Sam stole from business and diverted assets to endeavor

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Read the story which follows and collaborate to identify the issues with this scenario and offer recommendations. The issues could be related to contracts, employment issues, choice of entity, ethics, or any topic covered this semester.

Sam and Andy have known each other for years and are best friends. In order to survive the drudgery of Finals week, they historically have gone on a "baking spree" making all sorts of yummy comfort foods. This year, like most years, all their friends pester them for cupcakes, cookies and the like to ease the end of semester stress.

Since they are both doing very well in their law class, they decide that they should start a baking business together. They promise they will only bake items for sale within their business and will not accept "side jobs."

The business does very well for several years. But eventually, Sam decides that the baking business is not "meeting his needs." Sam steals recipes from the company and starts baking specialized brownies with Rebecca. Sam informs their primary flour distributor that half of all new flour shipments are to be delivered to a new address, but should continue to be billed through the original business. Sam does not tell Andy about any of this and this extra money allows him to do many things that make him feel good and "alive."

When Andy discovers what Sam has been doing, some people tell Andy that it is Andy's fault that Sam stole money and recipes from the company because Andy probably did not pay Sam enough. Since they have been friends since childhood, some people advise Andy to forgive Sam and continue to work on building their business.

Andy is devastated that Sam stole from their business and diverted assets to a new endeavor.

Reference no: EM132255877

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