BLAW2006 Tutorial Questions Topic 2(1).docx - Company Law for Business BLAW2006 TUTORIAL QUESTIONS TUTORIAL 2(TOPIC 2 QUESTION ONE For many years Ali

BLAW2006 Tutorial Questions Topic 2(1).docx - Company Law...

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Company Law for Business BLAW2006 TUTORIAL QUESTIONS TUTORIAL 2 (TOPIC 2) QUESTION ONE For many years Ali has been the chief chemist with the Pop-a-Pill Drug Company Ltd. Clause 33 of his employment contract states that in the event of Ali leaving his employment, he will not work “ in competition with the Pop-a-Pill Drug Company Ltd for one year” . Ali registered an Australian company [Gee Chemicals Pty Ltd] and when he resigned from Pop-a-Pill he immediately became the managing director of Gee Chemicals. Please consider the following two issues: (i) Pop-a-Pill claims Ali is in breach of contract. Ali says that Gee Chemicals is in competition with Pop-a-Pill Drug, but that he personally is not. (ii) Later, Gee Chemicals Pty Ltd is found to be selling drugs in breach of the law. Ali claims that he is only an employee and that it is the company that has broken the law, not he. With reference to relevant cases and sections of the Corporations Act 2001 discuss each scenario separately. [A discussion of contract law or criminal law is not required here] Step 1: The Area of Law in Incorporation of separate legal entity and piercing the corporate veil Step 2: S119 – Company comes into existence beginning of day it is registered S124 – Deemed to be a legal person upon registration o Capable of powers and rights o Company is liable for their actions not its members Corporate veil can be pierce through common law or Corporations Act 2001 Gilford Motors V Horne – avoiding contractual legal obligations - Contractual obligation to not be in competition with Gilford Motors - Set up company against Gilford motors with his wife as the director - Company was a sham as wife was not managing company, he was using his wife as a figure head. - He was in breach of his contractual obligations The Court will state that Gee Chemicals was set up in order for Ali to avoid his contractual obligations under clause (ii) The area of law is fraud Company Law for Business BLAW2006 Tutorial Questions – Topic 2 © Faculty of Business and Law 1/4 1/4
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