Law School Discussion


« on: March 23, 2007, 03:31:28 PM »
Hello everyone, I can't seem to figure out what the issues are other than breach of duty of loyalty from this hypo. What do you guys think? Thanks

HYPO: G and H opened a restaurant. G is a great cook and has recipes passed down from his grandmother. He is
responsible for creating menus and meals. H is responsible for being host and arranging parties. G and H agreed to split revenues 65% for G and 35% for H, but each responsible for expenses associated with their specific endeavors. H would pay for waiters' salaries and G would pay for salaries of cooking staff & food ingredients. G would pay rent, utilities, insurance, and ads.

A yr later, G wanted to expand restaurant and G signed lease to open another one. H dissaproved and wants to
get out of it.

Also, G took his grandmother's recipes to a publisher and got a book contract. H found out about book
contrat and that all royalties will go to G. Business has now declined and both want to get out of the
situation. Both believe the other committed breaches of various duties. G comes to you for advice.

Re: Business/Corporations
« Reply #1 on: March 23, 2007, 11:59:01 PM »
What kind of organization is it? (Not that this probably matters for the hypo, but it's odd that it's silent).

Are the recipes an asset of the organization? If so, you could argue a breach of fiduciary duty with the cookbook, since G benefits but not the organization.

The plan to expand can bring in various breahes such as a breach of loyalty,  breach of fiduciary duty, and breach of duty to cooperate. Again, these could be argued for either side. For example, G is working to better the place, and H isn't playing along. Or G is overexpanding and H is being harmed.

Is there a duty of care argument related to the failing business? Does that only relate to the failed expansion?

Are there authority questions related to the expansion? Since G's liabilities include rent, you could argue that he had the authority to expand, but you might also say that both were required to sign off on any expansion.

Just a few unorganized thoughts off the top of my head.