Commercial Law in the UK - Essay Example

?Commercial Law Problem Leather Craft agreed to buy a quantity of leather from Cattle rear Ltd and have paid the full price of ?20,000 in advance.They have now been notified that Cattle rear Ltd has gone into liquidation. The leather has not been delivered. Discuss whether they can claim either the leather (which they know is in Cattlerear Ltd's warehouse) or a refund. Solution In relation to the problem mentioned above, the Leather Craft organization can decide whether they want the leather, which is in Cattlerear Limited’s warehouse or a refund. If the organization decides that they want a refund of their money or the leather, then they are a few steps to be followed. First and fore most, since the organization has already been notified that the company is being liquidated, they automatically become a trustee1. This is in relation to the Bankruptcy and Insolvency Act. In the United Kingdom, the law that is responsible for dealing with both individuals and firms that face bankruptcy or insolvency is the Insolvency Law of the United Kingdom. There are key statutes that are involved in the bankruptcy and insolvency act. These include the Insolvency act 1986 which was amended by the Enterprise Act 2002, the Companies Act 2006 and the Company Director Disqualification Act 19862. The pari passu is the essential procedure that dictates how the goods will be distributed among the creditors in the UK insolvency law. Unless the statute displays preferred creditors, then a contract might be used that was signed between the organization and the creditor3. Since the Leather Craft knows where their goods lie, and they have been automatically declared as creditors, the contract they signed will assist them in the process. This means that the security interests to the assets of the company are entitled to the creditor. In this case, the approach that the law of UK takes is to give out either specific or fixed asset that the creditor has applied for. Situated at the Companies House, the law requires the interested assets of the company are filed on the companies charges of register. Leather craft must provide a debenture. Debenture simply means that the document which contains either the secured or unsecured debt owed by the company to their creditors4. Although the companies Act of 2006 requires the organization to have its own list of debentures, the Companies House requires all the debentures, which are secured by charge, be registered with them5. The main aim of the registration is to find out which company should be given first priority in the list of creditors. First, the Leather Craft companies must decide whether they can make an agreement with the company, which is voluntary on how to receive their dues. If they want a refund, they can agree with the board of directors for the Cattlerear Ltd if they can receive less in order to assist the company from insolvency6. Consequently, since the required goods are in the warehouse and they have already paid for them, they can agree to possess up the goods that are in the warehouse. In addition to that, if the company goes under new administration, this is according to the Enterprise Act of 2002 in which a trained insolvency practitioner will take up as new administration7. If this happens, since the specific goods that the Leather Craft industry wants are in the warehouse, they can agree with the new Cattlerear ltd administrator to have their goods, which are located in the warehouse. However, if none of these procedures are taken up, then all the assets of the companies can be sold and the Leather Craft industry can have their refund back if they do not want the leather that the Cattlerear has which is located in their warehouse. This is after the Leather Craft Industry has completed either forms that display that they owe the company the goods and that they want a refund of their money back or their goods in which they are aware they are located in the warehouse. It should be noted that if a qualified insolvency practitioner is appointed, then the decisions they make must be decided by the notion of majority votes win8. Problem 2 - Last year Leathercraft decided to buy an additional van. Bruno saw what appeared to be a suitable vehicle for ?25000. He went to speedy Motors Ltd's premises to deal with this. Speedy Motors Ltd said they could arrange a loan with Bright Finance Ltd, and Speedy Motors Ltd’s employee completed the finance application there and then. The loan was duly made, and Leathercraft took possession of the vehicle. The van has been a disaster. It has broken down repeatedly. Although Speedy Motors Ltd kept repairing it, it has been off the road for weeks at a time. The engine has now seized up and Leathercraft has had enough. They want their money back. They have however found out that speedy Motors Ltd has closed down. Advise Leathercraft. Solution If a company closes down in the United Kingdom, this means that the company has to undergo the liquidation process. The car that the LeatherCraft bought from Speedy Motors Ltd has proved to be a breach of the contract, which they had agreed. This means that you deserve compensation or a refund for the van, which you bought. In addition to that, the Speedy motors limited did not inform you when closing down. However, there are rules that protect you. The companies house which hosts all the debentures of a company has will advice you whether the organization has been declared bankrupt or not9. The first step that the Leathercraft limited must do is to proof that the van, which they bought, has been an act of breach for the contract. This means that the van did not meet the qualities that were discussed during the purchase10. In analyzing that, the vehicle must meet the conformity, which was agreed upon at the time of buying it. Firstly, it is clear that the vehicle did not meet its performance satisfactory. This is because the van has been breaking down every now and then. In addition to that, the vehicle has not been able to serve you for the intended purpose. According to the Act of Directive, it states that the goods, which the buyer has bought, should be in shape and fit the particular purpose in which the buyer intended them to be used for.11 This is very clear that you deserve compensation for the goods. According to section 14(3) of the sales act of goods, it clearly states that if the buyer expresses his purpose of the goods understood to the seller, then it is the duty of the seller to make sure that the goods, which will be given, fit the purpose that is intended. It should be noted that if it were reasonable for the buyer to rely on the expertise of the seller then would the terms apply12. This is clear proof that you need to be compensated. You can hire a lawyer to assist you with the process. After a clear proof of conformity that Speedy motors went against the terms of the contract, then you will become a creditor to the company’s assets13. In this case, the approach that the law of UK takes is to give out either specific or fixed asset that the creditor has applied for. Situated at the Companies House, the law requires the interested assets of the company are filed on the companies charges of register14. First, the Leather Craft companies must decide whether they can make an agreement with the company, which is voluntary on how to receive their dues. If they want a refund, they can agree with the board of directors for the Speedy Motors Ltd if they can receive less in order to assist the company from insolvency15. Consequently, if Speedy Motor Vehicles limited have agreed that they need to compensate you for the van, you can decide whether to replace the van with a new one that is in their possession or continue to seek a refund. In addition to that, if the company goes under new administration, this is according to the Enterprise Act of 2002 in which a trained insolvency practioner will take up as new administration16. If this happens, since the specific goods that the Leather Craft industry wants are in the warehouse, they can agree with the new Speedy Motor vehicles Limited administrator on how they can have a refund of their money back. However, if none of these procedures are taken up, then all the assets of the companies can be sold and the Leather Craft industry can have their refund back if they do not want the speedy Motors limited to replace them with a new van. This is after the Leather Craft Industry has completed either forms that display that they owe the company the goods and that they want a refund of their money back or their goods in which they are aware that the limited might possess some new vans within their premises17. It should be noted that if a qualified insolvency practioner is appointed, then the decisions they make must be decided by the notion of majority votes win. Problem 3- When the partnership was formed in 2000, Arnie was already in business as a sole trader. He owned his own workshop and his same workshop has been used by the partnership ever since then. Early in 2009 Bruno retired and was replaced as a partner by Felicity. In the summer of 2009 the firm manufactured several saddles for a Grand National trainer. This was badly delayed due to problems with suppliers. There was a clause in the contract specifying a time by which the work was to be completed, and the trainer is now suing Leathercraft for breach of contract. The trainer and his stables are claiming significant damages for their alleged loss of winnings (and profits) whilst the horses could not be trained. Bruno is claiming that he is entitled to a share in the value of the workshop premises. A) Against which of the parties would the trainer be able to enforce any judgment, which he may obtain? (20 marks) B) Is Bruno entitled to a share in the value of the premises? (13 marks) Solution The partnership act of 1890 governs the rules, which are to be followed in the United Kingdom18. When two or more people come together to form a business with the intention of making profit, then it means that they have become partners19. In any case, regarding either the loss or the profit of the company, both the three partners who are Cedric, Armie and Felicity are responsible for it. By the way the people conduct themselves or have a written or oral agreement, then it is evident that a partnership is already formed. All the partners who are involved in the business have the right to indulge themselves in the management of the business20. In addition to that, the profits earned must be shared equally together with, the entitlement of not being expelled by the other partners and they should have assuarity of the liabilities, which was earned within the course of the business21. These means that since the organization is a partnership, the trainer is entitled to sue all the parties involved22. In addition to that, if the trainer goes through the litigation process and he wins, then it is the duty of all the partners to partake the loss and pay the trainer. However, it should be noted that the workshop is a privately owned property and its not part of the partnership since it was not acquired then23. Solution to problem 3b If Bruno retired, this means that he stopped working completely in the organization. When Felicity replaced Bruno, it should be determined which process was used. The partnership of Bruno ended when he agreed to leave the organization leading to him being replaced by Felicity. When felicity replaced Bruno, this means that Felicity bought the existing partnership from Bruno and replaced him. This is because the rules of partnership prohibit any of the partners from withdrawing their investment which they did at the beginning of the business24. This means that Bruno is not entitled to any share of the premises25. The person who is legally entitled to a share in the value of premises is Felicity since he has replaced Bruno in becoming the partner26. 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