商法导论outcome3答案.doc

Case Study 1Questions:1. List the main business organizations recognized by Scots Law.2. Given the fact that Lisa will be running the business herself and, for the time being, she is unlikely to be employing anyone, how would you classify her business?3. Identify two advantages and two disadvantages of the type of business organization run by Lisa Case Question 1The main business organizations recognized by Scots Law are:Sole traderPartnershipLimited liabilityPrivate companyPublic company Question 2 Lisa is running a very small business, so the most appropriate form of organization is sole trader. According to the Companies Regulation 1992, Lisas organization form does not fit for the condition of private company; such a private company is limited by shares or by guarantee and need only have on member. As a result, we can judge that the organization form of Lisas company is sole trader. Question 3Advantages: very basic legal requirements to comply with Total control over his/her business and does not have to take into account the opinions of any shareholders. It is the simplest form of business organization recognized by Scots Law A sole trader is to all intents and purposes to be regarded as a self-employed person. Disadvantages: A sole trader may find it difficult to fund an expansion of the business because she/he can not offer shares to other parties in order to raise funds.(筹集资金) If the business fail, the sole trader is said to have unlimited liability for any debts or obligations owed to third parties. The inclusion of new partners would force a change in the nature of business, operation by converting it into a partnership or some other form of corporate body. (in any case), A business expansion requiring a major injection of capital might entail a loss of control over the business because new members who are a source of new finance will almost certainly demand a say in the running of the business.以上优、缺点各选两个答即可 Case Study 2Question 1What are the main differences between a traditional partnership and a limited liability partnership (LLP)?PartnershipUnincorporated bodyPartners have unlimited liability in respect of partnership debtsNo need to be registered with registrar of companies and no need to supply formal documentsRegulated by Partnership Act 1890 LLPCorporate bodyMembers enjoy limited liability in respect of LLP debtsMust be registered with the registrar of companies and certain documents must be suppliedRegulated by LLP Act 2000 Question 2What are the main advantages for an existing partnership when it changes to a limited liability partnership? The reason why many traditional partnerships try to translate to LLP is that the members can enjoy the limited responsibilities. Further more, under the conditions of losing of privacy and greatering external regulation for the members, lots of traditional partnerships definitely hope to translate to LLP.(because of LLP) Question 3What is the nature of the legal relationship between partners in firm and members of a LLP? There exist a fiduciary relationship in law relationship between company and partners. 举例说明公司与成员之间的忠实关系 Pillans Brothers v Pillans 1908 According to Limited Liability Partnerships Act 2000, section 6 regulations, there should be recognized to an agents relationship between members and LLP. The general rule of the law agency that an agent (member) must always act in the best interest of his principal (LLP). A member is not an agent of his fellow members. Case Study 3Question 1What is a companys objects clause? Object clause 是存在于Memorandum of Association 之中的。 Object clause 通常是公司的成立目的并且列出了公司可以从事的商业或商事行为。 Before the reforms introduced by the Companies Act 1989, 公司无权与第三人签订任何商业协议，除非公司的object clause有明确规定。 假如公司 object clause 没有授权公司去从事某项商业交易时，则公司就没有行为能力（lack of capacity）去订立合同，并且第三方也不能抗辩（third party was no defence）. Nowadays, many companies will have straight forward objects clauses which allow them to enter into any type of business of commercial transaction whatsoever. Question 2Does MacGregor have the right to withdraw from the project with Constructit? Macgregor 没有权力撤销它与Constructit 之间的协议。 As a result of reforms introduced by the Companies Act 1989, Section 35 of the Companies Act 1985 now states that every contract is enforceable against the company. No act done by a company may be questioned by the fact that it was beyond its legal capacity as stated in its objects clause in the Memorandum of Association. Section 35B of the 1985 Act goes on to say that there is no necessity for a third party to check that a proposed contract is within the powers of the company as per the Memorandum of Association. The Section 3A of the company Act 1985 now permits a company to have a simplified objects clause which means a company can enter into practically any contract whatsoever with third parties. In situation where third parties dealing with the company here failed to act in good faith and where the Directors have exceed their authority, Section 35A, Companies Act 1985 raise the possibility that such an ultra virus (毒树之果) contract may be declared voidable by the company. 举例 Ashbury Railway Carriage & Iron Co v Riche 1875 Question 3Will the legal action by MacGregor shareholders be successful so that the company will be forced to pay out the expected bonuses? 根据Companies Act 1985, Section 14中的规定，公司当中最重要的两个文件分别是Article of Association & Memorandum of Association. 股东是否有权利分红（receive bonuses）完全取决于公司的Article of Association 的规定。 假使规定可以，那么股东可以根据Section 14 的规定去起诉并要求公司分红 （force payment of dividends）。但是，假如分红的规定只是随意的（discretionary）由公司决定，那么公司就有权暂缓（suspend）在今年分红。 举例（任选其一）： Eley v Positive Life Assurance Co Ltd 18762. Hickman v Kent or Romney Marsh sheep Breaders Association 19153. Rayfield v Hands 19604. Wood v Odessa Waterworks Co 1889 Case 4Question 1List three differences between a private company and a public company. Question 2Can people simply decide to set up any kind of company and begin to trade immediately? Question 3What kind of legal status is a company said to have? Question 4What management body is responsible for the day-to-day running of a company? Question 5What is the most common type of liability for company members? KeysQuestion 1 (注意看上面的题目，只用选三个写就好） private: only one director is requiredpublic: there must be at least 2 directors private: limited by shares or by guarantee need only have one memberpublic: there must by at least 2 members private: there is no upper age limit for directorspublic: directors must retire when they reach the age of 70 private: Audited accounts must be produced within 10 months of the end of the financial yearpublic: Audited accounts must be produced within 7 months of the year end (更为严格) private: Trading can start as soon as a certificate of Incorporation is obtained.public: Public companies can not begin trading without having been issued with a Section 117 certificate. private: Company name must end in “Limited” or “Ltd”public: Company name must end in “public limited company” or “PLC” private: The Article of Association of a private limited company may provide for a right of pre-emption so that when a member wishes to sell or to transfer ownership of his share he must first offer them to existing member.public: Members must be free to transfer their shares as they please. private: There is no minimum capital requirement public: A public company must have minimum issued share capital of at least 50,000. private: The shares can not be traded or listed on the other exchange. public: Shares can be listed on the stock exchange and can be traded.Case Study 1 Question 1 The main business organisations recognised by Scots Law are: .sole trader.partnerships.limited partnerships.limited liability partnerships.private companies.public companiesQuestion 2 Given the fact that Lisa is running a very small business, it will almost be certainly run as a soletrader enterprise. There is the very remote possibility and it is very remote that a smallbusiness could be run as a single member private company in terms of the Companies (SingleMember Private Limited Companies) Regulations 1992. Such a private company is limited byshares or by guarantee and need only have one member. Nowhere, however, does it mentionthat the business is limited by shares or by guarantee and we would, therefore, assume that it hasthe character of a sole trader. Question 3 The advantages of a sole trader business are: 1It is the simplest form of business organisation recognised by Scots Law. 2A sole trader is to all intents and purposes to be regarded as a self-employed person. Inother words, no difference is made between the sole trader and his or her business; theyare legally indistinguishable. 3 Very basic legal requirements to comply with ie submission of income tax returns to theInland Revenue and the disclosure requirements of the Business Names Act 1985.4 Total control over his or her business and does not have to take into account the opinions of any shareholders, members or partners. The disadvantages of a sole trader business are: 1 If the business fails, the sole trader is said to have unlimited liability for any debts orobligations owed to third parties.2 A sole trader may find it difficult to fund an expansion of the business because she/hecannot offer shares to other parties in order to raise funds. 3In any case, a business expansion requiring a major injection of capital might entail a lossof control over the business because new partners, shareholders or members who are asource of new finance will almost certainly demand a say in the running of the business. 4The inclusion of new partners, members or shareholders would force a change in thenature of the business operation by converting it into a partnership or some other form ofcorporate body (public/private companies or a limited liability partnership). Case Study 2【】Question 1 There are many differences between a traditional partnership and a limited liability partnership(LLP), but candidates should be able to pinpoint the following characteristics of both types ofbusiness organisation from the table below: Partnership Limited liability partnershipUnincorporated business Corporate bodyNo need to be registered with Registrar ofCompanies and no need to supply formaldocumentsMust be registered with the Registrar ofCompanies and certain documents must besuppliedRegulated by Partnership Act 1890 (unless thepartners agree otherwise)Regulated by the Limited LiabilityPartnerships Act 2000Partners have unlimited liability in respect ofpartnership debts/liabilities ie they are jointlyand severally liable and can be pursued to theirlast pennyMembers enjoy limited liability in respect ofLLP debts/liabilities ie they will only beliable to the extent of their stake in thebusiness Practice Note It would be highly advisable to concentrate on the differences between a traditional partnershipand an LLP when introducing candidates to this area of the course. Question 2 Currently, many traditional partnerships have sought LLP status because of the perceivedbenefits of limited liability for the members of an LLP even if this does represent a loss ofprivacy and greater external regulation for the members ie registration with the Registrar ofCompanies and tougher auditing requirements. Question 3 The legal relationship between partners in a firm is classified as a fiduciary relationship ie arelationship of trust. Partners are agents of their fellow partners and also of the firm itself. Candidates should cite the following case which exemplifies the nature of the fiduciaryrelationship between partners: .Pillans Brothers v Pillans 1908The legal relationship between a member and a limited liability partnership will also beclassified as a fiduciary relationship. Section 6 of the Limited Liability Partnerships Act 2000states that the members of an LLP are to be regarded as the agents of the business and it is ageneral rule of the law of agency that an agent (the member) must always act in the bestinterests of his principal (the LLP). It is important to bear in mind that a member is not an agentof his fellow members. Case Study 3 Question 1 A companys objects clause is found in its Memorandum of Association. The objects clause setsout the purpose of the company usually in the form of a list (sometimes a very long list) of thevarious commercial and business activities that it is likely to undertake. Before the reformsintroduced by the Companies Act 1989, companies could not enter into certain contracts withthird parties unless such a commercial transaction was listed in the objects clause. Such anunauthorised contract was void by reason of the companys lack of capacity to enter such anagreement in the first place and ignorance of the contents of the objects clause on the part of thethird party was no defence. Nowadays, many companies will have straightforward objectsclauses which allow them to enter into any type of business or commercial transactionwhatsoever. Question 2 No is the simple answer. MacGregor does not have legal justification for its withdrawal fromthe contract with Constructit. MacGregor is attempting to rely on the old ultra vires rule. As aresult of reforms introduced by the Companies Act 1989, Section 35 of the Companies Act 1985now states that every contract is enforceable against the company. No act done by a companymay be questioned by the fact that it was beyond its legal capacity as stated in its objects clausein the Memorandum of Association. Section 35B of the 1985 Act goes on to say that there is nonecessity for a third party to check that a proposed contract is within the powers of the companyas per the Memorandum of Association. Furthermore, Section 3A of the Companies Act 1985now permits a company to have a simplified objects clause which means a company can enterinto practically any contract whatsoever with third parties. In situations where third parties dealing with the company have failed to act in good faith andwhere the Directors have exceeded their authority, Section 35A: Companies Act 1985 raises thepossibility that such an ultra vires contract may be declared voidable by the company. In otherwords, the ultra vires rule comes back to haunt third parties dealing with the company whenthey act in bad faith but not in this case study. Candidates should cite the following case which emphasises the harshness of the old ultra viresrule: .Ashbury Railway Carriage & Iron Co v Riche 1875Question 3 Candidates must reference their answer to Section 14 of the Companies Act 1985 ie the bindingcontractual nature of the Memorandum of Association and the Articles of Association. Theshareholders will have to establish whether they are entitled to receive bonuses in terms of thecompanys Articles of Association. If so, they can raise an action against the company in termsof Section 14 to force payment of dividends. If the payment of bonuses is purely discretionary,the company may well have the right to suspend payment this year. Candidates should be able to cite at least one of the following examples from case law insupport of their answer which demonstrate that the relationship between a company and itsmembers and between the members themselves is contractual in nature as per Section 14 of theCompanies Act 1985: .Eley v Positive Life Assurance Co Ltd 1876.Hickman v Kent or Romney Marsh Sheep Breeders Association 1915.Rayfield v Hands 1960.Wood v Odessa Waterworks Co 1889Case Study 4 Question 1 There are numerous differences between private and public companies. It is often useful to givecandidates a list of the different characteristics of both organisations whereby they are able tocompare and contrast. Candidates are only being asked to list three differences between aprivate company and a public company from the two lists set out below and there is plenty tochoose from. The main characteristics of a private limited company are: 1Company name must end in “limited” or “ltd”. 2The Articles of Association of a private limited company may provide for a right of preemptionso that when a member wishes to sell or to transfer ownership of his shares hemust first offer them to existing members. 3 There is no minimum capital requirement.4 The shares in a private limited company cannot be traded or listed on the stock exchange.5 Only one director is required.6 In terms of the Companies (Single Member Private Limited Companies) Regulations 1992, a private company limited by shares or by guarantee need only have one member.7 There is no upper age limit for directors.8 Audited accounts must be produced within 10 months of the end of the financial year.9 Trading can start as soon as a Certificate of Incorporation is obtained. The main characteristics of a public limited company are: 1 The company name must end in “public limited company” or “plc”.2 Members must be free to transfer their shares as they please.3 A public company must have minimum issued share capital of at least 50,000.4 Shares can be listed on the stock exchange and can be traded.5 There must be at least 2 direct