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JBaxLaw
JBaxLaw, Attorney
Category: Business Law
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Experience:  Experienced in business formation and licensing issues
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Can a board of directors have a conflict of interest with a

Resolved Question:

Can a board of directors have a conflict of interest with a contractor they are in agreement with.
Submitted: 4 years ago.
Category: Business Law
Expert:  JBaxLaw replied 4 years ago.

BizAttorney :

Hello,

BizAttorney :

Board members have a fiduciary duty not to engage in self-dealing. That would include seeking contracts with a contractor to whom they are related or would derive some benefit.

BizAttorney :

Board members who breach their fiduciary obligation could face a civil suit.

BizAttorney :

So, board members cannot seek or approve contracts with whom their is a conflict of interest.

BizAttorney :

Please let me know if you have any questions.

BizAttorney :

Please let me know if you need any other assistance. Thank you for accepting my answer and ensuring that I receive credit for assisting you.
Thank you again

Customer:

Well in my situation I have a maintenance contract with an association that is due to end in June. I had an subcontractor quit working for my company and started working with another contractor who has now placed a bid for my same contract. Is this a conflict of interest since they have agreed to negotiate with the new contractor and have not met with me

BizAttorney :

One sconed please

BizAttorney :

second

BizAttorney :

A subcontractor working with an alternative contractor for the same customer does not create a conflict of interest with a board.

BizAttorney :

A board would be conflicted if a member of the board had some relation or financial interest in a particular contractor getting a job.

BizAttorney :

Please let me know if you need any other assistance. Thank you for accepting my answer and ensuring that I receive credit for assisting you.
Thank you again

BizAttorney :

Is there anything else?

BizAttorney :

Please let me know if you have any other questions.

Please be so kind to leave me a positive feedback rating, if you have a few seconds. You will be prompted for feedback after pressing the accept or submit button. You can still continue to post follow-up questions even after the accept button is pressed.

Thank you so much

BizAttorney :

You can always post a question later if you think of anything. It seems you are asking whether a subcontractor would be prohibited from leaving one general contractor and working for another on the same bid project.

BizAttorney :

The only barrier would be present if the subcontractor had entered into a non-compete with the previous general contractor.

Customer:

Well actually I was thinking that the board of directors was wrong for negotiating with another contractor who is using the same subcontractor I was using while I am still in a contract with them. This particular subcontractor left me with a huge debt because he didn't have insurance. I will accept you answer.

BizAttorney :

I see.

BizAttorney :

A board is not conflicted however, they may consider whether they want to utilize service providers with a poor work history.

BizAttorney :

To accept, you press the accept or submit button.

BizAttorney :

Thank you again

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