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Photograph of a Board of Directors spacer
figure 1

 

dog-leg claim. A claim brought by the beneficiaries of a trust against the board of directors of a trustee corporation, accusing them of breaching their duties. The basis of such a claim is that the directors are an asset of the trust and that it is their duty to benefit the trust rather than the corporation itself.reference 1 The nomenclature appears to arise because this is a strategy to get around the premise that any breach by a director or directors was committed as an agent of the company therefore the breach is by the corporation not the individual. A dog-leg is typically a term for a sharp turn, most often in the fairway of a golf hole, based on the crookedness of dogs' hind-legs, hence the getting around.

Did you get that? Thus far such claims have been exclusively in U.K. where they have largely lost. In a 1911 case the court held that “directors stand in a fiduciary relation to the company, but not to a stranger with whom the company is dealing.”reference 2 However there has been a recent spate of such cases, some of which have international implications.

1. Pfaff, Lucinda. 2009. Dog-Leg Claims - a Dog's Dinner. Knowledge. Allen & Overy. Accessed Jan 13 2009 from http:// www.allenovery.com/ AOWEB/ Knowledge/ Editorial.aspx? contentType ID=1&contentSubType ID=7944&item ID=49730&prefLangID=410.

2. Ibid.

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About the illustration: Figure 1 shows a rather stereotypical Board of Directors of the 20th century. © 2009 Jupiterimages Corporation.  
see also: dogleg; crooked as a dog's hind leg Last updated: January 13, 2009
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