Question 1: Homer is a director and officer of Numero Uno, Inc. Homer makes a market­ing decision that results in a dramatic decrease in profits for Numero Uno and its shareholders. The shareholders accuse Homer of breaching his fiduci­ary duty to the corporation.

1. What is Homer's best defense against this ac­cu­sation?

2. In general, what was Homer required to do to escape liability?

3. What type of conduct would lead to liability?

Question 2: One the decrease in profits issue is resolved; a resolution comes before the Numero Uno Board to sell one of its real estate holdings -outside of the ordinary course of business-- to One-of-a-Kind Corporation. Homer also is a director and shareholder of One-of-a-Kind.

1. What is Homer's responsibility in this situation? Can a situation exist which this is OK?