Guth v. Loft Inc.
So, imagine you have a toy that you want to sell to your friend. You tell your friend that the toy is in really good condition and your friend agrees to buy it from you for $10. Your friend later finds out that the toy doesn't work as well as you said it did and it's not worth $10. Your friend feels like they were tricked into buying the toy and wants their money back.
This is kind of what happened in the case of Guth v. Loft Inc. except instead of a toy, it was a company. Mr. Guth was the president of Loft Inc., and he sold a branch of the company to the other leaders without giving the company a fair market value. Later, the company found out that the branch wasn't worth as much as they thought and they lost a lot of money. The company sued Mr. Guth because they thought he tricked them and they wanted their money back.
The court agreed with the company and said that Mr. Guth didn't act in the best interest of the company by not getting a fair price for the branch, even though he was the president. This means that even if you're the boss of a company, you can't make decisions that hurt the company just to benefit yourself.
This is kind of what happened in the case of Guth v. Loft Inc. except instead of a toy, it was a company. Mr. Guth was the president of Loft Inc., and he sold a branch of the company to the other leaders without giving the company a fair market value. Later, the company found out that the branch wasn't worth as much as they thought and they lost a lot of money. The company sued Mr. Guth because they thought he tricked them and they wanted their money back.
The court agreed with the company and said that Mr. Guth didn't act in the best interest of the company by not getting a fair price for the branch, even though he was the president. This means that even if you're the boss of a company, you can't make decisions that hurt the company just to benefit yourself.