had a major environmental liability attached. In this situation, can Bob expect to face personal liability?
Choice 1 No, because he did nothing to get the land purchased in the deal
Choice 2 Yes, because politicians are not allowed to serve on corporate boards
Choice 3 No, because a person is allowed to sell land to whomever he pleases
Choice 4 Yes, because he failed to report his interest in the transaction
Terry is on the boards of two companies that compete in the aftershave market. Terry fails to disclose this conflict or to step down from either of the boards. If Terry’s acts are discovered and he is sued for violating his fiduciary duties, under what theory is the suit likely to be filed?
Choice 1 violation of the Duty of Fair Competition
Choice 2 violation of the Duty of Care
Choice 3 violation of the Duty of Loyalty
Choice 4 violation of the Duty to Disclose
Harold is a director of XO Co. In this capacity, he sold the company a piece of property that he owned. Because of his position, he sold the company for an amount slightly higher than he would have received on the open market. It turned out, however, that the property appreciated a great deal and the company sold it five years later for a significant gain. Is Harold liable for any act in the transaction?
Choice 1 No, because the company profited on the sale
Choice 2 No, because the amount he gained over the market price in the initial transaction was nominal
Choice 3 Yes, because he violated the Duty of Care
Choice 4 Yes, because of the standard of entire fairness
The law of fiduciaries comes to us from the law of:
Choice 1 Contracts
Choice 2 Property and Torts
Choice 3 Trusts and Agency
Choice 4 Criminal Law and Civil Procedure

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