Explain how the court would determine if the directors


Basic Products Corp. has five directors on its board. Basic owned vacant land that it had purchased several years ago as the site for a new factory. Basic no longer planned to build a factory on that land. The directors of Basic asked the corporation President to obtain an appraisal of the property. The president obtained the appraisal from a qualified appraiser, who appraised the property for $50,000. At a board meeting, the directors reviewed the appraisal and voted 5-0 to sell the property. Susan, Basic's vice president of marketing, was present at the meeting and told the directors that she was interested in purchasing the land for the $50,000 appraised value, noting that Basic would not need to pay a commission to a real estate broker, which would net more money for Basic. The board agreed and voted 5-0 to sell the land to Susan.

The sale to Susan was completed and the sale was mentioned in Basic's next shareholder meeting. Brice, a shareholder, believed that the property was worth more than $50,000 and sued the directors for breach of their duty of due care.

Explain how the court would determine if the directors satisfied their duty of due care, including a discussion of how the business judgment rule may apply.

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Dissertation: Explain how the court would determine if the directors
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