Q1: Oxy Corp. is negotiating with the Wick Construction Co. for the renovation of the Oxy corporate headquarters. Wick, the owner of the Wick Construction Co. is also one of the five members of the board of directors of Oxy. The contract terms are standard for this type of contract. Wick has previously informed two of the other directors of his interest in the construction company. Oxy's board approves the contract by a three-to-two vote, with Wick Voting with the majority. Discuss whether this contract is binding on the corporation.
Q2: Oya Paka and two business associates formed a corporation called Paka Corp. for the purpose of selling computer services. Oya, who owned 50 percent of the corporate shares, served as the corporation's president. Oya wished to obtain a personal loan from her bank for $250,000, but the bank required the note to be cosigned by a third party. Oya cosigned the note in the name of the corporation. Later, Oya defaulted on the note, and the bank sued the corporation for payment. The corporation asserted, as a defense, that Oya had exceeded her authority when she cosigned the note on behalf of the corporation. Had she? Explain.
Oxy Corp. negotiated with Wick for the renovation of Oxy's headquarters. Wick is on the board at Oxy. The contract terms are standard, so we know that there is nothing out of the ordinary given the exact nature of the contract. Wick informed two of the other directors (out of five) that he has an interest in the company. Oxy's board approved the contract by a 3-to-2 vote (Wick was one of the three). Is the contract binding?
No. Wick owns the construction company that is trying to secure the deal and Wick has voted ...
This solution discusses the Oxy Corp. and the Oya Paka business law scenarios