Corporate Management Duties and Product Liability: Legal and Ethical Case Analysis
Case Summaries
In this essay, corporate management and product responsibility are two legal scenarios that are analyzed. In the first scenario, Parker charges Phillips with wrongfully stealing a business opportunity from their closely held organization. In the second scenario, Simon’s mother files a lawsuit against Allan and Bradford Inc., claiming that a water heater injured her son. The arguments put out by each party will be examined along with pertinent legislation and ethical standards to decide the outcome of these cases.
Management of Corporations
Parker may contend that Phillips violated his fiduciary duties by taking a business opportunity away from P&P Resorts Inc.. According to the Linda Pope case (Security Title Agency, Inc. v. Pope, 2008), an officer has a fiduciary duty of loyalty to the corporation and shouldn’t take actions that harm the corporation’s interests. By creating Travel Brokers and pursuing the deal for himself without alerting Parker, Phillips transgressed his fiduciary duties. Conversely, similar to the defense presented by Linda Pope, Phillips can claim that he was merely making arrangements to compete in the future (Security Title Agency, Inc. v. Pope, 2008). He may argue that he intended to pursue the opportunity once Travel Brokers had the necessary resources and did not divert it from P&P Resorts Inc., since it was not feasible for the corporation then.
A blatant breach of Phillips’ fiduciary duties can be seen in his incorporation of Travel Brokers, pursuing the CTA contract without informing Parker, or affording the option to P & P Resorts Inc. This is supported by the verdict in the Security Title Agency, Inc. v. Pope case (2008), where the judge found Pope responsible for breaching her fiduciary duty by covertly hiring staff for a rival business while still working for her previous employer. The trust and fairness inside the company are further undermined by Phillips’s covert discussions and pursuit of the contract for personal gain; hence, his activities ought to be seen as unlawful.
The ethical principles of honesty, loyalty, fairness, and integrity apply to this case. Officers must demonstrate loyalty to the corporation’s best interests and avoid conflicts of interest that could compromise their fiduciary duty (Jacobs, 2021). Officers must serve all shareholders fairly and refrain from using business opportunities for personal gain. By pursuing legal action against Phillips, Parker aims to uphold these ethical principles and hold Phillips accountable for his actions.
Product Liability
Allan can claim that he performed his duty of care, given that he installed the water heater and set the temperature to a secure level of 105°F. He can assert that he adhered to Bradford Inc.’s guidelines, which included temperature limitations and warnings regarding the perils of hot water. By including explicit warnings on the water heater and the manual, Bradford Inc. may argue that it upheld its duty of care.
They can contend that Allan or Karla’s negligence in failing to adequately watch over Simon was to blame for any harm. Bradford can argue that the incident was caused by Allan or Karla’s negligence and that their product was not defective (Twomey et al., 2022). Finally, Linda may argue that Allan and Bradford Inc. should still be liable for Simon’s injuries. The warning did not adequately convey the potential dangers of hot water at lower temperatures, especially for vulnerable individuals like young children.
In this situation, Bradford Inc. should be regarded as the victor. They performed their duty of care by issuing warnings regarding the risks of hot water and the suggested temperature ranges. Allan set the temperature safely and according to industry regulations. According to the case of Thomas v. Staples, Inc. (2014), Linda’s claims that the warning wasn’t sufficient may have some validity because the scalding episode may not have been entirely due to her conduct. The adults in charge are ultimately responsible for guaranteeing adequate supervision and avoiding accidents (Wolter, 2022). Based on these considerations, Bradford Inc. should be the winning party, and Allan’s liability remains minimal.
References
Jacobs, L. (2021). Corporate insolvency practitioners: ethics and fiduciary duties. In P. J. Omar and J. L. L. Gant (Eds.), Research handbook on corporate restructuring (pp. 447-465). Edward Elgar Publishing. Web.
Security Title Agency, Inc. v. Pope, 219 Ariz. 480, 200 P.3d 977 (Ariz. Ct. App. 2008). Web.
Thomas v. Staples, Inc., 2 F. Supp. 3d 647 (E.D. Pa. 2014). Web.
Twomey, D. P., Jennings, M. M., & Greene, S. M. (2022). Anderson’s Business Law and the Legal Environment, comprehensive edition (24th ed.). Cengage Learning.
Wolter, L. J. (2022). The Parental Immunity Doctrine: Should it shield parents from being apportioned fault in product liability cases where their negligent supervision resulted in their child sustaining harm from a product that presents obvious dangers, and can the Consumer Product Safety Commission recall the product? Quinnipiac L. Rev., 41, 135. Web.