Business and Corporate Law Question Answer 2022

Running head: BUSINESS AND CORPORATE LAW
Business and Corporate Law
Name of the Student
Name of the University
Author Note

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Question 1
Part A
Issue
Weather any legally binding contract has been formed between Tina and Jeff.
Rule
A contract that has been affected with the help of a formal document can have three
types as per the provisions established in the case of Masters v Cameron [1934] 2 KB 394.
The first category includes a contract to be concluded by way of negotiations and has been
agreed to be executed by the enumeration of each and every term in a written document. The
second category includes the contract to be created but certain terms to be agreed upon the
creation of the formal document. The third category includes the contract you have been
agreed upon and to be executed only upon the execution of the format document signed by
the parties.
Application
In the instant situation, Jeff and Tina has been negotiating the sale of the business
pertaining to Jeff. Both of them signed a head of agreements where all the terms that are
required to be incorporated in the contract for the sale of the business has been enumerated
expressly. Again, one of the clause included in the head of agreement requires the contract to
be executed in a written form. Moreover, certain terms relating to the contract were also
required to be finalized on the execution of the formal documents effecting the contract. This
implies the second category of the form of documents as has been provided under the
principles established in the case of Masters v Cameron [1934] 2 KB 394. The contract

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between Jeff and Tina has been appropriately instituted and the breach of the same would in
current liability on part of Tina.
Conclusion
A legally binding contract has been formed between Tina and Jeff.
Part B
Issue
Whether any legally binding contract has been formed between Tina and Jeff if the
heads of agreement contained a clause stating “ This agreement is subject to Tina obtaining
suitable finance”.
Rule
A contract that has been affected with the help of a formal document can have three
types as per the provisions established in the case of Masters v Cameron [1934] 2 KB 394.
The first category includes a contract to be concluded by way of negotiations and has been
agreed to be executed by the enumeration of each and every term in a written document. The
second category includes the contract to be created but certain terms to be agreed upon the
creation of the formal document. The third category includes the contract you have been
agreed upon and to be executed only upon the execution of the format document signed by
the parties.
Application
In the provided scenario, Tina has included a clause in the heads of agreement that
requires the execution of the contract to be affected only upon Tina being able to avail
finance for carrying out the contracts. This can be treated as an agreement of the third

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category where the contract has not been created but is contingent upon the creation of a
formal document as well as condition upon which the contract has been contingent.
Conclusion
Hence, a legally binding contract has been formed between Tina and Jeff.
Question 2
a) Issue
Whether any personal liability for the debt unpaid has been incurred by Phil being the
managing director of the company LightsBright.
Rule
As per the legal principle provided in s 180(1) of the CA 2001, any person who is
holding a position of a director in a company is required to show diligence and care in all his
endeavours under the scope of his position as a director. Again, the legal principles provided
in s 182 of the CA 2001, the persons who are engaged as a director of a company is required
to refrain from serving personal benefits by virtue of the position in the company.
Application
In the instant scenario, there has been a financial difficulty suffered by CheepCheep
and it has been known for a bad credit risk. Phil, the managing director of LightsBright has
the information of all these but however he has accepted a large offer from CheepCheep. This
can be treated as a breach of s 180(1) of the CA 2001. Moreover, it has been discovered that
Phil has been friends with Robert who has been the director of CheepCheep. This can be
treated as a breach of s 182 of the CA 2001.
Conclusion