Please Read The Following Case And Answer The 3 Questions

Please Read The Following Case And Answer The 3 Questions At The End O

Please read the following case and answer the 3 questions at the end of the case. (150 Words Total) Lawrence Gaffney was the president and general manager of Ideal Tape Company (Ideal). Ideal, which was a subsidiary of Chelsea Industries, Inc. (Chelsea), was engaged in the business of manufacturing pressure-sensitive tape. Gaffney recruited three other Ideal executives to join him in starting a tape manufacturing business. The four men remained at Ideal for the two years it took them to plan the new enterprise. During this time, they used their positions at Ideal to travel around the country to gather business ideas , recruit potential customers, and purchase equipment for their business.

At no time did they reveal to Chelsea their intention to open a competing business. The new business was incorporated as Action Manufacturing Company (Action). When executives at Chelsea discovered the existence of the new venture, Gaffney and the others resigned from Chelsea. Chelsea sued them for damages. What is the fiduciary duty of loyalty?

Did Gaffney act ethically in this case? Did he and his partners breach their fiduciary duty of loyalty? USE IN-TEXT CITATION FROM THE FOLLOWING REFERENCE: Cheeseman, H. R. (2013). The legal environment of business and online commerce: Business ethics, e-commerce, regulatory, and international issues (7th ed.). Upper Saddle River, NJ: Prentice Hall.

Paper For Above instruction

The fiduciary duty of loyalty requires corporate officers and executives to prioritize the interests of their employer above personal gains and to avoid conflicts of interest. In this case, Gaffney and his partners used their positions at Ideal to gather information and resources without disclosure, intending to start a competing business, Action Manufacturing. Such actions constitute a breach of their fiduciary duty because they exploited their roles and confidential information for personal benefit, violating the obligation to act in the best interests of Ideal and Chelsea (Cheeseman, 2013). Ethically, Gaffney's behavior is questionable because he concealed his intentions and engaged in activities that undermined his fiduciary responsibilities. From an ethical and legal standpoint, their actions likely breach the duty of loyalty, as they used company resources and information improperly to benefit a competing enterprise. This breach justifies Chelsea’s legal action for damages, reinforcing the importance of fiduciary duties in corporate governance (Cheeseman, 2013).