Commercial and Corporation Law | Assignment

Running head: COMMERCIAL AND CORPORATION LAW
COMMERCIAL AND CORPORATION LAW
Name of the Student:
Name of the University:
Author Note:

COMMERCIAL AND CORPORATION LAW1
Answer 1:
ISSUES:
The issues that are to be discussed in the present case study are as follows:
 Whether AlcoStores Pty Ltd can compel Benjamin to stop the working of LiquorCheap
Pty Ltd in Quessnsland,
 Whether the Commercial Bank Ltd can sue him for 100,000 $ personally.
RULES:
A restraint of trade clause in a contract between an employee and the employer prevents
the employees to engage in same type of business within any particular time period or
geographical area once the employment contract is once over between them (Sirchia 2017). It
refers to the condition imposed by the employer on his employees from carrying on a similar
type of trade or business like the previous one. This is done to provide protection of the
company’s best interest. However it must not be detrimental to the reasonable rights of an ex-
employee or against the public policy (Srinivasan 2015).
This clause is valid and enforceable when the restraint is only to protect the legitimate
interest of the concerned business. Hence the employee is bound by it if it is reasonable and
required for protecting the interest of the company as seen in the case of Southern Cross
Computer Systems Pty Ltd v Palmer (No 2) [2017] VSC 460.
A unique feature of a company is its separate legal entity distinct from its owners,
directors or managers. In the landmark case of Salomon v Salomon [1897] AC 22, the separate

COMMERCIAL AND CORPORATION LAW2
identity of a company from that of its shareholders as well directors and managers is held. In this
case, it is decided by the House of Lords upheld the corporate personality doctrine so that the
creditors of an insolvent company cannot sue the share holders of the company to pay its unpaid
debts. This separation of the company’s identity from the identity of its managers, owners or
shareholders is enumerated in the doctrine of corporate veil that provides a protection to the
members of a company as seen in Peate v Federal Commissioner of Taxation (1964) 111 CLR
443.
However, in some situations, the directors and the managers of the company can be made
personally liable for the loss incurred by the company or to pay the debts of the company. This
occurs when the directors or the owners misuse the power entrusted to them and try to gain
personal benefits at the cost of the company’s interest. In these situations, the court can pierce
the corporate veil and make them liable for this as seen in Adams v Cape Industries plc [1990]
Ch 433.
Again this corporate veil shield can be lifted if it is seen that a company is being formed
to suppress any legal obligation that existed in relation to the directors or owners of the company
as observed in the case of Gilford Motor Co Ltd v Horne [1933] Ch 935. Similar type of
observation was made in the case of Creasey v Breachwood Motors Ltd [1993] BCLC 480. in
many situations, it is observed that a company was created to carry on its fraudulent activities. In
such case the owners or the directors can be made liable for the loss suffered by such company as
seen in the case of Sharrment Pty. Ltd. v Official Trustee in Bankruptcy (1988) 18 FCR 449.