Gwen Hill built her business selling Registered Savings Plans as a sole proprietorship, and reached the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Gwen Hill built her business selling Registered Savings Plans as a sole proprietorship, and reached the point that for further expansion she would require additional capital. She transformed her sole proprietorship into a corporation, and sold shares to a number of friends who had admired her progress in business, a few of whom took positions as salespeople and managers in the expanded company. The business continued to grow in spite of numerous arguments over management and five years after incorporation, Gwen felt she was best off as a sole proprietor. She sold her 50% ownership in the company to the other shareholders and started out once again alone. To prevent a future lawsuit, Gwen left behind her client lists for the use by the remaining shareholders in continuing their company. However, once it became public knowledge that Gwen was on her own, many former clients switched their business to her, preferring her approach to service. On her own, Gwen approached other former clients and suggested to them that if they too preferred her business style, that they were welcome as her clients as well. On discovering this practice, the shareholders of Gwen's former corporation took action against her. Discuss the nature of this cause of action, the rights and duties of the parties, and the appropriate rationale that would be used by a court in rendering a decision. Render a reasoned decision of your own. Gwen Hill built her business selling Registered Savings Plans as a sole proprietorship, and reached the point that for further expansion she would require additional capital. She transformed her sole proprietorship into a corporation, and sold shares to a number of friends who had admired her progress in business, a few of whom took positions as salespeople and managers in the expanded company. The business continued to grow in spite of numerous arguments over management and five years after incorporation, Gwen felt she was best off as a sole proprietor. She sold her 50% ownership in the company to the other shareholders and started out once again alone. To prevent a future lawsuit, Gwen left behind her client lists for the use by the remaining shareholders in continuing their company. However, once it became public knowledge that Gwen was on her own, many former clients switched their business to her, preferring her approach to service. On her own, Gwen approached other former clients and suggested to them that if they too preferred her business style, that they were welcome as her clients as well. On discovering this practice, the shareholders of Gwen's former corporation took action against her. Discuss the nature of this cause of action, the rights and duties of the parties, and the appropriate rationale that would be used by a court in rendering a decision. Render a reasoned decision of your own.
Expert Answer:
Answer rating: 100% (QA)
The cause of action in this scenario may involve several legal principles including breach of fiduciary duty and the duty of loyalty Nature of Cause o... View the full answer
Related Book For
Federal Taxation 2021 Corporations, Partnerships, Estates & Trusts
ISBN: 9780135919460
34th Edition
Authors: Timothy J. Rupert, Kenneth E. Anderson, David S. Hulse
Posted Date:
Students also viewed these finance questions
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
A long cylindrical wood log (k = 0.17 W/mK and = 1.28 10 -7 m 2 /s) is 10 cm in diameter and is initially at a uniform temperature of 15C. It is exposed to hot gases at 550C in a fireplace with a...
-
What are the dichotomous outcomes for the related-samples sign test?
-
Explain the difference between a current and a noncurrent liability. Give an example of each. Explain whether liability amounts are difficult or easy to determine.
-
Your instructor will divide your class randomly into groups of four to six people. Acting as a team, with everyone offering ideas and one person serving as official recorder, each group will be...
-
The Caraway Seed Company grows heirloom tomatoes and sells their seeds. The heirloom tomato plants are preferred by many growers for their superior flavor. At the end of the most recent year the firm...
-
1)Consider the crowding out model. Assume there are men and women in the labor force and three occupations: preschool, elementary and secondary teachers. Suppose only women can work as elementary and...
-
1. Provide features of good project risk management within an organization. 2.Explain how a project team will go about developing a risk management plan. 3.Discuss the role of quantitative risk...
-
The company has the following information for the 1st quarter of its operation during the taxable year 2021: Description January February March Current Sales Vatable Sales/Receipts 5,500,000...
-
What are the salient features of a quality issue as perceived by consumers and organizations, respectively, delineating the nuanced viewpoints from both ends of the spectrum?
-
The hotel has a total of 300 available rooms. On March 24th 240 rooms were occupied. 180 rooms asked that the sheets not be changed. The result of the reduction labor and operations cost for the 180...
-
What are the intricate considerations entailed in power management strategies within operating systems, and how do sophisticated techniques optimize energy consumption, prolong battery life, and...
-
Round your answers to three decimal places, if needed. Find the absolute extrema of the function f(x, y) = 1.4x+4.7y2 - 1.2x-3.5y on the region bounded by y=x, y = 3, and x = 0. The absolute maximum...
-
Company A started at the beginning of 2019. They entered into a lease with Jan 1st as both inception and commencement date The Lease term is as below - 5 yr non-cancellable - 5% interest rate - equal...
-
What are current assets and current liabilities? How are they different from non-current assets and non-current liabilities?
-
The IRS audited the tax returns of Darryl Blueberry, a former major league outfielder. It contended that, between 2013 and 2016, Blueberry earned $800,000 for autograph signings, appearances, and...
-
Siu is considering giving her son stock in Ace Corporation or Gold Corporation. Each has a current FMV of $500,000, and each has the same estimated future appreciation rate. Sius basis in the Ace...
-
Yolanda and Xavier, spouses, have four adult children, Andy, Betty, Cathy, and Danny. In the current year, they made a number of gifts. Yolanda gave Andy cash of $40,000 and Betty stock valued at...
-
If price moves from disequilibrium to equilibrium, what happens to the combination of producer and consumer surplus in the market?
-
Why does nearly every purchase you make provide you with consumer surplus?
-
The chapter frames the issue of the effects of taxation in terms of its effects on producer and consumer surplus. a. What does that framework leave out of the analysis? b. How might one frame the...
Study smarter with the SolutionInn App