Allcom Ltd has the following provisions in its articles: Paragraph X: The company secretary may not make any contract on behalf of the company for an amount exceeding 10,000. Paragraph Y: The Companys borrowings shall n
Allcom Ltd has the following provisions in its articles: Paragraph X: "The company secretary may not make any contract on behalf of the company for an amount exceeding £10,000." Paragraph Y: "The Company's borrowings shall not be allowed to exceed £1 million without the authorisation of the general meeting." Paragraph Z: "The quorum for meetings of the board of directors shall be five." Sally is the company secretary. Sally makes a contract with Motorhire Ltd to hire several cars for Allcom for a period of one year at a contract price of £50,000. Sally owns 25% of the shares of Motorhire, although she is not involved in the running of the company. At a meeting of the Board of Allcom at which four directors are present, a resolution is passed authorising Wally, the company's finance director, to take out a loan from the company's bank, Grandbank. This will take the company's aggregate borrowings from Grandbank to over £1 million. Grandbank's lawyers have read Allcom's articles and have reported on them to Grandbank. Consider whether the contracts with Motorhire and Grandbank are binding on Allcom. In this essay I shall advise Allcom as to whether contracts made on its behalf are legal binding. The main source for the recommendations I make will be from the Companies Act 2006 (referred to as the Act). Allcom Ltd, is a limited liability company, the definition of a
Business Advice.
Business Advice In advising Gus, Gloria, and the liquidator (collectively known as the "claimants") as to the sustainability in law of their respective claims in relation to, Rajinder (hereinafter referred to as "R"), Sarah (hereinafter referred to as "S"), and the liquidated company Exotic Holidays Ltd. (hereinafter referred to as "E Ltd."), the core issue appears to be that of corporate identity as opposed to personal identity of the members of the corporate entity. Issues relating to the general effects and consequences of incorporation are also discussed, namely, issues of separate legal personality, liability and related exceptions, which in turn necessitates consideration of the "corporate veil" and under what circumstances the courts will be prepared to assign liability etc beyond the corporate entity to the members. Before considering individual claims, some thought is given to the general or fundamental issue of legal identity, on the grounds that this is central to all the situations. The most important case in this regard is undoubtedly Salomon v Salomon [1897] AC 22 (hereinafter referred to as "Salomon"), which also provides an apt starting place. The fundamentally important principal that emerged from Salomon is that a company, once incorporated, is a legal entity in its own right. In other words, the company itself, in this instance E Ltd., is a distinctly
the resurgence of transnational commercial law
"The twentieth century saw the resurgence of a truly transnational commercial law and all the indications are that the twenty first century will be the century of a truly global commercial law" Discuss. WORD COUNT 3965 Table Of Contents . Introduction 3 2. Nature of The Transnational Commercial Law. 3 2.1. Definition of Transnational Commercial Law. 3 2.2. The Importance of Transnational Commercial Law. 4 2.3. The Role of Merchants in Comprising Transnational Commercial Law. 5 2.4. The History of The Transnational Commercial Law. 6 3. The Resurgence of Transnational Commercial Law in the20th Century. 7 3.1 The Impact of Political and Economical Changes on Transnational 7 Commercial Law. 3.2 Examples of The Prosperity of Transnational Law in The 20th Century. 7 3.3 The Urge of The Prosperity of Transnational Law in The 20th Century. 8 4. The Global Commercial Law. 9 4.1.The Theory of Global Commercial Law. 9 4.2. The Fertility of The approaches of Global Commercial Law. 10 5. Conclusion 11 6. Bibliography 12 . Introduction It is generally recognised that the transitional commercial law has experienced a dramatic transition during the twentieth century. This transition was not coincidental. In fact, there are many economic as well as political factors that
In the past, virtually all business entities were in the forms of either that of a sole proprietor, a general partnership or that of a limited liability company. However,
In the past, virtually all business entities were in the forms of either that of a sole proprietor, a general partnership or that of a limited liability company. However, April 6 2001 saw the advent of a new form of business organization, that of the Limited Liability Partnership (LLP). As its name may suggest, it possesses several characteristics of a general partnership, with the added bonus of limited liability. Nevertheless, it has its own distinct features, features that we will look into below. In addition, we will look into the emergence of this new business entity; we will look into its raison d'etre. The Limited Liability Partnership Act 2000 sets out the key features of the LLP business entity. Section 1(2) of the act states that a limited liability partnership is a separate corporate body with a legal personality separate to that of its members. This means that an LLP can (i) hold land and other assets with its own name (ii) enter into contracts with its own name (iv) employ staff (iii) sue and be sued. These are characteristics similar to that of a limited liability company, and most importantly, like the limited liability company, members of an LLP have limited personal liability with regards to the liabilities of the LLP. In the case of an LLP being wound up, its assets and funds will be used to repay its creditors. Furthermore, because an LLP does not have any
To what extent is the rule contained in the Salomon v. Salomon & Co. Ltd judgement open to abuse?
To what extent is the rule contained in the Salomon v. Salomon & Co. Ltd judgement open to abuse? The company as a separate legal personality from that of its members as defined by the Companies Act 1862 was established in common law by the House of Lords in 1879 when they delivered their judgement in the case of Salomon v. Salomon & Co. Ltd. Indeed, this case is now seminal, with both practitioners and students of the law referring to it as the foundation upon which modern company law is based. However, although the outcome of Salomon v Salomon & Co. Ltd is now firmly embedded that is not to say it has not been prone to the effects of the occasional tremor. Since this ruling and some might argue prior to this ruling by the House of Lords questions relating to the interpretation of the act and its scope have been hotly debated. While some see this ruling as clearly interpreting the 1862 act at common law others contend that such an interpretation is too rigid and clearly open to abuse. It would be argued that a separate legal personality in conjunction with limited liability offered the nineteenth century entrepreneur the protection they desperately needed if their business ventures were to grow and expand beyond their personal resources. Others would contend that this ruling was to the detriment of the company's creditors, allowing the unscrupulous individual or
In the eyes of the law, once registered, a company has its own legal identity separate from its members. Case study
In the eyes of the law, once registered, a company has its own legal identity separate from its members. This has been the case since businesses started to become incorporated. However, it was not until the case of Salomon v Salomon & Co Ltd [1897] A.C. 22), that this was recognised by the court and became the case law which introduced the phrase the veil of incorporation between a company and its shareholders, acting as a screen between them. In 1892 Salomon formed a limited company to take over his business as leather merchant and boot manufacturer. Each member of his family, wife, daughter and four sons, signed the memorandum of association and subscribed for one share each. Salomon was paid in 20,000 shares of £1, a £10,000 debenture, secured by a floating charge on the company's assets and the balance, up to £39,000, in cash. Unfortunately the business went into liquidation within one year. The assets were sufficient to pay off Salomon's debentures but all trade creditors would receive nothing. This was challenged by the unsecured creditors, claiming the company was an alias or agent of Salomon. The House of Lords held that as Salomon & Co Ltd was a separate and distinct person from Salomon then the debentures were valid and the remaining creditors of the new company should have been aware of the risk they were taking. (Keenan & Bisacre 1996 p3). This firmly
Commercial Law Case. Jack needs to be advised regarding the two issues he has with the Solent Builders and Ron. The first issue is that, Jack discovered that Solent Builders in liquidation and have not paid for the bags of cement. The second issue is that
In this scenario, Jack needs to be advised regarding the two issues he has with the Solent Builders and Ron. The first issue is that, Jack discovered that Solent Builders in liquidation and have not paid for the bags of cement and the bricks which is written on Jacks terms that they should pay for the goods within 30 days of delivery. The second issue is that Ron only paid 10% of the hire charge to the owner Utility Finance Ltd and they demands the return of their truck but Ron is bankrupted. As Ron is bankrupt there is possibility in Jack suing him because he will not have sufficient assets to satisfy an award of damages in his favour. He needs to be advised whether Solent Builders and Ron shall pay for the goods. For the purposes of Solent builders under a conditional sale agreement with Jack is to be taken not to be a person who has bought or agreed to buy the bags of cement and bricks, and "conditional sale agreement" means an agreement for the sale of goods which is a consumer credit agreement within the meaning of the M1 Consumer Credit Act 1974 under which the purchase price or part of it is payable by instalments, and the property in the goods is to remain in the seller (notwithstanding that the buyer is to be in possession of the goods) until such conditions as to the payment of instalments or otherwise as may be specified in the agreement are fulfilled.1 The legal
Legal Due Diligence Process.
Legal Due Diligence Process Due Diligence can be widely defined as a broad spectrum of investigative procedures in relation to an acquisition of a company's shares or of assets in a commercial context, a joint venture project, a financing transaction, the issue of securities and other general pre-contractual inquiries. (Kumar & Mathur, 2002) If you are the owner of a company, the time to start thinking about due diligence is now. Every decision that you make, test it against the question "how will this look when someone comes along asking hard questions?" Every company is going to have to go through due diligence someday, when you are acquired, seek outside investment, or go public, unless you intend to remain small and family-owner forever. Doing business in an emerging market involves more risk. One of those risk is that the very process designed to minimize risk - due diligence - does not always reveal reliable information or all the information that a company needs. Conducting legal and financial due diligence before making an investment or starting a new business relationship may not be enough. Many companies now regularly retain specialists to supplement that process with "business" or "investigative" due diligence. (Economist Intelligence Unit) Investigative due diligence is meant to answer questions that official records and financial accounts cannot. For example
Explain the differences between partnerships and Limited Liability Partnerships (LLPs) while considering the advantages, if any, that LLPs may have over other forms of business vehicle.
Business Law LW22012 Coursework 1 Task: Limited Liability Partnerships ("LLPs") were introduced in 2000 in the expectation that there would be great commercial demand for them. This has turned out not to be the case. In practice, LLPs are found mostly in the accounting profession, though some solicitors' firms have adopted the LLP status. Explain the differences between partnerships and LLPs while considering the advantages, if any, that LLPs may have over other forms of business vehicle. Finally, consider why the demand for them has not been as great as anticipated and the extent to which LLPs are in fact necessary. Introduction The Limited Liability Partnerships Act 2000 received Royal Assent on 20th July 2000, and came into influential existence on the fourth month of 20011. The 2000 Act created Limited Liability Partnerships as a new legal business entity and set the stage for it to develop to a well established business vehicle, that would drive the business to profit, with, as the name suggests, limited liability for its founding members. The LLP joins the pool of business, with three other main business mediums, which include limited companies (Sony), partnerships (Dundas and Wilson) and sole traders (an early Richard Branson). It is worth noting that this is not the first attempt to consider limited
In certain circumstances the veil of incorporation has been lifted both judicially and by statute to reveal the reality of who owns and controls the company. The exceptions to the general principle are namely the agency and piercing the corporate veil.
By incorporation, a company acquires separate legal personality, that is, the company is recognized as a person separate from its members, a principle established in Salomon v Salomon & Co Ltd (1897) and with that in time came the modern phenomenon of the corporate group with subsidiary companies owned by corporate shareholders. One of the principles of separate legal personality is that the company itself, rather than its members or directors is liable on its contracts. This problem question involves a parent company, H plc, which carried on a removal business using three subsidiaries: P Ltd, S Ltd and T Ltd. In certain circumstances the veil of incorporation has been lifted both judicially and by statute to reveal the reality of who owns and controls the company. The exceptions to the general principle are namely the agency and piercing the corporate veil. Firstly, we will consider the case of M, a former senior manager of S Ltd, who obtained judgment against S Ltd in respect of his dismissal in 1992 but has since discovered that all S Ltd's assets have been transferred to P Ltd and that S Ltd has been struck off the register of companies. In Gilford Motor Co Ltd v Horn [1933] the court lifted the corporate veil on the grounds that the company was trying to avoid the impact of an order of the court. This was overruled in Ord v Bellhaven Pubs Ltd (1998). In the particular