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An Introduction to the Law of Corporations: Cases and Materials, Fall 2017

Corporate Opportunity Doctrine

Remember that directors have an obligation to act in the best interests of the corporation.  However, that charge can sometimes be difficult for even well-meaning directors to operationalize. For example, directors are often experienced business-people with their own relationships and their own business ventures. A common challenge facing directors comes in the form of business opportunities that come to them while they are directors. Which of the opportunities that come to directors properly belong to the corporation and which of them properly belongs to the director can be a vexing question.

If the director gets the answer to that question wrong, she may well find herself on the wrong end of a lawsuit alleging violations of the duty of loyalty for wrongfully benefitting from an opportunity that properly belonged to the corporation. On the other hand, the director may also mistakenly forego personal business opportunities for fear that her duty to the corporation prohibted her from pursuing them.  The courts have developed a doctrine with respect to corporate opportunities that directors may come across in their capacities as directors of the corporation.