Ryan Collins has ten years of experience working in Google's marketing program. Bored with his job, he
Question:
Ryan Collins has ten years of experience working in Google's marketing program. Bored with his job, he decides to start his own advertising company. He meets up with an old college roommate, Braxton Manning, who has his own private company in the marketing field, and they decide to go into a joint business venture as partners. Two years after the launch of the Collins and Manning Advertising Partnership, three more partners, Joe Ali, Mohammad Abraham and Tito Paez, join Collins and Manning. One day, Tito Paez is called by Carpet World, who wants the services of Collins and Manning Advertising. Tito Paez creates a contract with Carpet World, agreeing to consult with Carpet World to increase public relations and visibility of the firm. A month later, while reviewing the society's budget for the previous month, Collins notices that no payment was ever recorded for Paez's work with Carpet World.
Collins has been suspicious of Paez since Paez was established as a partner; Páez had annoyed Collins, but Manning loved Páez's attitude and immediately wanted Páez to join the partnership. However, under the partnership agreement, both Manning and Collins have the ability to autonomously expel any of the partners, excluding Collins and Manning, for good reason. Consequently, Collins expels Páez, claiming that Páez pocketed the money from his work with Carpet World and therefore did not record Carpet World's payment in the monthly budget to avoid sharing the profits. Páez sues Collins in court for breach of fiduciary duty. Specifically, Páez claims that he was improperly expelled. Collins claims Paez breached his fiduciary duty to the partners by failing to report Carpet World's payment to the company. The court disagrees and finds Collins liable.
But what if the facts of the case were different? Select each set of facts below that could change the outcome of the case. Check all that apply:
A. The court considered that Páez's expulsion resolved a “fundamental schism.”
B. Paez's failure to document Carpet World's payment in the monthly budget was an honest mistake.
C. Paez chose not to disclose Carpet World's payment even though the partnership agreement stated that all material facts relating to Collins and Manning Advertising were to be disclosed to all partners.
D.Paez had received a letter from Collins and Manning, as revealed in an email 2 months before Paez's deal with Carpet World, stating that Collins and Manning had decided to allow Paez to make all the profits from the Carpet World project, and that Paez simply should not report payments received from Carpet World in the monthly budget.
Introduction to Business Law
ISBN: 978-1285860398
5th edition
Authors: Jeffrey F. Beatty, Susan S. Samuelson