Business and Commercial Law

Running Head: Business and Commercial Law
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Business and Commercial Law
Student’s Name

Business and Commercial LAW 1
Contents
Question 1...................................................................................................................................................2
Issue 2
Rules 2
Application 4
Conclusion 5
Question 2...................................................................................................................................................5
Issue 5
Rules 5
Application 7
Conclusion 8
References...................................................................................................................................................8

Business and Commercial LAW 2
Question 1
Issue
There are a total of two issues in this case. One is to check that whether Nu Shampoo Pty
Ltd can legally sue David for the breach of trade clause and another one is to check whether
David is personally liable to pay $ 100000 to the standard bank.
Rules
Even though companies can be registered fairly quickly, it still sometimes occurs that the
people who are setting up the company enter into arrangements and contracts in anticipation of
the company coming into existence – e.g. leasing premises and buying furniture. These people
are called promoters (Harris, 2013). In addition to the promoter, the other important groups of
people in the context of a corporation are a board of directors and shareholders. People who
invest their money in a company in the form of capital are known as shareholders. Further to
state that a corporation is, an artificial person and the same cannot manage its affairs. This is the
reason that boards of directors are there to perform actions on behalf of a corporation. These
people deal with outsiders on behalf of the company. Further, to state that in addition to being an
artificial person, a company is also a separate legal person. As soon as a company, come into
existence the same get a separate identity in the eyes of law. Neither promoters, directors nor
shareholders may held liable for the act of the corporation.
A company may enter into any agreement by its name. In addition to this, the same can
sue a third party and can be sued by them similar to a natural person. The concept of separate
personality and limited liability of shareholders was established in Salomon v Salomon & Co Ltd
[1897] AC 2. Salomon formed a company (Salomon & Co Ltd). He transferred the assets of his