CL701 Module 1 Discussion Document

1. To help control its costs of production, Corporation is negotiating a long-term contract with Supplier. Officer is in charge of marketing for Corporation and is not involved in the negotiations with Supplier. Officer ends up seated on an airplane next to an employee of Competitor (a competitor of Supplier), and in the course of a four-hour flight learns more about Competitor's pricing structure than Officer ever wanted to know. A few days later, Officer overhears a watercooler conversation at Corporation about the negotiations with Supplier. Officer then realizes that Competitor is capable of providing Corporation with the same materials as Supplier for a substantially lower cost. What, if anything, is Officer required to do with this information? Be specific and explain your answer.

2. A furniture manufacturer, Corporation is seeking to buy West's tree farm business, to ensure Corporation's continuing access to quality hardwoods. Director is a member of Corporation's board of directors. Director is also a significant (but not controlling) shareholder of West. Does Director's ownership of stock in West present any problems with the proposed deal between Corporation and West? If so, what is the nature of the problem and what are the possible resolutions? If not, why not? Be specific and explain your answer.