The Legal Environment of Business and Online Commerce, Research Paper Example

Critical Legal Thinking

It would appear, and certainly as validated by the ruling in Menendez v. O’Niell, that the courts are concerned with protecting shareholders as not accountable for the actions of the corporate entity of which they are a part.  This is rational, on one level at least; to hold individual shareholders responsible for actions of which they had no knowledge is unreasonable, just as the nature of large corporations goes to shareholders as likely uniformed of specific policies or behaviors.  When a corporation faces debt, then, there can be no real justification in law for holding shareholders as liable. At the same time, it is equally plain that individual corporate scenarios require individual perspectives. That is to say, the courts are similarly obligated to determine shareholder accountability as valid when circumstances indicate direct shareholder involvement in decision-making and/or the shareholders as actually directing the organization.

This issue of specificity is clearly relevant to the ethics of the Fraioli decision.  To begin with, it is unethical that he should employ a corporate “shield” when he is in fact the corporation and its sole shareholder; there is, in plain terms, no possibility of the corporation’s acting without his involvement.  Then, the court’s releasing Fraioli from liability does not technically release Triumvirate, but the blatant reality remains that, as Fraioli and Triumvirate are one and the same, the technicality translates to this release. The ruling is then perverse in terms of justice, in that the court holds to protecting an individual from a corporate responsibility confined to that individual.

Law Case with Answers

It is to an extent arguable that Van Gorkom acted with no ulterior or personal motive, and negotiated the Trans Union sale to Pritzker with some measure of corporate responsibility. It is, for example, important that Van Gorkom proposed a share price of $55, considerably above the current trading value; this may indicate that Van Gorkom was intent on realizing the best possible profit margin for the company, his own interests aside, and that he then took such a radical initiative in handling the sale so quickly because he perceived this as necessary to secure the advantageous deal. Viewed in such a light, Van Gorkom did not act irresponsibly.  Nonetheless, such a view requires a complete disregard of basic business and legal ethics, and the reality of Van Gorkom’s 75,000 shares is foundational to understanding this disregard.  In plain terms, Van Gorkom chose to conduct the sale with virtually no participation from the Board, as he apprised them of it after his attorney was instructed to finalize the documentation.  His presentation to the board lacked information crucial to making an informed decisions, and these realities alone strongly go to grossly unethical conduct, which in turn reinforces the weight of Van Gorkom’s personal “stake” in the sale.  That the Directors acted irresponsibly is equally apparent, but in no way lessens the culpability of Van Gorkom, as virtually every circumstance of the transaction points to an agenda for personal gain, and one carried out with astonishing speed and covertness.

Critical Legal Thinking Cases

The Supreme Judicial Court of Maine ultimately found for defendant Lawrence Gay, affirming that, absence of factual evidence aside, his allegations were sound and that the company’s refusal to pay dividends was a manipulation to compel him to sell his shares and relinquish his authority (Leagle, 2014).  This is just and responsible, and U.S. business is all the more encouraged to perceive that fiscal strategies, even fully legal, are insufficient protection when motive is suspect.  With regard to the TONM Oil & Gas case, there can be no doubt that such corporate behaviors present important implications for U.S. business. This is in fact a template illustrating liability as arising from the illegal communicating of insider information as not restricted to the providers of that information.  The actions of the investors were blatantly based on knowledge of the stock values as insider, and consequently privileged; that they in fact were reassured of this reality inescapably implicates them in the wrongdoing, so the obligation of the external party – or investor – to refuse to engage in such practices is emphasized by the case.

Moving on, Judge Grimes of the Florida District Court of Appeal determined in 1976 that the law protected Florida Fashions, in that it had never been qualified to do business in Florida and was thus exempt from business negligence suite (Leagle, 2014).  This is a decision resting solely on jurisdictional technicalities, and one seemingly ignoring potential criminal liability, as in Mysel’s choosing to do business in that state; the courts must move beyond such narrow conditions of commerce if they are to administer real justice. Lastly, the Zapata Off-Shore Company case has more than one implication for U.S. business and business law.  On one level, it emphasizes the urgency of corporations as fully comprehending the jurisdictional matters to which they agree, and which bind them in law.  In today’s global markets, the importance of this cannot be overstated.  The 1972 Supreme Court ruling in fact underscores this, noting the dangerous legal precedent in the U.S. assuming “parochial” powers of jurisdiction, but nonetheless affirming the District Court’s decision that a Tampa court be permitted to rule on the disputes (LII, 2014).
Ethics Case

In a very real sense, there is no “fiduciary duty of loyalty,” certainly in terms of the phrasing itself.  That is to say, loyalty is a concept requiring adapting to pertain to business, as its meaning is too social or personal to be applicable otherwise.  This being the case, loyalty translates then to integrity, and here is then a distinct fiduciary component. The individual employed in any capacity to further a specific business is bound by integrity to uphold basic principles, one of which is to refrain from exploiting that business for personal gain.  This is, however, precisely what Gaffney did. It is understandable that he would seek to form his own company, and perhaps arguable that he was entitled to use his position with Chelsea to that end.  Nonetheless, there are ethical parameters violated here.  It is one thing to gain experience and knowledge to be taken to the new business; it is quite another to forge contacts and buy equipment serving this goal, and without the employer’s knowledge of the true motive.  Gaffney and his associates in the new venture then blatantly breached the innate integrity required in business practice.  This was a long-term and covert scheme abusing the employer’s trust and assets, and was completely unsound in ethical terms.

References

Cheeseman, H.  R.  (2012).  The Legal Environment of Business and Online Commerce: Business Ethics, E-commerce, Regulatory, and International Issues, 7^th Ed. Upper Saddle River, NJ: Prentice Hall.

Leagle. (2014).  Mysels v. Barryno. 75-1354. 332 So.2d 38 (1976).  Retrieved from http://www.leagle.com/decision/1976370332So2d38_1352.xml/MYSELS%20v.%20BARRY

Leagke. (2014).  Gay v. Gay’s Super Markets, INC.: 343 A.2d 577 (1975). Retrieved from             http://www.leagle.com/decision/1975920343A2d577_1910.xml/GAY%20v.%20GAY’S%20SUPER%20MARKETS,%20INC.

Legal Information Institute (LII).  (2014), M/S BREMEN and Unterweser Reederei, GmBH, Petitioners, v. ZAPATA OFF-SHORE COMPANY: 407 U.S. 1 (92 S.Ct. 1907, 32 L.Ed.2d 513). Cornell University Law School. Retrieved from http://www.law.cornell.edu/supremecourt/text/407/1