Dan Is a Director of a Corporation,and Without Disclosing His

question 48

Essay

Dan is a director of a corporation,and without disclosing his conflict of interest,he entered into a contract to supply the corporation with widgets.The contract was made in the name of his mother so that the corporation would not know that Dan was involved.Pat is a minority shareholder in the corporation,has found out about the conflict,and intends to bring a derivative action against Dan.Explain what a derivative action is.Why is a derivative action appropriate in the circumstances? What must Pat show in order to bring a derivative action? What remedy might a court award?

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Definitions:

Linear Relationship

A type of correlation where changes in one variable are directly proportional to changes in another variable.

Significance Level

The probability of rejecting the null hypothesis in a statistical test when it is actually true, usually denoted by α.

Gas Mileage

A measure of a vehicle's fuel efficiency, usually calculated as the number of miles traveled per gallon of gasoline consumed.

Incidence of Skin Cancer

The rate at which new cases of skin cancer occur in a population over a specified period, often expressed per 100,000 individuals per year.