Company Law Assignment 1

1418 Words Feb 25th, 2015 6 Pages
Company Law: Assignment

1. Advise Sarah and Jane of the advantages and disadvantages of operating their business:
a. Separately
b. Sarah Jane Pty Ltd
c. Sarah Jane Ltd

-less cost to set up the business
-easy to comply with legal requirement under the corporation act
-you are there on your own unlimited unlimited liability her own asset could in danger as the result of breaches in contract and in tort

The advantage of Sarah Jane Pty Ltd:
Sarah, Jane and their employees of a company are separate legal entity to the Sarah Jane Pty Ltd therefore, it allows Sarah, Jane and employees to have contracts with their own company.
It could help to limited tax liability if Sarah and Jane paying their tax at the highest
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Step 1
Is Horace liable in relation to the payment for the machinery to JM Ltd? Was Horace authorized to enter into that contract for the sale of the machinery on behalf of the company? Was Horace acting as a partner to the company? Was Horace a promoter of the company?
Step 2
Promotion is a period leading up to the registration of company. An active promoter is someone who undertakes to form the company (but excludes someone providing a service such as a lawyer or accountant) (Twycross v Grant). The promoter has certain duties and obligations to the company (see page 2 of Topic 3).
A partnership is a relationship between two parties who are acting together with a common purpose, with a view to profit. One partner can bind another partner through his own actions (according to the Partnerships Act 1895 (WA)).
Step 3
Horace entered into the supply contract for the wine making machine before the company was registered. Therefore, was he acting as a promoter? On the one hand, he is providing a service as an accountant and would therefore not be a promoter (Twycross v Grant). On the other hand, his act to purchase the machinery was not made in the course of providing accounting services. On this basis, he may have acted as a promoter and therefore, be subject to promoter’s duties (see lecture slides)
Step 4

Step 1
Horace is listed as the company’s accountant

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