Nobody downloaded yet

Company Law legislation - Essay Example

Comments (0) Cite this document
Summary
The pre-incorporation contracts are entered into on behalf of the company by the promoters of the company. Usually such contracts may include leasing or purchasing real estate property and equipment, hiring of executives, financial arrangements with third parties or agreements with prospective clients.
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER97.2% of users find it useful
Company Law legislation
Read TextPreview

Extract of sample "Company Law legislation"

Download file to see previous pages 'A contract which purports to be made by or on behalf of a company at a time when the company has not been formed has effect, subject to any agreement to the contrary, as one made with the person purporting to act for the company or as agent for it, and he is personally liable on the contract accordingly.'
The UK legislation provides that promoters are personally liable on pre-incorporation contracts, a reform of the common law position which made liability of the promoter dependent on the manner in which the contract was signed. (Mrs. Janet E. Morgan)2
As the company Beta Limited was not in existence, at the time the lease contract was entered into whether Sam being the promoter is liable on the contract depends on the capacity in which he purported to sign the lease contract. Since the contract was signed by Sam as promoter using the wordings "on behalf of Beta Ltd", it can be assumed that he signed the contract in his personal capacity and hence, he becomes personally liable, under the contract for any consequences. This position was confirmed by the court in the case of Phonogram Limited v Lane3
The position would be different if he has signed as "Beta Limited per Sam" then it amount to his signing on behalf of the company. In this case he will not be liable as he has signed on behalf of a company which does not exist.
Liability of Beta Limited:
Since the contract was signed by Sam using the words 'on behalf of Beta Ltd' the company does not become liable on the lease agreement as was decided in the case of Phonogram Limited v Lane
However since the company has continued to pay the lease rent after occupying the premises it amounts to ratification of the action of Sam in leasing the premises on behalf of the Beta Limited entered into prior to incorporation.
At the point when Gamma limited wants Beta Limited to quit it cannot pass on any liability arising there from to Sam under the plea that the contract is entered into prior to incorporation.
Another example to illustrate this case is the decision In Newborne v Sensolid (GB) Ltd4 Here a contract was entered by the plaintiff company with the contract signed as Leopold the promoter as "Yours faithfully, Leopold Newborne (London) Ltd". The court held that neither the company nor the promoter could compel the defendant to enforce the contract as the contract was neither purported to be signed by the company nor the promoter.
Yet another case that proves the invalidity of the contract if the company was not in existence at the time the contract was entered into can be seen in the case of Cotronic (UK) Ltd v Dezonie5 where Dezonie signed a contract for and on behalf of his company and unknown to him the company was struck off the register about years earlier. On knowing this that the company was no more in existence, Denzonie registered another company in the same name and tried to interpret s. 36c to his advantage. The court held that s. 36c would not be applicable as the case was relating to a company that had been formed many years before.
The decision of the court in the case of Oshkosh B'Gosh v Dan Marble Inc and Another6 is also ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Company Law legislation Essay Example | Topics and Well Written Essays - 3000 words”, n.d.)
Retrieved from https://studentshare.org/miscellaneous/1530322-company-law-legislation
(Company Law Legislation Essay Example | Topics and Well Written Essays - 3000 Words)
https://studentshare.org/miscellaneous/1530322-company-law-legislation.
“Company Law Legislation Essay Example | Topics and Well Written Essays - 3000 Words”, n.d. https://studentshare.org/miscellaneous/1530322-company-law-legislation.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Company Law legislation

Company Law

...? Company law has been an interesting matter of study since decades. In the company law a variety of difference exists between the liability of the directors or the employees and thus they are convicted based on certain situation. The paper studies two different cases and helps to analyze the difference between the judgments provided based on the variability of the situation. It also underlines the fact that the courts held matter of fraud in a serious manner. Williams Vs. Natural Life Health Foods Ltd The case of William vs. Natural Life Health foods limited is an important element of study in the company law and the contract...
6 Pages(1500 words)Essay

Company law

...? Topic (Company Law) A company acquires its legal personality after registration under the companies Act. Through incorporation, a company becomes a legal entity separate and distinct from its members who are the shareholders. Registration of a company involves delivery of memorandum of association, article of association, declaration by promoters of their intention of being formed into a company and list of directors to the registrar of companies as entailed in the companies Act. The company registration constitutes it “a body corporate.” It becomes a “legal person” or...
12 Pages(3000 words)Essay

Company law

...? Company Law No: Company Law Question No Advise Leaping Lizard Coffee Emporium Pty Ltd on whether the company will have to honor the contract for $25,000 that has not been approved and signed by the managing director. Corporations Act 2001 The Corporations Act 2001 in fact an act of Commonwealth of Australia that deals with the business entities of Australia from federating level to inter state level. It mainly focuses on companies besides other entities like partnerships / managed investment schemes1. The Corporations Act is an important legislation passed by the legislators that governs the...
8 Pages(2000 words)Essay

Company Law

...ahead with the sale and becomes insolvent within two years, the transaction could be set aside under the Insolvency Act 1986. With regard to the proposed purchase, the transaction itself will not require prior approval, however in light of the company’s current financial situation the directors could be in breach of the express duties under the CA to act in the company’s best interest and promote the success of the company. Finally, as Ergan, Arif and Moshe are minority shareholders, the circumstances of the proposed purchase could entitle them to rely on the exception to Foss v Harbottle and claim a fraud in the minority or make a derivative application under the CA for unfair...
3 Pages(750 words)Essay

COMPANY LAW

...Court of Western Australia held that s440C of the Corporations Act protects receivers from conversion claims by the owner of goods subject to retention of title where the company is under administration at the time. What this indicates is that if Black Books has been placed under the receivership owing to the actions of the other two creditors—Supplier and Pressing—it is impossible for Black Books to refuse 8 ceding the ownership of the land to Lender. This is completely against the law. However, if there is a clause in the debenture or contractual agreement which claims that Black Books could offset its debt to Lender through alternative payment and not ceding the landed property, then Lender could ask...
10 Pages(2500 words)Essay

Company Law - English law

...(a) It was established in Salomon v A Salomon & Co [1897 that 'The company is at law a different person altogether from the subscribers. Nor aresubscribers as members liable, in any shape or form, except to the extent and in the manner provided by the [Companies] Act.'2 It is a general principle of English law that it is not possible in the absence of agency, a trust relationship or wrongful trading to hold one person liable for the debts of another.3 However, like most common law principles and judicial interpretations it is a rebuttable presumption which must give way to a statement to the contrary 'in clear and unequivocal language'4 by Parliament....
10 Pages(2500 words)Case Study

Company Law, Business Law

...May 23, 2006 Academia Research Topic: Exam questions for Business Law (Company Law Adam owns 11% of the shares in a medium-sized company, andthat company owns a chain of fast food outlets around Wales. Apparently, the board of directors has decided to implement two recent special resolutions to alter the articles of association. Additionally, Adam is uncomfortable with the decision of the board of directors because the board of directors no longer needs to obtain the approval of the shareholders for certain high-value transactions. Mostly, the majority rule usually prevails when voting over certain issues pertaining to the company;...
3 Pages(750 words)Essay

Legislation and common law responsibilities

...Legislation and common law responsibilities 1. What would you need to do to maintain your duty of care in this situation? As the primary caregiver, I am alert to the needs and interests of the children under my care. Offering to do a productive activity of interest to them and one which they will learn from is part of my duty of care. I am becoming responsive and sensitive to their needs. However, I should also be aware of possible hazards or risks that may harm them such as the safety of the materials I will be using, in this case, the ingredients of the milkshake I plan to make with them. I must be sure that they are not allergic to the ingredients and that the finished product will not present...
3 Pages(750 words)Essay

Civil Legislation and the Law

...Civil Legislation and the Law Case Study: Donoghue v. Stevenson Question 1) Could Mrs. Donoghue sue the cafe-owner under the law of contract?Yes, or No? Give your reasons clearly. Yes, she could sue the café-owner under the English law of Contract. It is reasonable to believe that manufacturers of goods that are used for consumption have duties and responsibilities towards their customers, ensuring the highest degree of safe usage, whether or not, there exists a contractual relationship between the manufacturer of the said product and the said consumer. A manufacturer needs to provide a degree of care, that an man of ordinary prudence need to have exercised under such...
9 Pages(2250 words)Essay

Business Law (company law)

.... The issue of transfer of selling of shares is a comparatively clear-cut process; this is in spite of the fact that existing shareholders are cosseted through their various preemption rights and also via company legislation that are in charge of safeguarding the minority investors’ interests. Additionally, the process of lending to another company is much easier in comparison with other forms of business. The lending bank could secure its loans against particular assets of the enterprise. In the case of a limited liability company, the selection of a company is strictly restricted (Pylodet, 1873). Provided a selected name conforms to all the rules in...
8 Pages(2000 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Company Law legislation for FREE!

Contact Us