The cоffee cоmpаny hаs grоwn аnd has a strong management team including Marta, Will, and Eddy. The shareholders have provided adequate capital for expansion that allows owning coffee farms in Colombia, Panama, and Costa Rica. The shareholders have largely been enthusiastic and supportive until a debate and decision last year by the board of directors of the company. A lot of political turmoil in Colombia has caused the impoverishment of people. Marta and Eddy became particularly sensitive to the working conditions, wages, and infrastructure on the farms in Colombia. They felt that their employees deserved better. At a recent board meeting, Marta and Eddy presented a detailed plan, including drawings, financials, and market conditions, as part of their proposal to raise the hourly wages of workers and construct simple housing for the workers on the farm. Initially, Will objected that the wages were above market conditions, and unnecessary because of the low wages prevailing on competing coffee farms. He also thought the housing idea was too costly. However, after a lengthy two-day meeting and discussion, Will supported the plan and the rest of the directors were convinced. The board approved the plans, and the wages and project were implemented. A group of three angry shareholders have protested. Their argument is that the increased costs are unnecessary, that the company should remain aligned with market wages of competitors, and that the housing project is so costly that the Colombian farms are no longer profitable, and that it may take up to three years to break even. These shareholders are preparing to sue the board of directors for decisions that the shareholders characterize as “waste” and for positioning the operations to lose money when they otherwise can be profitable. Do you see any legal issues here? What are the arguments? What do you think will be the outcome of a lawsuit? Answer in the IRAC format.
A generаl pаrtnership cаn be fоrmed inadvertently.