John Spark, CEO of Maine Valley Arms, Inc. (MVA), wanted to hire his best friend, Frank King, as the new president of MVA. MVA was in the business of manufacturing and selling guns, muzzleloaders, and hunting rifles. After graduating college, King had worked the past 10 years as a used car salesman. He had no experience in the gun business. Spark, however, believed King was an excellent businessperson and believed that King would be instrumental in turning around the low-profits of past years. Spark believed new blood was needed and thought King would bring fresh ideas to turn the business around. Initially, the Board of Directors was against hiring King, but ultimately decided to agree with the CEO's decision. King was offered a lucrative $1 million annual salary and stock options.

On the first week of his job, King became aware of a potential multi-million dollar lawsuit against MVA. A hunter in Alabama, Ricky Dean, had been severely injured and lost both of his eyes when his hunting rifle exploded in his face. Dean's 15-year old son had purchased the MVA hunting rifle.

CASE ONE - SHORT ANSWER Questions: 5pts each (10 pts. total)

Instructions: In six to eight sentences explain your answers to the following questions.

Can the shareholders of MVA sue? Explain why or why not. Under what theories could the shareholders potentially bring an action? Explain all possible defenses.

Can Dean bring (file) a lawsuit? Who would he sue and what would be his cause(s) of action? Could MVA rescind the sale of the gun based on the age of the individual who purchased the gun?