Duties Of Mandataries Essay - 2366 Words

Business Law and Ethics
Comm 315
Duties of Mandataries
© Benito Aloe, Attorney
B.A., LL.L.

15-03-01

© Benito Aloe, A,orney B.A., LL.L.

1

Business Law and Ethics
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©
Benito Aloe, A,orney B.A., LL.L.

2138 C.C.Q.
MANDATARY’S OBLIGATIONS
• Art. 321-324 CCQ: more specific rules regarding
Corporate directors and officers;
• Directors (and officers) are mandataries of corporation;
• Director is managing the property of the corporation;
• Has no right to put this in jeopardy;

• Decisions are binding for corporation unless they exceed powers; • Corporations should supplement legal obligations with rules of Corporate governance;
– A Code of Conduct provides path to ethical decision-making;
– Intel Code of Conduct;
• Comprehensive rules on all aspects of corporate management;

© Benito Aloe, A,orney B.A., LL.L.

2138 C.C.Q.
MANDATARY’S OBLIGATIONS
• These obligations apply to all mandataries with authority (and obligation) to represent others; • Including professionals, executors of an estate
Stock Brokers;

• Fiduciary Duty;
• Duty of Trust;
• “Bon père de famille”;
©
Benito Aloe, A,orney B.A., LL.L.

2138 C.C.Q.:
DUTY OF LOYALTY
• Act Honestly and faithfully;
• Obligation of Loyalty is based on a need for
TRUST between Mandator and Mandatary;
– Therefore the term “Breach of Trust”;
– Breach of Trust is a fire-able offence;

© Benito Aloe, A,orney B.A., LL.L.

2146 C.C.Q.: CONFIDENTIAL
INFORMATION
• Duty of loyalty prohibits that Mandataries :
– Communicate or benefit from confidential information
(or property) acquired in the course of their mandate;
– Unless it is with mandator’s consent;

• Consequences :
– Compensate mandator for loss;
– Pay appropriate rent or interest;
– Remit any benefit (profit) to mandator;
– BMO vs.Ng;

• Also applies to Directors and Officers (ART. 323
C.C.Q., CBCA, QBCA);
©
Benito Aloe, A,orney B.A., LL.L.

2146 C.C.Q.: CONFIDENTIAL
INFORMATION
• Who owns business opportunities developed by the corporation?
– Can Aero vs. O’Malley;
• Who owns business opportunities offered to the corporation? – Peso Silver Mines vs. Cropper;

© Benito Aloe, A,orney B.A., LL.L.

CONFLICT OF INTEREST
• ART. 324 C.C.Q.: Avoiding Conflict of interest is a legal and ethical obligation;
• Must act objectively;
• Director must avoid conflict between personal interests and duties as director;
• Must declare all potential conflicts of interest
(value);
• Recorded in minutes of board of directors;

• A Conflict compromises the confidence
(Trust) of the mandator;
©
Benito Aloe, A,orney B.A., LL.L.

CONFLICT OF INTEREST
• Two types of Conflict:
– Real/Actual conflict—personal interests at odds with interests of the company ;
• i.e. the employer or company suffers a loss;

– Appearance (Potential) of conflict;
• i.e. the employer or company does not suffer a loss but there is a perception of potential wrongdoing;
• Ex.: buying supplies from your brother;

© Benito Aloe, A,orney B.A., LL.L.

CONFLICT OF INTEREST
• Examples:
– Accepting gifts or personal advantages from suppliers, clients or customers;
– Consulting or advising a competitor;
– Trading stock and equities of the company
(insider trading);
– Receiving personal discounts from suppliers, clients; – Doing business with individuals not at “arms length”; © Benito Aloe, A,orney B.A.,

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