Question 4: Separate legal identity1. Harry was managing director of Grantham Plumbers Limited(Grantham). A...Question...

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Accounting

Question 4: Separate legal identity
1. Harry was managing director of Grantham Plumbers Limited(Grantham). A restraint of trade clause in his contract ofemployment prevented him from soliciting Grantham’s customers afterhe left its employment. Harry left and set up a company calledRight As Limited (Right As), which successfully marketed itsservices to Grantham’s customers. Grantham wishes to sue Harry, whoclaims he has not breached his contract. Explain the legal basis onwhich Grantham might sue Harry as the owner of the separate legalentity, Right As. Refer to relevant provisions in the Companies Act1993, and case law to support your answer. (Ignore any applicationof s145 Companies Act 1993).
2. Ricardo is a director and shareholder of Dodge Limited(Dodge), a company formed to take over Peel Limited (Peel), acompany that is no longer trading. One of Peel’s assets transferredto Dodge is a lease of a BMW car. The motor vehicle dealer wasunaware that Peel was no longer trading and prepared a new lease inPeel’s name. Ricardo signed the lease agreement on behalf of Peel.Dodge subsequently runs into difficulties and becomes insolvent.Can the motor vehicle dealer hold Ricardo personally liable for theunpaid lease on the car? Refer to any relevant provisions(including subsections) in the Companies Act 1993 to support youranswer.
3. Comprehende Ltd (Comprehende) controls the composition of theboard of Pharoah Developments Ltd (Pharoah). Pharoah owns 80% ofthe shares in Piety Ltd (Piety). Piety becomes insolvent afterengaging in highly risky behaviour. Refer to provisions (includingsubsections) in the Companies Act 1993 to support your answers.
(a) Explain if Piety is a subsidiary of Comprehende.
(b) Explain if Pharoah might become liable for the debts ofPiety.

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1 Facts of the case Harry is the managing director of Grantham Plumber ltd having a restraint of trade after relieving from employment and prevents from soliciting its customers But he sets a new companyRight as Ltd and solicits its customers Now Grantham wants to sue Harry for restraining of trade Provisions in Companies act 1993 There are some conditions where the seperate legal entity concept can not be applied and thelaw will lift the corporate veil One of the situations is restraint of trade this is an exception to the provision of seperate legal entity The same was held in the case of Gilford Motor Co Ltd v Horne The brief facts of this case are that Gilford employed Horne as a managing director for a six year term Hornes employment contract See Answer

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In: AccountingQuestion 4: Separate legal identity1. Harry was managing director of Grantham Plumbers Limited(Grantham). A...Question 4: Separate legal identity1. Harry was managing director of Grantham Plumbers Limited(Grantham). A restraint of trade clause in his contract ofemployment prevented him from soliciting Grantham’s customers afterhe left its employment. Harry left and set up a company calledRight As Limited (Right As), which successfully marketed itsservices to Grantham’s customers. Grantham wishes to sue Harry, whoclaims he has not breached his contract. Explain the legal basis onwhich Grantham might sue Harry as the owner of the separate legalentity, Right As. Refer to relevant provisions in the Companies Act1993, and case law to support your answer. (Ignore any applicationof s145 Companies Act 1993). 2. Ricardo is a director and shareholder of Dodge Limited(Dodge), a company formed to take over Peel Limited (Peel), acompany that is no longer trading. One of Peel’s assets transferredto Dodge is a lease of a BMW car. The motor vehicle dealer wasunaware that Peel was no longer trading and prepared a new lease inPeel’s name. Ricardo signed the lease agreement on behalf of Peel.Dodge subsequently runs into difficulties and becomes insolvent.Can the motor vehicle dealer hold Ricardo personally liable for theunpaid lease on the car? Refer to any relevant provisions(including subsections) in the Companies Act 1993 to support youranswer. 3. Comprehende Ltd (Comprehende) controls the composition of theboard of Pharoah Developments Ltd (Pharoah). Pharoah owns 80% ofthe shares in Piety Ltd (Piety). Piety becomes insolvent afterengaging in highly risky behaviour. Refer to provisions (includingsubsections) in the Companies Act 1993 to support your answers.(a) Explain if Piety is a subsidiary of Comprehende. (b) Explain if Pharoah might become liable for the debts ofPiety.