Commercial and Corporation Law Case Study Analysis

Running Head: COMMERCIAL AND CORPORATION LAW
Commercial and Corporation Law
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Author Note

1
COMMERCIAL AND CORPORATION LAW
Answer One:
Issue
The issue in this case is that whether Yellowscope is liable for Fan’s injury. The issue is
also associated with the fact that whether Blackspot is held partially liable for Fan’s injury and
can he avoid liability based on which grounds.
Law:
A company is a separate legal entity which is separate from its shareholders. According
to the provisions of Section 119 of the Corporation Act 2001 (Cth) a company attains the title of
a separate corporate after its registration. Therefore, it is noteworthy to mention here that only
the company has the right to sue and to be sued in its own name (Lozano, Carpenter and
Huisingh 2015). According to the provisions of Section 124(1) every company has the same
capacity and powers which are similar to the general powers of an individual. Therefore, in this
regard, it is worth mentioning that, only the company shall be held liable for the debts incurred
during the process of business transactions (Veldman 2018). According to Section 180(1) of the
Corporation Act 2001 (Cth) directors are required to act in due diligence and care.
Under the law of torts, a person may be held liable for the acts or omission on the part of
another person. In such cases, the persons are not personally held liable for their own conduct.
Therefore, it is worth noting that an employer may be vicariously liable for the acts of their
employees which were held in Hollis v Vabu Pty Ltd (2001) 207 CLR 21. It is noteworthy to
mention here that, the employer shall not be held vicariously liable for the acts done by
independent contractor.

2
COMMERCIAL AND CORPORATION LAW
It is worthwhile to mention here that the company does not act as an agent to its
shareholders; however the shareholders act as an agent to the company. In this regard, the case of
Salomon v Salomon & Co Ltd [1897] AC 22 can be emphasized. In this case, it was held by the
Court that Salomon being the sole shareholder was not personally liable to the creditors. The
company was held liable as it was a separate legal entity. The case Salomon v Salomon & Co
Ltd [1897] AC 22 was a landmark case in which it was established that how a company
functions. The case was concerned with the claims demanded by unsecured creditors during the
process of liquidation. However, as Salomon was the majority shareholder of the company, he
was held personally liable for the debts incurred by the company. in this regard, the Court in its
decision held that Salomon being a shareholder is not personally liable for the loss of the
company and therefore cannot be personally sued. However, in the ruling, the Court was of the
opinion that the company was incorporated by Salomon but the creditors in this case conducted
the business as an agent of Salomon who should according to the application of law be held
liable for the debts incurred by them during the course of agency. It is worth stating that the
shareholders of a company cannot be held liable for any negligence in regard to the company. In
case of negligence occurred as a result of their personal conduct, the shareholders shall be held
liable.
Application:
In the given scenario, it can be observed that Fan Bingbing is the plaintiff who is an
employee, sole shareholder and director of the company Blackspot Pty Ltd. However, the
plaintiff used to work for Yellowscope Pty Ltd as well (defendant no). It can be argued that the
plaintiff was working on a project given by defendant when she received injuries. In this case, it
is worthwhile to refer here that the Court was of the opinion that as the plaintiff was carrying out