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    Barry - Business law

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    Barry runs the board of directors for Halal Hash Distributors (HHD). Recently, Barry decided to begin a separate company, owned exclusively by Barry, that specialized in raising pigs from which hash could be produced. Because Barry had influence on the board at HHD, he decided to ask the board to contract with him for their animal needs. Can Barry legally contract with HHD? Explain why or why not.

    © BrainMass Inc. brainmass.com December 24, 2021, 10:54 pm ad1c9bdddf
    https://brainmass.com/business/business-law/barry-business-law-517388

    SOLUTION This solution is FREE courtesy of BrainMass!

    Barry cannot legally contract with HHD due to his influence over the board. Barry is an agent of HHD and cannot enter into agreements that are not in the sole best interest of the corporation. This agreement was formed to be in the best interests of Barry - namely, to make money for him due to the ownership of the second company. Because he is on the board/runs the board at HHD, he cannot enter into an agreement with HHD from his own company unless certain conditions are met.

    The main condition is that the agreement must be decided by a majority vote of the board members. Also, the agreement must be in the best interest of the company - HHD. The agreement has to benefit HHD in a reasonable way in the same capacity that an agreement would, with a company not owned by Barry. Because this is a conflict of interest and the decisions have not proven to be in the best interest of HHD, Barry cannot enter into a legally binding agreement with HHD from his own company, even though he is an agent of HHD.

    References/additional resources:

    http://www.moga.mo.gov/statutes/C300-399/3550000416.HTM <-- even though this deals with non-profits, the guidelines are basically the same. Barry has a material interest in the other company owned by him, so the agreement as formed is illegal.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    © BrainMass Inc. brainmass.com December 24, 2021, 10:54 pm ad1c9bdddf>
    https://brainmass.com/business/business-law/barry-business-law-517388

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