Company Law Case Questions

Answer BOTH questions below

Your answers for EACH question must be no more than 1,500 words long (not including footnotes used, if any) – N.B. this is a maximum limit, not a required word count.

Please include footnotes (to the extent necessary) – these do not need to be as fulsome as you would typically include in an essay

All questions carry equal marks

Question 1

USA Ltd (the Company) is a travel company, and is a private company limited by shares. It has three formally appointed directors, Don, Joe and Kam (together the Board). The Company has never appointed a managing director, though Don has been using the title for about three years. He has even had it printed on his business cards and introduces himself as the Company’s managing director, something the rest of the Board is aware of, but has done nothing to correct. 

In November of last year, Don unilaterally cancelled all existing contracts that the Company had entered into with its biggest customer, The People Ltd and told The People Ltd that the Company never wanted to deal with them again. In doing so, Dom said that he was negotiating on behalf of the Company.

The Board had previously sent a letter to The People Ltd asking The People Ltd to deal directly with Dom in all matters.

The Company is devastated by the cancellation of the contracts, particularly as The People Ltd is now refusing to have anything further to do with the Company. The Company has come to you for advice. You search the CRO website and note that the Company has not appointed anyone as a registered person.

Please advise the Company as to whether Don had authority (i.e. actual, deemed or ostensible – please go through each) to act on behalf of the Company (and the possible nature of any such authority). Please cite relevant cases and statute law.

Question 2

Front Man Ltd (the Company) is an entertainment company focusing on running children’s games at work parties.  The Company is in sound financial health and has been doing particularly well over the last few years.

The Company has one formally appointed director, Cho. Kang also works for the Company, but does not appear on the CRO website as being a director of the Company – nevertheless, Kang attends board meetings, has recently had a new name plate put up outside her office referring to her as ‘director’ and she has signed cheques as director of the Company. It turns out that the Company meant to appoint Kang as a director, but the relevant application form never got posted and is still sitting on Cho’s desk.

Cho and Kang are very reliant on Abdul, an industry specialist. Abdul receives a large pay packet from the Company, and he is quite forceful in his views. Indeed, it seems like he regularly has meetings with Cho and Kang. When giving this advice, Abdul demands to see the Company’s financial statements, list of clients and schedule – he also tells Cho and Kang how to organise their bookings, how to deal with corporate clients and the ways in which they can arrange their tax payments. Cho and Kang are actually quite scared of Todd and so always do what he asks of them, generally without questioning him.

Abdul’s assistant, Boris, occasionally attends the meetings between Cho, Kang and Abdul. Boris is very full of himself and quite hot headed. At these meetings, he likes to make himself feel important by shouting at everyone, telling Cho and Kang to get better pens, softer chairs and more flattering lighting. Cho and Kang typically ignore Boris and let him tire himself out or gets distracted by lunch.

1. Advise (i) Cho, (ii) Kang, (iii) Abdul and (iv) Boris as to what positions they may be considered to hold in the Company (e.g. are they a particular type of director or are they nothing in the company?).
2. Would your advice to Abdul change if you were told that he was the Company’s lawyer?

Please cite relevant cases and statute law.