Solved Questions on Law

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Ramrajee Baboo is a young attorney with a Master’s Degree in Corporate Law, specialising in project financing documentation. Ramrajee has been appointed to the Board of UDECOTT as it moves forward in a new program based on project financing for its new proposed constructions. UDECOTT is a state enterprise and Ramrajee is paid a stipend of $3,000.00 per month. UDECOTT had previously engaged the services of a general commercial law practitioner, Buji Bamee, to provide legal advice at a cost of $50,000.00 per month. Unknown to Ramrajee, the Chairman of the Board in an informal meeting with the Chief Executive Officer of UDECOTT agreed to terminate the contract of the consultant and have Ramrajee vet the project financing documents in her capacity as a director. Ramrajee was never informed of this decision. Two weeks prior to a board meeting, Ramrajee received board papers including certain project financing contracts for discussion at the next board meeting (scheduled to take place two weeks later). Ramrajee perused the papers cursorily and made certain brief notes. At the board meeting the documents were discussed and Ramrajee made certain general observations. The agreements were subsequently executed. It later transpired that the documents were not properly vetted and UDECOTT suffered a 10 million dollar loss. The agreements were not examined by any attorney other than Ramrajee. The government minister responsible for UDECOTT is quite annoyed and would like someone to be held liable. The Chairman said he relied on Ramrajee to vet the documents but Ramrajee has stated that her duty is that of a general review and would have needed detailed legal analysis beyond what is contemplated by her role as a director to uncover the deficiencies in the documents that occurred. Advise the Minister as to the conduct of Ramrajee.

ISSUE: Did Ramrajee exercise the level of skill required of her as director?

LAW: Directors’ behaviour...
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