Also known as: personal benefit requirements · personal benefit
Written by attorneys · grounded in primary & secondary sources — see below
2 senses
A condition that an individual must receive a personal advantage rather than acting solely in a representative capacity to establish liability for breach of duty.
A condition that permits exclusion of a period from the rule against perpetuities when a power of destruction is held for the exclusive personal benefit of the holder.
A condition that an individual must receive a personal advantage rather than acting solely in a representative capacity to establish liability for breach of duty.
Pedro Pacheco incorporated each of his ten cabs as a separate corporation holding only the minimum insurance required by law. When one cab injured a pedestrian, the victim sought to hold Pedro personally liable by arguing the corporations were mere alter egos. The court refused to pierce the veil because the corporations were not shown to have been operated for Pedro's personal benefit beyond ordinary shareholder expectations.
A condition that permits exclusion of a period from the rule against perpetuities when a power of destruction is held for the exclusive personal benefit of the holder.
Pablo Perez created a trust that gave his daughter the uncontrolled power to destroy a remainder interest at any time before she reached age forty. When measuring the perpetuities period, the court excluded the years during which the daughter could exercise that power. The exclusion applied because the power was held solely for the daughter's exclusive personal benefit.
Each sense below has its own examples, sources, and questions.
Priscilla Parks, an analyst at a public company, disclosed upcoming earnings shortfalls to her college roommate who managed a hedge fund. The roommate traded on the information and shared a portion of the profits with Priscilla. Prosecutors established the personal benefit requirement by showing the tip was made to obtain that monetary gain rather than for any corporate purpose.
Priya Prasad, a geologist at Texas Gulf Sulphur, learned of a major mineral discovery and purchased shares before the public announcement. She argued she owed no duty because the information was not obtained for her personal benefit. The court held that her trading itself satisfied the personal benefit requirement because she used the information to enrich herself rather than to serve the corporation.
Paige Porter worked at a printing firm that prepared takeover announcements. She purchased target-company stock after learning the identities of the targets from documents she handled. Because Paige had no relationship with the target shareholders and obtained no personal benefit from the disclosures themselves, the court found no breach of duty under the personal benefit requirement.
Patricia Patel, a director of Macmillan, approved a lockup option favoring one bidder after that bidder agreed to retain her as a consultant at a substantial fee. The court scrutinized whether the lockup served the corporation or instead delivered a personal benefit to Patricia. Finding the personal benefit, the court invalidated the lockup as a breach of fiduciary duty.
No. The personal benefit must be received in connection with a breach of the duty of trust and confidence owed to the corporation or its shareholders. A corporate insider who trades for her own account need not show a personal benefit from the trade itself.
In tipping cases the personal benefit is what makes the disclosure a breach of duty. In veil-piercing cases the personal benefit shows the corporation was operated as the alter ego of its shareholders rather than as a separate entity.
Yes. A gift of material nonpublic information to a trading relative or friend is treated as conferring a personal benefit on the tipper analogous to trading and giving the proceeds as a gift. The government need not prove a tangible pecuniary quid pro quo.
Yes. A transferee who knows the transfer is solely for the partner's personal benefit is on notice that the partner lacked authority, allowing the partnership to recover the property.
A servitude created for the personal advantage of a named individual rather than for the benefit of that person's land ends at the death of the beneficiary unless the instrument clearly provides otherwise.
…virtue of a confidential or fiduciary relationship with another is not free to exploit that knowledge or information for his own personal benefit but must account to his principal for any profits derived therefrom.” Diamond v. Oreamuno , 24 N. Y. 2d 494, 497, 248 N. E. 2d 910, 912 (1969); see also Restatement (Second) of Agency…