Legal Aspects of Contracts and Company Law

This study material from Desklib covers the legal aspects of contracts and company law, including articles of association, memorandum of association, and key sections of the Companies Act 1965. It discusses the legal validity of contracts, loopholes in policies and laws, and how the memorandum of association can protect parties. The content also includes references to relevant laws and regulations.

Running Head: Group Assignment
Group ASSIGNMENT
[Document subtitle]
[DATE]
[Company name]
[Company address]

Table of Contents
Question no 1..............................................................................................................................................2
Question No 2..............................................................................................................................................2
Question No 3..............................................................................................................................................3
References...................................................................................................................................................5
1

Question no 1
A contract is a legally enforceable agreement between two or more parties where each assumes a
legal obligation that must be completed. In this particular case the contract will be drafted
between May or June and other third party companies on behalf of Almanac ltd. There is a clause
included by Almanac Ltd that if the remuneration and benefits of the directors exceed the value
of RM100,000 then the legal validity of the contract will not be established and this is enabled by
Section 127 of Company’s Act 1965. This provision is brought into effect through the articles of
association of Almanac ltd. Article of association consists of predefined rules which guide the
internal operations and management of the company. It also defines the fixed paths of procedures
for internal affairs and also the authorities and responsibilities of the member, shareholders and
directors. The appointment of the directors are done by voting based on Section 126 of
Company’s Act 1965. In this particular case if a contract of more than RM100,000.00 is accepted
by any of the mentioned persons then the person must first seek the approval from the board.
Single motion has promoted May and June to the board of directors means that they may or may
not have received remuneration of more than RM100,000.00. April has entered in a contract with
Ceaser for RM200,000 which is a third party related to Almanac ltd to provide consultancy
services which means that either April has taken the approval of the board and his contract is
legally binding or else the contract has become illegal and case of future arbitrations April will
have no legal (Charman, 2016).
Question No 2
Table A is a prescribed format for articles of association of an organization limited by shares
under the Section of 132D companies Act 1965. Table A gives a company the necessary option
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to skip filing of articles. In this particular case it is a clear example how loopholes in policies and
laws can be abused for ones benefit. Syarikat Toy planet Pte Ltd Company is owned jointly by
Andy, Buzz and woody. It is a clear case of how Table A can be used to manipulate the internal
affairs of a company for personal benefits. In this case Andy and buzz used Table A to bypass
and adopt a resolution demanding money from any member of the company and Section 137 of
Comapies Act 1965 clearly states that this can be made possible legally. Woody is appointed as
the solicitor then passed a resolution to demand RM100,000 from woody and then removed
woody using the key man clause of Table A under Section 130A of Companies Act 1965 thus
consolidating the majority shares to Andy and Buzz and securing funds of RM100,000 for the
company(Whittaker, 2011).
Question No 3
In this case the memorandum of association and how can it protect the parties bounded by it are
the main points.
In this particular case we can identify three underlying problems which are discussed below
along with possible outcomes.
Firstly the major issue is that Perick and Pangang started a joint venture with a furniture
company praboat Pte ltd but some of the minority shareholders of RoastChick Ltd Kenny and
Roger are dissatisfied with this decision and want to take the action against this by restricting the
contract between RoastChick Pvt Pltd and Praboat Pte Ltd. In order to do so first they need to
check the objective clause of the MOA where it should be mentioned that main party cant go into
business with any other company. If it is not mentioned then they cant take any action against the
contract between the two companies legally. In case there is a clause in the MOA that prevents
them from doing so then the dissatisfied party can appeal for a motion in the general meeting of
the company and the motion should be unanimously accepted then only canthe contract
performance be restricted between RoastChick Ltd and Praboat Pte Ltd.
Secondly the issue is how can Perick and Pangang amend the MOA to increase the age limit for
the directors from 60 to 69. It can be inferred from the statement that it is a primary clause in the
MOA and guidelines of Company Act, section 17 states that if the keypersons in the MOA can
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unanimously decide on the decision of increasing the age then there will be no issues in
implementing them. A important criteria should be fulfilled that the decision should not harm the
internal affairs of the company in any manner. But in this particular case it is already mentioned
that the shareholders want to increase the age from 60 to 69 so passing the motion will not be an
issue (Banoff, 2002)
Thirdly the issue that remains is that Panggang along with some shareholders wants to remove
Percik from the post of director. As it is already mentioned that Percik controls 30 percent of the
votes so it establishes him as a key man in the MOA and section 94 of the companies act states
that in order to remove a key man a motion of resolution has to be offered and it must garner the
maximum number of votes( In this case more than 50%). So Percik can only be removed if the
company is able to present and pass a motion of resolution garnering more votes than Percik then
only can he be removed (Compilation of securities laws within the jurisdiction of the Committee
on Financial Services, 2001).
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References
Banoff, B. (2002). Company Governance Under Florida's New Limited Liability Company
Act. SSRN Electronic Journal.
Charman, M. (2016). Contract law. Willan Publishing.
Compilation of securities laws within the jurisdiction of the Committee on Financial Services.
(2001). Washington: U.S. G.P.O.
Compilation of securities laws within the jurisdiction of the Committee on Financial Services.
(2003). Washington: U.S. G.P.O.
Gilson, R. (2016). A Model Company Act and a Model Company Court. SSRN Electronic
Journal.
Whittaker, S. (2011). The Optional Instrument of European Contract Law and Freedom of
Contract. European Review of Contract Law, 7(3).
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