Legal Question in Business Law in North Dakota

conflict of interest

Is there a conflict of interest by the head of the marketing division by also representing his own company? The company that he represents markets techiques for a price with additional commitments to bolster his profits from the company that he is the marketing head. The marketing techniques were sold on unsubstantiated income claims


Asked on 11/21/97, 6:25 am

1 Answer from Attorneys

Robert Friend Robert H. Friend, Attorney at Law

Conflict of interest

Actually, your question is not perfectly clear to me. If you are asking whether there is an inherent (built-in) conflict of interest between being an officer of one company and representing another company that you personally own, my answer (which is not based upon research of your state's law) would be "MAYBE." If the two companies are competing in the same market and selling the same product or service, then, yes, there is an inherent conflict of interest.

If the two companies are selling unrelated things, then there may or may not be a conflict of interest, depending upon the exact circumstances. Sometimes companies will have specific agreements with their employees about things like this. For example, if the employee has disclosed to the employer what he wants to do in addition to his regular job and the employer has said "that's OK" then there is an agreement that avoids any conflict of interest.

However, I would say that an employee probably has a duty NOT to do anything that is harmful to his employer. So, if whatever he is doing "on the side" harms the employer's business (or takes business away from the employer), yes, there probably is a conflict of interest.

However, if you are just an observer and not a key person of the employer, this is all academic to you. But if you are a part of the company that is being harmed (and they don't KNOW they're being harmed), you should probably figure out whom to report the problem to and do it. A safer (for you) method would be to write an anonymous (and untraceable) letter to the person that you want to know about this. Or have someone else write it for you (so your writing style cannot be recognized) and you send it.

I recommend anonymity in this case because "whistle blowers" (which you would be) often get fired, it seems.

To get right down to the meat of this matter, I would need to know exactly why you are interested in this situation. Are you involved in the company that's being harmed? What do you personally stand to lose if this continues?

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Answered on 11/21/97, 1:07 pm


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