Corporate Law Case Study

This essay analyzes a case study involving five brothers who formed a private company and faced a dispute when one brother attempted to sell his shares and exit the company. The essay explores the legal remedies available under equitable and statutory law, providing insights into their application in resolving business disputes.

Corporate Law

Table of Contents
INTRODUCTION...........................................................................................................................3
Main Body.......................................................................................................................................3
Case Study..............................................................................................................................3
REFRENCES...................................................................................................................................8

INTRODUCTION
Corporate Law is the body of law which governs the rights, companies, activities of
individuals, organizations and business. It refers to the legal practices in relation with the
different theory of corporations. The term of corporate law explains the several matters which
comes directly from the life cycle of a corporation. This law always regulates that how investors,
shareholders, directors, creditor, employees interact with each other in the competitive working
environment. Whereas, business law or company law is used interchangeable (Kraakman and
Hansmann, 2017). This report entails a case of five brothers who formed a private company
which started to difficulties which made one of the brothers, Tim to sell his share and exit.
However, he had been a victim of bully by other brothers. Thus, the report has described
equitable and statutory remedy to overcome this situation.
Main Body
Case Study
In this present time Corporate Law is a main part of law, regulation, rules and practices
that govern the operation or formation of corporations. This law has been made part of
Australian legal system to regulate entities so that business can be conducted smoothly and
efficiently. Law is necessary to govern rights and liabilities of citizens living in a country.
Furthermore, it is applicable on ownership, formation and management. It is wider in nature as
its comprises number of acts.
In the given case, five brothers formed a private company called “The Grumpy Pty Ltd.”
(TGG) which became successful within a short period. All the five brothers are directors who
have equal decision making and profit sharing. TGG's constitution defines that:
 Five brothers are the only directors and shareholders of the company.
 If, any of the brothers proposing to sell their individual shares in the company and it can
happen only with consent of other directors. Furthermore, it can be sold internally to
remaining directors.
 Every decision must be passed with majority vote.
After some time, TGG's business started to suffer from losses and decline in the profit could be
seen. The other four brothers had doubts about Tim thinking to move out of TGG following
which rest of the brothers initiated to bully and used their majority vote to not to let him exit
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from the company by selling his shares. Tim is seeking suitable remedy which can provide
justice to him so that he can do what he has been planing which is legal.
Company's constitution sets out the foundation on which all the business activities are
carried. There should not be any event in which it goes beyond what has bee written in the
constitution. Corporate law provide that directors are appointed to conduct activities on behalf of
the entity. Also, there are duties and responsibilities which a director has to follow and exercise
in all circumstances. Furthermore, decisions are taken by directors which are implemented in the
organization.
From the above case study, Tim can have access to number of remedies under Equitable
and Statutory. These are provided by Australian legal system to protect an individual against any
illegal and unethical action. These provide justice and the decision passed by the court is of
binding nature. These are the solution to number of problems which is implemented to make
situation better. A detail description of both remedies viz. Equitable and statutory have been
elaborated below:
Equitable Remedy: These remedies are also known as judicial remedies which are
developed by the courts of equity from about the time that offers more suitable response in order
to change social situations that can be possible in precedent based common law. Equitable
remedies was granted through the court of chancery in Australia and now a days it is very
famous law in a specific manner. In lot of jurisdictions equitable or legal remedies have been
combined in order to widespread judicial merger, that differentiate between legal or equatable
that remains number of significance instantly. There are two main equitable remedies that is
injunctions or particular performance. These are used in breach of contract and bifurcated into
two types viz. Legal and equitable. Such remedies are availed when compensation in monetary
form has failed to provide the justice. Furthermore, it is classified into different types which are
as follows:
Specific performance: This refers to an order from court under which the party in breach
is compelled to carry the work or perform their individual part for complying with terms of the
contract.
Contract rescission: The contract whose terms have been breached are revoked or
cancelled. Furthermore, in order to have legal effect, a new contract maybe written and executed
by including requirements of all the parties to contract.
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Contract reformation: In this, the original contract is rewritten with more clear
intentions. This will give an accuracy and validity to the contract.
In the case of Co-operative Insurance Society Ltd. V Argyll Stores (Holdings) Ltd.
[1997], petitions entered into a lease agreement for granting permission to defendant to utilise a
particular area in a shopping centre. It was formed for 35 years, and contained a clause requiring
to give promise that shopping mall will be opened during ordinary business hours in various
local areas. After an analysis, defendant shut down 27 supermarkets including this one which
was a great attraction and source of income for many. Defendant was given a concession on the
rents even after this, supermarket was closed. Due to this, plaintiff filed for a case seeking
specific performance and damages (Kraakman, 2017).
Decision was given in the favour of plaintiff but rejected specific performance. Following
which defendants filed an appeal. In which the issue was about sufficiency of clause in the
contract for seeking specific performance together with enforcement. The court held that,
defendant would have to suffer huge loss as compared to plaintiffs if the remedy is allowed.
Hence, the judgement of appeal was given in the favour of defendant.
In the case of Tim, he has been refrained from selling his shares in the company with a
view to move out of it. The harassment and bully by rest of the brothers are absolutely unethical
which should be prevented. However, Tim has already suffered from mental stress which should
be stooped so he can approach for Equitable remedy. This remedy states that applicant must get
his share which is legal. By applying this in the case of Tim, the brothers will be bound to let him
sell his shares in the company and move out it. There is no traces of monetary compensation and
all those which things will be given to applicant on which he has valid authority.
Statutory remedy: These remedies are very useful from court of law mainly in the
existence of civil law jurisdiction, imposes a penalty or enforces a right to impose it well. In the
common law mixed civil law or jurisdictions that shows the difference between statutory or legal
remedy for example (a particular amount of monetary damages) in this law another kind of
remedy is also available in these type of systems that is declaratory relief in which court define
the rights of parties in order to take correct action without ordering equitable relief or awarding
damages in a well manner. Every contract formed in a registered entity will be governed through
laws which provides. The Australian courts have power to provide any of the below mentioned
remedies in case of breach of contract:
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 A decision to refuse on the enforcement of all or some of the clauses.
 It may make and order containing rendering the contract void in whole or in part.
 Order for making modifications in all the terms or a part of it.
A company should carry its business according to the constitutional documents MOA and
AOA. These two are fundamental documents which govern all the business activities of an entity
particularly a corporate. In case of private company, there is a requirement that shares or
property will be sold as provided under AOA.
In the case of TGG, all five brothers should carry their duties and responsibilities. In
contravention to bye laws will make the director responsible and respective punishment will be
given along with the fine. However, no statutory remedy can be availed by Tim for selling the
his share in the company. as he is one of the directors of TGG and should carry his duty. But, he
can seek statutory remedy for the bully and other metal pressure. He can pray for damages which
has incurred during the tenure of such mental pressure (Liu, 2017).
There is one more point to be considered is that every director holds certain rights and
powers which must be exercised with due care and in the right way. However, in no case a
director must act beyond the constitution otherwise it will ultra viruses the company's operations.
As for the TGG, the articles contain that if director wish to sell his shares in the company you
can do so with the majority approval of rest of the directors. This is a major point which has to
be followed in every circumstance. Also, The other brothers do not have right to put Tim in such
a condition. If there is genuine reason then Tim should get opportunity to exit from the company
and start his on as he he has predicted worst condition of the company which is going to occur in
in coming days. If an entity is suffering from loss and that laws cannot be made good then it is
better to wind up such company and invest the funds in any other profitable venture.
On the other side statutory law is a kind of written law which is set by the body of
legislature or it be made by the singular legislator. This is opposite to customer or oral law or can
be regulatory law in order to develop the common or executive law in the judiciary. These all
type of this laws generated by the state legislature or local municipalities in an appropriate
manner.
Tim can apply for this remedy, wherein monetary compensation is given. Tim can seek
compensation for his shares. In rest of the brothers have problem with Tim selling his shares,
then they will be compelled to pay compensation equal to the amount of his share.
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Therefore, these law are very important in order to overcome situation without any
issues. There is also private law which is also much necessary in order to make company in a
free mode. With the helps of these laws any owner of the firm can reduce the monopoly and also
can give attention to their individuals in an appropriate manner.
CONCLUSION
From the above report, it has been concluded that corporate law is important for every
company and other types of entities as it governs the operations and contracts made in the
ordinary course of business. Furthermore, the laws define rights and liabilities of a person in case
he or she contravenes or breaches any of the provisions. Along with this, every action be
conducted by completing the legal requirements so that penalties can be avoided. Also, a director
of a company is an important person who should know his rights and exercise them in the correct
manner as there are remedies in the form of equitable and territory which can be availed by a
person in case of any default or damages.
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REFRENCES
Books & Journals:
Kraakman, R. and Hansmann, H., 2017. The end of history for corporate law. In Corporate
Governance (pp. 49-78). Gower.
Stout, L. A. and Blair, M. M., 2017. A team production theory of corporate law. In Corporate
Governance (pp. 169-250). Gower.
Kraakman, R., 2017. The anatomy of corporate law: A comparative and functional approach.
Oxford University Press.
Liu, S., 2017. Globalization as boundary-blurring: international and local law firms in China’s
corporate law market. In Law and the Market Economy in China (pp. 231-264).
Routledge.
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