1. Bernie is a director of BALCO Co. Bernie has missed last two director’s meetings. Could the shareholders remove Bernie if the corporate by laws give the power of removal to the other directors?

2. Flushes R Us, Inc. (FRU) is a corporation whose principal business is the manufacturing and sale of toilets.  Gert is a manager in charge of the employees in FRU's product delivery division.  Eddie is one of the employees in that division.  One day, while Eddie was en route to a retail customer's place of business (where he was to make the delivery of a large quantity of FRU toilets), Eddie negligently operated truck he was driving and caused injury to a pedestrian.  Due to this, Eddie was violating a specific corporate directive that employees were not to be negligent.  The injured pedestrian filed suit against Eddie, Gert, and FRU in an effort to get money damages for her injuries. Who is liable?  Why?

3. Ellen is the president of Ajax Co. Briefly describes Ellen’s duties to Ajax.

4. Dana is treasurer of Smith Co. In her capacity as treasurer, Dana borrows large sum of money from National Bank. Was Dana authorized to do this in her capacity as Smith Co. treasurer? What could the corporation do in this situation?

5. Ace Motors, an automobile manufacturer, has been experiencing problems with the particular model. Many people have been killed in accidents resulting from poor design and location of the fuel line in the car. Can officers and directors of the corporation be held liable for these damages and deaths?

Case Problem

Following one year of negotiations, James McDougal signed the agreement to purchase the Bank of Kingston. The sellers were the majority shareholders in First National Bank of Huntsville, the only other bank in the county. The sales agreement included a provision prohibiting the buyer from moving the bank to Huntsville for a period of 1 0 years. McDougal signed the agreement to purchase the bank stock as “James B. McDougal, Agent.” About three months after the purchase, the board of directors of the Bank of Kingston changed the name of the bank to Madison Bank and Trust. Shortly thereafter, they began efforts to move the bank’s main office from Kingston to Huntsville. The sellers sought an injunction to force the bank to comply with the provision in the sales agreement which prohibited such move. Bank defended on the grounds that McDougal, its president, acted outside of his authority in signing the agreement. Is the covenant not to move to Huntsville enforceable against the bank? Describe.