Legal Business 1

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1. Jimmy John, officer at MNC, a company on the New York Exchange,  directed MNC sales in North America and Europe. In November of 2008,  John sold more than 7,500 shares of MNC stock. The following March, John  resigned from the firm, and the next month, he bought more than 20,000  shares of its stock. MNC provided some guidance to employees concerning  the rules of insider trading, and with regard to John's transactions,  the corporation said nothing about the potential liability. Steve Tate,  an MNC shareholder, filed a suit against MNC and John to compel  recovery, under Section 16(b) of the Securities Exchange Act of 1934, of  John's profits from the purchase and sale of his shares. John argued  that he should not be liable because he relied on MNC's advice. Should  the court order John to return his profits to the Corporation? Explain.


2. The accounting firm of Junk & sons prepared financial  statements for Lucy, Inc. After reviewing the various financial  statements, Days Bank agreed to loan Lucy $50,000 for expansion. When  Lucy declared bankruptcy under Chapter 11 six months later, Days Bank  promptly filed an action against Junk & sons, alleging negligent  preparation of financial statements. Review and explain the results  under the traditional Ultramares rule and the Restatement approach.  Further, explain the policy reasons for holding accountants liable to  third parties whom they are not in privity?


3 The Franchise Contract. Petersen & Petersen Associates, Inc.,  was in business as Laptop Computer. As a franchise, Laptop sold, among  other products, computer systems marketed by Home Microsystems, Inc.  Laptop’s agreement with Home included a forum-selection clause that  provided that any suit between the parties had to be filed in a  California court. When Home terminated its relationship with Laptop,  Laptop filed a suit in a New York state court. Home asked the court to  dismiss the suit on the basis of the forum-selection clause. Laptop  argued that the clause violated state franchise law, which invalidated  such clauses in auto dealership franchises. On what basis might the  court extend this law to cover Laptop’s franchise? Discuss.nt 9       

  • Posted: a year ago
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  • Budget: $5
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