Questions re first mid-term

1- Did Jack own 100% of the shares and was he the sole member when he decided to sell the SSI stock, or he did sell the stock while he owned 87% and without going back to the BOD?

2- Does a derivative suit on behalf of the company include causes of actions that arises before the shareholder bought his shares in the company? 


  1. I’m not sure why students are asking about the timing of the sale of the shares and who sold the shares to the new shareholders. He is a shareholder and a bunch of other people are shareholders. If you think the timing of the sales of the shares matters, you have to say why and explain what the result would be first if he sold his own shares and second if the corp sold new shares. For whatever it’s worth; a sale of shares by the corp must be approved by the BOD (therefore what is the consequences if the BOD does not approve?). A sale by a shareholder of his personal shares does not have to be approved by the corp or anyone else – forgetting securities laws. These are not issues in this question. If you think they are, by all means explain why. I will listen.
  2. The answer to this is no. But don’t worry about whether the derivative suit was procedurally proper. I should have said that in the question, although again it could be answered easily; “if she didn’t own shares when the bad things happened, she cannot be the plaintiff.”

Note: I have been thinking about this as I’m writing the response. The question says S wants her investment back. That’s a good question when we get to securities laws. Can she get it back from Jack? Your answer should say “yes, if ——-.” “No, if ———.” Can she get it back from the corp? Same.

But the question says (you forced me to look at the question): Suzie files a derivative suit against Jack and the BOD. It doesn’t ask you if she can get her investment back directly from Jack.

Good questions.

Study Sessions

I am not going to do a study session this Saturday because of the exam answers that are due next Tuesday. As I said in class last night, I am willing to spend an hour to 90 minutes with students by Zoom one evening a week for the next five weeks – starting next week. I can do it at 5pm or at 7pm, any night obviously except Tuesday night. Please send me an email if you are interested in attending telling me which days and times you prefer. I will pick a time which the most people can attend. That is the best I can do.

Question re first mid-term

Hello Professor Hayes, 

I have a question, in regard to the assignment did Jack sell his own common stock or issue new stock? the facts are not clear and I’m confused. 

Answer, I’m not sure it matters. If you think it does, you should say, “If Jack sold his own stock, then such and such, but if the corp sold new stock, then such and such.”

Study session tomorrow 10-10-20 if anyone is interested

I will hold a study session tomorrow by Zoom from 10:00am to 11:30am if I get at least three people who request it. Send me an email and if I get three, I will send the Zoom instructions.

We can review your answers to the short essay questions if you wish as long as I can give copies of your answers to whoever else is on Zoom so that they can follow along.

We can also review whatever areas we have already studied so far this year.

Let me know. Prof Hayes.

Assignment for Tuesday

We will discuss these seven cases in class on Tuesday.

Three Seventy Leasing Corp 31
Botticello 41
Humble Oil 66
Hoover 68
You have already done the questionnaires for these cases (or should have.  If you have not done them yet, turn them in now).
Partnership cases.
Martin v. Payton 137
Putnam 157
Page v. Page 166
Your case questionnaires for these three cases must be uploaded to dropbox by 6:30pm Tuesday.
Do the short essay as well.  We will begin the class by discussing the short essay.  The short essay question is in dropbox on D2L.