WASTE OF CORPORATE ASSETS

WASTE OF CORPORATE ASSETS

Antitrust & Trade Law: Clayton Act

Section 3 of the Clayton Act, 15 U.S.C.S. § 14, makes illegal certain distribution practices. Generally, Section 3 of the Clayton Act makes it illegal to enter into tying arrangements, exclusive dealing contracts, or requirements contracts if such arrangements or contracts tend to lessen competition.

Reliance on Third-Party Advice or Information

The duty of care requires directors to act in good faith and in a manner that they reasonably believe is in the best interest of the corporation. Directors must exercise informed business judgment and be attentive to the corporation's affairs. In order to do so, directors are required to keep themselves informed of all material information that is reasonably available to them before making a business decision. Directors also must use care when performing their duties.

Disclosure of Material Facts

The duty of disclosure is a component of the duty of loyalty, but it also implicates the director's obligation to act with due care and in good faith. As part of the duty of care, a director should reveal all relevant material information that he possesses about a transaction to all who are in the position of making a decision about that transaction. The director has a duty to make an informed decision because it will ultimately affect the corporate interest and welfare.

An Introduction to Corporations

Various structures are available for a business. A business may be set up, owned, and run as a sole proprietorship, a partnership (limited or general), or a corporation (regular, Subchapter S, or limited liability).