CLAW 3501

Company Law.

SECTION A

Instructions:  Read the following case and answer the questions.

                                   

 

Question 1

 

A funeral home business, named Williams & Sons Funeral Home was owned by Sam and his brother Daniel.  Rick is a mortician who works for the funeral home but is not a partner (although he badly wants to be made one).  One afternoon, Daniel, Sam, and Rick go to the funeral supply store to stock up on embalming fluid.  Daniel and Rick have just worked a funeral and are therefore wearing nice well-tailored dark suits.  Sam, on the other hand, has been doing some mechanical work on the company vehicles and looks like a bum.  While Daniel is off buying embalming fluid, Sam and Rick check out the new caskets.  Williams & Sons' casket supply is low, but the business does not have much cash on hand, so it would have to re-stock its supply using credit.  When a salesman approaches, Sam identifies himself as Sam Williams, a partner in Williams & Sons, and asks if the funeral supply business would sell him and his partner a few caskets on credit.  The salesman is less than impressed with Sam's attire (Sam looks and smells terrible), but he notices that Rick is wearing a beautiful black Armani suit and obviously has access to some cash.  Nodding toward Rick, the salesman asks Sam, "Is he your partner?"  Sam says yes, and Rick simply smiles, delighted to have been called "partner."  The salesman agrees to sell the caskets on credit.  When the bill comes due, Williams & Sons is unable to pay the bill, and Daniel and Sam skip town. 

 

Questions:  make reference to a case law in any of your answer for question below.

1. Can the funeral supply business recover the amount due from Rick? Give reason for your answer.    (10 marks)
2. What if, Daniel had not left town, could the funeral company recover the amount from him? Discuss.   (15 marks)

 

(  25 marks)

 

 

 

 

 

 

 

 

 

 

SECTION B

 

Instructions: Answer allthree (3) questions from this section.

 

a)      Cole’s Construction Ltd is in serious financial difficulty and the company’s bank, which has a floating charge over the company’s assets, is threatening to call in its overdraft. To assist the board of directors concerning their legal position, you have been asked to prepare an outline of receivership process so they can present it to their shareholder.

( 10 marks)

b)     Discuss the effect of liquidation on:

I)                   the company

II)                the directors

III)             the employees

IV)             the creditors

 

(15 marks)

 

a)      State the role of a company’s auditor and their expected relationship to members of the company.

(5 marks)

b)      List the five (5) documents that must be maintained by a company for general inspection and five (5) documents that must be maintained by the company for directors.

(5 marks)

c)      Define the term resolutions and explain the different types of resolution that may be used at meetings.

(15 marks)

 

 

[Question 5]

 

James operates his own small business, a clothing company. He realizes that by himself he cannot keep the business profitable. He decides to Join his friend who also operates a clothing factory and form J&J Clothing Company. He is unsure of the benefits of forming a company and issues that may arise.

 

Outline a decided case that will guide James as he forms this new company as it relates to ‘separate legal entity’ and discuss the Three (3) consequences of this protection. Also outline to him three (3) situations under which the ‘veil’ can be lifted.

 

(25 marks)

Attachments:

• 1501221045-CLAW 3501 STUDENT PRACTICE 2017 1.docx