Question: James owned Despatch Industries. When his son, Wade, and son-in-law, Alan, started working for the company, they both signed identical employment contracts, which provided for

James owned Despatch Industries. When his son, Wade, and son-in-law, Alan, started working for the company, they both signed identical employment contracts, which provided for a severance payment if they left the company. After Wade and James had a falling out, Wade resigned. The Despatch board agreed to make severance payments of $1.3 million to both Wade and Alan, although Alan continued to work for the company and receive a salary. There were no disinterested directors or shareholders. Did the company have the right to make these payments?

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