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A contract for personal gain, which could cause a corporate fiduciary to breach his or her fiduciary duty of loyalty to the corporation is generally held to be unenforceable as against public policy. A promise by a fiduciary to violate his fiduciary duty or a promise that tends to induce such a violation is unenforceable on grounds of public policy. Accordingly, Massachusetts courts vigorously scrutinize self-interested transactions involving corporate fiduciaries.
Plaintiff former senior vice president brought an action against defendants, corporation and others, to recover a finder's fee that defendant corporation promised plaintiff in the event of an acquisition. The trial court determined that the oral finder’s fee agreement was unenforceable for reasons of public policy and the Statute of Frauds, G. L. c. 259, § 7. Plaintiff appealed.
Was the finder’s fee agreement enforceable under the circumstances?
The court affirmed the trial court's judgment on the ground that the finder's fee agreement was unenforceable for public policy reasons. Viewing the undisputed facts and reasonable inferences in plaintiff's favor, the court concluded that plaintiff had not satisfied his summary judgment burden. The court found that plaintiff's actions to inform the acquired corporation of the finder's fee agreement did not rise to the level of full and fair disclosure that was required before a fiduciary could procure personal profit in the conduct of corporate affairs. The court determined that plaintiff's actions did not constitute full disclosure of all material facts respecting the finder's fee agreement, which was a prerequisite for enforcement. Because plaintiff was not entitled to profit personally from his actions on defendant corporation's behalf, he suffered no injury to a legally protected interest.