Berk's Duty Of Loyalty
The legal issue in this case is whether Berk breached his duty of loyalty to the company. The rule of law is that directors and officers have not to act adversely to the interests of the corporation and to subordinate their personal interests to those of the corporation and its shareholders. Berk was vice president of Comedy Cottage, Inc. Berk usurped a corporate opportunity when he arranged for the Comedy Cottage’s lease to be drawn in his name. He then used his former position to retain the lease and opened his own Comedy Club. This new club was in direct competition with his old corporation. Because of these two actions, the court held that Berk had breached his duty of loyalty to the Comedy Cottage.
The court ruled that Berk had breached
The court ruled that Berk had breached