Registered Company Issues - Assignment Example

Name College Course Date Question One First of all, under the law of contract, James is required to complete his payment to Michael. He was advised to go for the cheaper equipment, but he chose to purchase the more expensive one. He is therefore legally bound by the agreement he signed to the effect that he would pay the $1500 in three instalments. In this matter, should Michael sue James, Michael would certainly win; and any court would hold James to his signed agreement. Should Michael sue, James could site force majeure to defend himself. He could claim that things happened that were beyond his control, thus rendering him unable to complete the payment. This, however, may not hold much weight, unless he has really good reasons to attest to this claim. It would be much easier if he just completed the payment to Michael instead, even though the DNX9140 was stolen; seeing as Michael has nothing to do with the theft, and those are two separate contracts James entered. It is, however, important to note that at the time of the sale, James was 17 years old. This means that he was not yet an adult. This could be a good basis for defence. He was a child when he signed the contract. According to contract law, a contract can only be enforced between two adults of sane mind. One party in this agreement was underage, and therefore not able to make good decisions. James can, therefore, not be held accountable for a decision (and a contract) he made as a child; and he might just get away with not completing his instalments for the DNX9140. On the matter of the theft on the DNX9140 at the car park, James, again, is fully responsible. It is undeniable that a car park has a duty to provide security at the premises because, well, it is a business and the owners ought to create favourable conditions. However, the car park is privately owned, and for this reason, business is on the owner’s terms. The management realises the security gap in the car park and to this effect, has absolved itself of any liability in case of incidents. Up to this point, management has upheld its duty by informing the clients appropriately and well in advance. James cannot hold the private car park accountable for the loss of his Kenwood Excelon DNX9140. The car park has clearly indicated that owner’s may park their cars there at their own risk. The fact that James chose to park there anyway shows that he understood the risk but made the choice anyway. Furthermore, on the back of the parking ticket, it is indicated that the management will not be held accountable for any losses. James having this ticket, and having paid for it, shows that he agreed to the conditions. This is therefore also admissible as a contract between James and the car park management. On James’s issue with Sam, again, James is at fault. At the time of the sale, he should have conducted the necessary research and arrived at his desired selling price prior to making the deal with Sam. He did not do this. Therefore, according to the contract between Sam and James, the laptop was to cost $500. By this contract, Sam upheld his end of the deal and paid the due $500. It would therefore be wrong for James to try to force Sam to pay an extra $500 as this was not part of the contract that Sam willingly entered. For James to revise the terms of the contract after it has been enforced would inconvenience Sam. If Sam refuses to pay the extra amount, there is no way that James can hold it over his head. James may argue that, technically, it was a discount seeing as the laptop would go for a higher price elsewhere; but then Sam would counter saying discount or none, that was the amount agreed upon. They were both adults and of right mind during the transaction, so James has no reason to suddenly demand $500 from Sam. This, of course, is assuming that Sam, like James, is of age. Question Two i. Patrick should get back his $100,000. At the time the company bought his business, the $100,000 was a loan to help the company settle the amount. There is a contract that holds the company to the repayment of this loan. The company should have settled the loan at the first instance, when the business made a profit, however small, in honour of the signed contract. Therefore, Patrick can act on his loan security, which is the mortgage he took out on the vacant piece of land. In this instance, Patrick is only acting on the pre-signed contract regarding the loan he gave to the company. Company law is based on two principles: legal or corporate personality and the theory of limited liability. The principle of legal or corporate personality is set to the effect that when a company is registered it becomes a legal person separate and distinct form its members and managers. It acquires an independent existence with certain capacities and subject to incapacities. By the theory of liability, liability refers to the extent to which a person may be called upon to contribute to the assets of a company and in the event of its being wound up. The liability of a company may be limited or unlimited. It may be limited by shares or by guarantee. In this instance, the company that bought Patrick’s business has limited liability. This means that Patrick is, therefore, not viable to lose his assets (the $100,000) in the event that the company goes into liquidation. Under the law governing companies, the liability of a registered company is limited by shares or guarantee. A member can only be called upon to contribute to the assets of a company either the amount, if any, outstanding on the shares held; or the amount he undertook to contribute if the company was wound up during his membership of within one year of cessation of membership. The members are not generally liable for the debts and other obligations of the company. On liquidation, the company has $120,000 to use to settle claims by creditors. The company owes Patrick $100,000. If Patrick is the only secured creditor for the company, then he is entitled to the $100,000, or more. Seeing as the creditors’ claims amount to $210,000, but the available amount is only $120,000, Patrick will come first. He is the only one of the creditors that is secured, so he is given priority over the unsecured creditors. If the company is unable to settle the said amount with Patrick, he is entitled to hold on to the mortgage on the piece of land that he had put down as security for the loan. ii. Yes, Patrick can claim workers’ compensation. His injury happened while at work and the company owes him workers’ compensation. So technically, he is entitled to the compensation because his injury is work related. However, Patrick is the sole shareholder and sole director. So while he is entitled to workers compensation for his injury, he is also the management of the company that owes him the compensation. So really, he would not get the compensation seeing as he is the director and shareholder of the company; and this would be like claiming workers compensation from himself. However, assuming that Patrick is not part management of the business, then he is entitled to workers’ compensation. If the company has a workers’ compensation policy in place, they should be able to provide Patrick with the necessary medical attention. However, if the company has no such policy, then Patrick has a right to sue the company for negligence. Even though the company has gone into liquidation, it owes Patrick the compensation because he is an employee and failure to do so would attract a law suit. A registered company has capacity to enter into contractual relationships such as borrowing in furtherance of its objectives. It has the capacity to hire and fire. Similarly, as a legal person a registered company has rights and is subject to obligations. It has the capacity to enforce the rights by action and may be sued on its obligations. At common law, when a wrong is done to a company, the company is prima facie the proper plaintiff for redress. Read More