Preview

Contract and Common Law Position

Satisfactory Essays
Open Document
Open Document
336 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Contract and Common Law Position
081-AC1221-60 Company Law
ASSIGNMENT ONE

The case concerns the pre-incorporation contracts.

Firstly, it is necessary to define the pre-incorporation contracts. They are the contacts which the promoter wants to enter the contract before a company is incorporated. Under Common law position, the company cannot gain contractual rights or incurs liabilities from a pre-incorporation contract. Also; the pre-incorporation contracts cannot bind the company.

In this case, Bosco is the promoter who is on behalf of Bozo Limited to sign the tenancy agreement. However the contract was signed before Bozo Limited was corporated. Therefore, this tenancy agreement is a pre-incorporation contract which the company cannot sue or be sued in this pre-incorporation contract. (Case: Newborne v Sensolid (GB) Ltd [1954] )

Secondly, the company cannot ratify the pre-incorporation contract after its incorporation. But the pre-incorporation can bind the promoters; they may be personally liable on a pre-incorporation contract unless the parties to the contract specifically stipulate in the contract that the promoters will not be liable under Common law position. Also, section 32A(1)(a) provides that the signatory of a pre-incorporation contract will be personally liable on the contract if he purports to act for the company or act as its agent unless there is an express agreement to the contrary.

According to the case, Bozo Limited isn’t liable to pay the outstanding rent to Land Limited because of the pre-incorporation contract under Common law position. However, Bosco is personally liable for the outstanding rent unless there is an express agreement in the contract that the promoters will not be liable. But there isn’t an express agreement to the contrary in the tenancy agreement. Although Bosco signed “For and on behalf of Bozo Limited” in the tenancy agreement, it does not mean that he is not personally liable. Therefore, Land Limited can make a claim against Bosco

You May Also Find These Documents Helpful

  • Best Essays

    Some years after the buildings completion it was sold by the then trustee of the property trust to the appellant Woolcock Street Investments Pty Ltd in 1992. Substantial structural defects became manifest more than a year after purchasing the property as a result of the materials below the building. The appellant claimed the buildings distress was a result of the respondents CDG Pty Ltd’s negligent design of the footings of the building and failure to take appropriate soil…

    • 2813 Words
    • 10 Pages
    Best Essays
  • Powerful Essays

    The House of Lords in Salomon v Salomon1 affirmed the legal principle that, upon incorporation, a company is generally considered to be a new legal entity separate from its shareholders. The court did this in relation to what was essentially a one person company. Windeyer J, in the High Court in Peate v Federal Commissioner of Taxation,2 stated that a company represents:…

    • 15226 Words
    • 61 Pages
    Powerful Essays
  • Satisfactory Essays

    BUSLAWDIS7

    • 335 Words
    • 2 Pages

    In this case of John and Thelma holding Michael personally liable and PIERCE THE CORPORATE VEIL for not delivering the mobile home they purchased, yes. After being INCORPORATED with Erin Holmes Inc. for 8 years you would think they would have held more than one meeting. Michael FAILED TO OBSERVE FORMALITIES and thus was not acting like a corporation.…

    • 335 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Common Law Contracts

    • 390 Words
    • 2 Pages

    Yes, common law contracts also apply to the scenario. Article 2 only covers tangible items, and everything else is than governed by common law contracts. An example is Grocery Inc 's contracts with vendors are covered by the UCC because the involvement of the sale, but a vendor or an individual who stocks the shelving themselves (performing a service) would be covered under common laws.…

    • 390 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Business Law

    • 668 Words
    • 3 Pages

    Issue--- The main issue in this case could be does Wessel successful win this case and get the paid form Gregory ? and Gregory whether have right to cancel the contract ?…

    • 668 Words
    • 3 Pages
    Good Essays
  • Better Essays

    Grocery Inc.

    • 1325 Words
    • 6 Pages

    It has been known for major companies to be in the light of the court for breach of contract. Depending on the stipulation of the contract most companies end up losing, but it is solely based on what the contract states. For example, in the matter of Grocery v. Masterpiece, (Specific performance, 2008) as a general rule, equity will not order acts that it cannot supervise. In many instances, specific performance is denied where courts would be unduly burdened with the task of supervising the performance. Supervision is a particular problem in building or repairing contracts because the court lacks the technical expertise, means, or agencies to learn exactly what task the contractor is performing or whether she is performing them properly.…

    • 1325 Words
    • 6 Pages
    Better Essays
  • Good Essays

    business law

    • 813 Words
    • 4 Pages

    Nicole has just been informed by the company that, as Developments Manager, Anthony did not have authority to enter into the contract and the company…

    • 813 Words
    • 4 Pages
    Good Essays
  • Satisfactory Essays

    Contract Law

    • 302 Words
    • 2 Pages

    “Australia’s legal system is based on the English legal system.” To what extent is this statement correct? Discuss.…

    • 302 Words
    • 2 Pages
    Satisfactory Essays
  • Good Essays

    Land Law and Tenant

    • 2686 Words
    • 11 Pages

    On the facts the original landlord, Larry and the Original tenant Tariq have assigned their leasehold estate. Clearly the original parties are bound to each other in contract to perform the covenants contained in the lease. Tariq liability continues throughout the whole term of the lease, and for any breach of covenant committed by his assignee Thursby v Plant (1690). Under s141 of the Law of Property Act (LPA) 1925, a landlord will not be able to sue the original tenant after he has parted with the land as that right is statutorily transferred to the new landlord, if the covenant has reference to the subject matter of the lease Re King 1963.…

    • 2686 Words
    • 11 Pages
    Good Essays
  • Good Essays

    Pre Registration Contracts

    • 1556 Words
    • 7 Pages

    At common law, a company was also incapable of ratifying a pre-registration contract after it was registered. "This was because under the law of agency , ratification has a retrospective effect and the contract was regarded as being made at the time it was entered into by the agent when the company was not in existence" .…

    • 1556 Words
    • 7 Pages
    Good Essays
  • Good Essays

    Occupier Liability Act

    • 1739 Words
    • 7 Pages

    The occupier must be selected before deciding a party which is at fault. The person with the most control other the site is the occupier according to the 1957 act therefore they are the ones who are liable. The case that represents this best is (Wheat v Lacon 1996). The case established that on one location it is possible to have more that one occupier, however the duty of care can be different for both (Giliker and Beckwith, 2008). This means that both Lord Waltersmith and his contractors are the occupiers.…

    • 1739 Words
    • 7 Pages
    Good Essays
  • Good Essays

    Case Review Law of Tort

    • 1079 Words
    • 5 Pages

    purchase agreement dated 15 May 1996. The plaintiff was aware at that time of the presence of squatters on the land. Following the said purchase, the plaintiff commenced eviction proceedings against the squatters and succeeded in obtaining judgment where the court ordered that the squatters surrender vacant possession of the subject land to plaintiff. The plaintiff’s solicitors demanded that second defendant cease supply of electricity and remove all structures in connection with the supply by letter dated 28 April 2004. Plaintiff brings a suit due to second defendant’s refusal to comply with the demand. The defence counsel, however, argued that second defendant could not be held liable for trespass in view of its statutory obligation under the Electricity Supply Act 1990 (ESA), and the plaintiff had failed to distinguish between the lots owned by the plaintiff and the rest of the land.…

    • 1079 Words
    • 5 Pages
    Good Essays
  • Powerful Essays

    Nuisance in tort

    • 1625 Words
    • 6 Pages

    who can sue: only the claimant who has an interest in the land or exclusive possession of the land can sue (Hunter v Canary Wharf 1996) as initially held in (Malone v Laskey 1907). Cat seems to be either the owner/tenant as she lives next door to the occupier (banger) of the land.…

    • 1625 Words
    • 6 Pages
    Powerful Essays
  • Powerful Essays

    thompson v foy

    • 27409 Words
    • 107 Pages

    Mortgage Business plc (“TMB”) which was in turn registered as proprietor of the charge on 10…

    • 27409 Words
    • 107 Pages
    Powerful Essays
  • Best Essays

    According to the statute law, it is likely that the subsidiary company (Asset Pty Ltd) would not write-off the loan to the parent company (Buildco Ltd) as a debt and could not claim a tax deduction for that debt. After lifting the corporation veil by making the holding company liable for the debts of its subsidiary where there are reasonable grounds for suspecting than the subsidiary is insolvent at the time of incurring the debt. In this present case, due to the failed project which is funded by the Asset Pty Ltd, the Buildco Ltd is financially unviable which lead to the company has to close down the business. As a result, it may be not feasible to solve the dispute through statute law.…

    • 1729 Words
    • 7 Pages
    Best Essays