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Summit Malt Inc. operates one brewery. Its president, Dana, routinely signs grain and bottle contracts for the company. Without a board vote, Dana signed a one-year grain-supply contract at market prices. The next day, also without a board vote or shareholder approval, Dana signed an agreement to sell the brewery building, brewing equipment, brand names, and inventory to a competitor. The sale would leave Summit Malt with only cash and no operating business.
The board later objected to both transactions. The grain supplier and the competitor each seek enforcement.
(a) Is Summit Malt likely bound by the grain-supply contract?
(b) Is Summit Malt likely bound by the sale of the brewery assets?
(c) What approvals are generally required for a sale of substantially all corporate assets outside the ordinary course?