Business Law Assignment - Bikeit Ltd

Added on - 22 Nov 2020

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Business law
Table of ContentsQUESTION 1...................................................................................................................................1Define the principle of Solomon v Solomon Ltd and significance.............................................1QUESTION 4...................................................................................................................................2QUESTION 5...................................................................................................................................3Presenting an advice to Ian over the liability of Bikeit Ltd........................................................3
QUESTION 1Define the principle of Solomon v Solomon Ltd and significanceConcept of legal personality:The principle of legal personality simple states that a company its directors and membersare all distinct legal person in the eyes of law. The company have its own property and assetswith having its own duties and responsibilities. The company have its own set of legal obligationfor which the directors and members can not be held liable. This principle comes into existencewith incorporation of the company with a separate legal personality and debt payment.Establishment of the clause and its significanceThe principle of legal personality of a company was significantly established in the caseof Solomon v Solomon in 1897 though this was empowered to the organisations in 1855. Theprinciple of the legal personality have states a important rule that the shareholders are theowners of the company and are referred as member of the organisation. The company and itsdirectors and owners a have imposed with a limited liability concept (Adam, 2016). Thisprinciple stated that the directed and the members can not be held liable to pay off the debt ofthe company beyond their investment in the organisation. The importance of this concept cannot be understated as the shareholder purchases the share of the company in return of the smallshare in the ownership and funds are used by the business to expand its operation. If casecompany is successful the share prices will increase and the members will receive annualdividend and if not the most they will lose is their investment. The case Solomon v Solomon,gave a extension to this principle as the directors and the company are two distinct legal person.The liability of the company can not be imposed on the directors as well as the members. Theyare not eligible to pay for the company beyond the extend of their contribution to the firm thatis investment through shares. This principle was also stated in the case of Lee v Lee air farmingwhich outlined the consequences as a family or the single director can not claim compensationor part of the company on the basis on their position and holding in the company(Allen, 2017).The courts stated that there is no right of the director or member on the property of business ascompany and its directors are two separate legal person.Conclusion:1
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