Wednesday, March 31, 2010

COMPANY LAW --> EXERCISE

EXERCISE ON COMPANY LAW (BBL2014)
Ben and Gary are the subscribers of Sporty Sdn. Bhd., a company that imports sport equipments from China to Malaysia. After two years of successful business, the company decides to buy 70% of shares at Promo Sdn. Bhd. another local company that does the promotion and distribution works for Sporty Sdn. Bhd. in Malaysia. The other 30% shares were retained by Lim and Leong, both the original subscribers of Promo Sdn Bhd. On this outset, please discuss the legal issues and their solution according to the Malaysian company laws that you have learned:


Question 1:
Memorandum and Articles of Association are vital documents for every company. Explain the nature and function of each of Memorandum of Association and Articles of Association.


ANSWER OF QUESTION 1:
The memorandum of association of a company, often simply called the memorandum, is the document that governs the relationship between the company and the outside. While the articles of association of a company, often simply referred to as the articles, are the regulations governing the relationships between the shareholders and directors of the company, and are a requirement for the establishment of a company.
Together with the memorandum of association, they form the constitution of a company. A similar term, "articles of agreement", is often used for non-profit organizations. The memorandum of association records the agreement of the first subscribers to form a company and to become members and, in the case of a company that is to have a share capital, to take at least one share each. Articles of association typically cover the issuing of shares, the different voting and dividend rights attached to different classes of share, restrictions on the transfer of shares, the rules of board meetings and shareholder meetings, and other similar issues.

Question 2:
Sporty Sdn. Bhd. made a contract with ChinaSport Corp (a Chinese company) to supply gymnastic equipments to Kuala Lumpur. Unknown to Gary, Ben had made a prior back agreement with ChinaSport Corp to allocate some shares of ChinaSport Corp to Ben personally as a gift for his role in concluding the contract with Sporty Sdn. Bhd. Gary only knew this later and he asked if there is anything he could do against Ben. Please advise him and support your answer with relevant decided case law.



ANSWER OF QUESTION 2:

In this case, Gary can sue Ben for using company power for his own personal benefits without notifying the shareholders (Gary in this case). This type of offenses falls under the principal of “Lifting of Corporate Veil” which states that “in certain circumstances the directors and members of the company might be personally liable for their business transactions”. These cases include:
1. Business carried on when there are fewer than two members.
2. Defrauding the creditors.
3. Signing in documents without the name of the company.
What Ben has done is signing documents without the name of the company (prior back agreement with China Corp) to get personal gift as shares. He is only eligible for the gift due to what he has done for China Corp to get the deal with Sporty Sdn Bhd.


Question 3:
In undertaking the promotion activities, Promo Sdn. Bhd. had received loan amounting to RM 1million, that is currently outstanding (overdue) and exceeds the assets of Promo Sdn. Bhd. Bank Putri Berhad (the creditor) seeks to claim for the repayment from all the company’s owners, i.e. Sporty Sdn. Bhd., Lim and Leong. Please explain to them the law on this and who should be liable to pay the debt in this situation. Please support your answer with relevant decided case law.




ANSWER OF QUESTION 3:

According to this this, reference can be made to the case that discusses “Salomon v. Salomon Co.LTD(1987)”. The individual that is supposed to reimburse back the balance due is the possessor company, which is know as Sporty Sdn.Bhd, this is because, the law of Separate Legal Entities claims that the mentioned company is obviously separate from it’s members/ this means that Leong and Lim are only the members of the company after the taking over of the company by Sporty Sdn.Bhd. Sporty Sdn.Bhd is accountable if a fine is in consideration to be passed.


Question 4:
Knowing that Promo has an outstanding debt amounting to RM 1million, Lim and Leong, who also acted as directors of Promo Sdn. Bhd. secured another business with a third party in which Promo has to finance the project with their money first, and therefore they applied for another loan at another bank. The loan of RM 500K was approved, but not long after that the loan was due and it was obvious that Promo Sdn. Bhd. could not pay as it already became insolvent in the first place. In the view of doctrine of separate legal entity, please discuss the liabilities of the directors (Lim and Leong) in this case. Please support your answer with relevant decided case law.



ANSWER OF QUESTION 4:

The case that suits this matter will be is Lee v. Lee’s Air Farming Ltd [1960]..
The incidents of the events of this case are very much similar to the example case given. In this case, lee acted as the pilot, governing director and the controlling shareholder of the company. After the murder, his wife claimed compensation from the company and it was the court’s decision to the wife’s entitlement of compensation as the situation declares that the company and Lee were separate legal persons. So, when we analyse the case further, it is understood that in the case of Promo Sdn.Bhd, the directors, namely Leong and Lim will not be liable to to pay their liabilities but in order to clear the debt the comoany will be liquidated. Despite the high ranking in the company, the debt stands under the company’s name due to the reasons being that the members in the company are separate legal entities.



Question 5:
Gary and Ben wanted to sell all their shares to Jojo and Cool respectively. What is the effect of these transactions to the status of the company Sporty Sdn. Bhd.? Please justify your answer with a case law.



ANSWER OF QUESTION 5:


ANSWER (1)

(a) The acquisition of an undertaking or property of a substantial value; or
(b) The disposal of a substantial portion of the company’s undertaking or property, unless the arrangement or transaction has been approved by the company in a general meeting.


ANSWER (2)

The creation of secured transactions begins with the consent of the parties to the transaction. The agreement would have to be registered under the relevant law or laws in order to give priority to the secured transaction. Once the security is placed on the register it will be deemed to be within the constructive knowledge of any subsequent creditor. This ensures priority to the registered charge over all subsequent registered and unregistered charges. Submitting a transaction for registration is a matter of procedure. Upon registration, the register would show the registration date to be the date on which the transaction was submitted for registration.
The following securities are available under Malaysian law: -
(i) a registered charge over National Land Code land;
(ii) debentures which form fixed and floating charges over real and personal property;
(iii) legal and equitable mortgages of personal and intangible property;
(iv) pledges of personal property;
(v) liens over land; and
(vi) the assignment of proceeds of contracts or choses in action.



....................THE END OF ANSWER THE QUESTION..................

Tuesday, March 30, 2010

HOME WORK (CASE 1 ) GROUP WORK........

GRUOP MEMBERS..
1.ILANGOVAN 1091103033
2.NURUL SYAZMIN HAMDAN 1081104673
3.MAEEN NAJEEB SHABAN 1061104398
4.LAKSHMIPRIYA MAHESWARAN 1061109030
5.RACHEL JEYA KUMAR 1061101963

QUESTION 3

One day, Jay saw a banner hanging in front of her favorite cassette outlet in Alamanda which reads: “BIG SALE! LATEST TOO PHAT’S ALBUM IS UP FOR GRAB WITH 50% DISCOUNT! LIMITED STOCK! HURRY, HURRY, HURRY!”.After reading it, Jaw immediately jumped in the outlet and said she wanted that album at the said discounted price. But to her disappointment, the shop owner said that the cassette is now sold at the normal price. Can Jay sue the shop owner for breach of contract? Discuss according to contract Act 1950 and relevant decided cases.

ANSWER FOR CASE STUDIES......

To begin with, the banner hanging in front of the outlet is not a contract but a mere invitation to treat. How do we know that the banner is just an invitation to treat and not a contract? In addition to the general rule that states that all types of advertisements (banner in this case) are just invitations to treat and not contracts, many of the contract elements are not found in this case. Elements such as consideration, certainty and some others don’t exist in this case, which supports the conclusion of invitation to treat and not a contract.

From this point, we can conclude that Jay cannot sue the shop owner for breach of contract as there is no contract in the first place.

In point form:

 Identify the legal issue:
Legal issue here is the fact that the shop owner is not following what he mentioned in the banner. So, Jay wants to sue him.

 Cite the relevant law:
This case falls under two relevant rules: Display of goods in the shop (with / without price tags)
- Advertisement (Banner).
Both cases are invitations to treat.

 Apply the law:
By applying the law here, the banner is just an invitation to treat, so Jay can’t sue the shop owner.

 Legal advice:
Jay can’t don anything and the shop owner has all the right to reject her offer to buy at the discounted price.

Thursday, March 4, 2010

contract law.......notes.......own notes.....

meaning of contract.....

an agreement between two or more parties that is legally binding between them. It is an agreement enforceable by law. (section 2(h) of Contracts Act)

Element of contract....

1. offer and acceptance
2. intentation
3. consideration
4. certainty
5. legality
6. legal capacity
7. free consent

Offer @ acceptance

1.Offer

When one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to the act or abstinence, he is said to make a proposal

two type of offer
a) bilateral offer.....specific person or group of persons
b) unilateral offer.....any specific person rather it is made to the world at large.

Acceptance

When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted: a proposal, when accepted, becomes a promise

2.intentation

....to create legal relations
....from the language and context of the agreement and conduct of the parties.


3.consideratiom


....“When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstain from doing, or promises to do or to abstain from doing something, such act or abstinence or promise called a consideration for the promise.”

without consideratiom
“An agreement without consideration is void.”
[Section 26,Contract Act 1950]

4. certainty

“Agreements, the meaning of which is not certain, or capable of being made certain, are void.” [Section 30, Contracts Act]

5 @ 6 legality
Requirement of Legality

The purpose or consideration of the contract should be lawful

.....If the purpose of the contract is unlawful,
.....then the contract would be invalid and would not be enforceable by law.
(Section 24)

constitutes illegality/unlawful
....is forbidden by law
....If allowed may defeat any law
....fraudulent
....Implies injury to other’s body or property
....Immoral or opposed to public policy

Status of Contract

..valid
..void contract
..voidaable contract

7. Free consent

... (sec. 10)

a. Fraud – s.17
b. Misrepresentation – s.18
c. Coercion – s.15
d. Undue influence – s.16
e. Mistake – s.21

a....
whenever a person causes another to act on a false

b....
false statement made by one party which induces the other to enter into a contract

types of misrepresentations
....Innocent Misrepresentation
....Negligent Misrepresentation
....Fraudulent Misrepresentation

c....
....“Coercion is the committing, or threatening to commit
....any act forbidden by the Penal Code,
....to the prejudice of any person whatever,
....with the intention of causing any person to enter into an agreement.”

d....
“A contract induced by “undue influence” where the relations subsisting between the parties are such that one of the parties is in a position to dominate the will of the other and uses that position to obtain an unfair advantage over the other.”

Elements of Undue Influence: A party who relies upon the plea of undue influence must prove that:
.....the other party was in a position to influence him;
.....the influence was exercised;
.....the influence exercised was undue;
.....the exercise of undue influence had brought about the transaction; and
.....by exercising undue influence the other party had obtained an unfair advantage over him.

e....
Where both parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void.


Discharge of contracts
a) Discharge by performance...respective promises in accordance ...
b) Discharge by frustration...if the contract legally or physically becomes impossible to perform for subsequent change of circumstances.
c) Discharge by Breach of contract...If one of the parties in a contract refuses to perform his promise it is said that the contract has been discharged by breach.

Remedies for Breach of Contracts

a) Damages
b) Specific Performance
c) Injunction
d) Quantum Meruit

a...
If one of the parties breaks the contract made between them, then the party affected by the breach may claim damages from the party who has breached the contract.

b...
which breaks the contract to perform his promise.

c...
If one of the parties breaches the contract then the other party may apply for interlocutory injunction to maintain status quo of the subject-matter in a pending suit.

d...
In the event of a breach of contract, the injured party may have a claim other than that for damages. In particular he may claim payment for what he has done under the contract.

the sources of law

the sources of law divided into 6 categories.....


1. Relion
2. Custom
3. convention
4. constitution
5. Statutes
6. common law

s
Sources of malaysian legal system....


divided into 2 parts as..

unwritten sources are....

1. customary law
2. islamic law
3. English common law
4. judicial decision

written law are....

1. constitution
2. legislation
3. subsidiary ligeslation



Islamic law


Shariah ....... Courts [Art. 121(1A)]


English common law


rules of equity are applicable to Malaysia through the operation of......... section 3(1) of the Civil Law Act 1956

suited to the local circumstances will be applied to Malaysia.


Constitution – Federal & States

Federal Constitution .....supreme source.....extent of the inconsistency be void.” (Article 4).


Doctrine of Stare Decisis

known as doctrine of binding judicial precedent.
other judges before them in dealing with cases with similar facts.

Horizontally: a judge is bound by decisions of earlier judges of similar/coordinate level.
Vertically: a judge is bound by decisions of judges made at superior courts.

Bommalattam ( The law ) tamil movie preview

Among a deluge of movies portraying rowdies who make a living out of taking the law into their own hands, it is a relief to see Thamizhan, that does not advocate that route and instead, propagates a valid message about the people knowing the law of the land and their rights. But director Majeed needs to take a few pointers from directors like Shankar on how to convey a socially relevant message in an entertaining manner. A lacklustre romance and crude comedy all but negate the effectiveness of the core message in this movie.

The movie details the circumstances that lead to the President himself releasing a postage stamp of Surya(Vijay), a lawyer in TamilNadu. Surya is a law school graduate, taking life lightly with his lover Priya(Priyanka Chopra) and his group of friends. When he realises the ignorance of the common man when it comes to the law of the land, he begins a crusade to educate him on the tenets of Indian law. His efforts lead to a virtual revolution where every man learns the ins and outs of the law and fights injustice based on his knowledge. When a wealthy plantation owner GK(Ashish Vidyarthi) arranges the death of Surya's brother-in-law Sakthivel(Nasser) after losing a case, Surya vows to bring GK to the streets through legal means.

Taking a cue from Shankar's Mudhalvan , Director Majeed cleverly picks a message that is close to the heart of the common man. So he is able to tackle everyday issues that resonate with the viewer. Viewers will definitely cheer when characters they probably meet everyday, like the rude conductor or the traffic policeman expecting some extra income, get their comeuppance from individuals who are now well versed in the law. But like most directors, he too goes to the extreme in depicting the changed situation, resulting in some scenes turning comedic.

But barring the scenes portraying Vijay's attempts to popularise basic law, there is little left to admire, or even enjoy, in the movie. Both the romance and comedy, which together occupy a hefty portion of the running time, are difficult to endure. Though the romance starts off promising to be cute, with both Vijay and Priyanka being in love but not conveying it to the other, it doesn't deliver on this promise. The sequences with the balloon are more silly than romantic and Vivek's intrusions don't help either. Its funny how Priyanka all but disappears once Vijay begins his social crusade but reappears at regular intervals to pave the way for a duet!

Director Majeed earns come points by not stopping with highlighting a key social issue but actually suggesting some concrete solutions to remedy the situation. Vijay's monologue in the court in the climax does have some intelligent(though Utopian) suggestions about increasing the quality of justice in the country.

Vijay does a neat job though his youth does work against him when he starts delivering advice while looking at the screen. Priyanka Chopra is likely to join the long line of single-movie heroines in Tamil cinema recently. Nasser and Revathi have little to do while Ashish Vidyarthi doesn't add much to another routine villain role. New music director Imaan composes some peppy and youthful tunes that help Vijay show off some impressive steps in the song sequences.

Thamizhan ( The law ) tamil movie preview

real Happen in Tamil Nadu (Chennai)

Among a deluge of movies portraying rowdies who make a living out of taking the law into their own hands, it is a relief to see Thamizhan, that does not advocate that route and instead, propagates a valid message about the people knowing the law of the land and their rights. But director Majeed needs to take a few pointers from directors like Shankar on how to convey a socially relevant message in an entertaining manner. A lacklustre romance and crude comedy all but negate the effectiveness of the core message in this movie.

The movie details the circumstances that lead to the President himself releasing a postage stamp of Surya(Vijay), a lawyer in TamilNadu. Surya is a law school graduate, taking life lightly with his lover Priya(Priyanka Chopra) and his group of friends. When he realises the ignorance of the common man when it comes to the law of the land, he begins a crusade to educate him on the tenets of Indian law. His efforts lead to a virtual revolution where every man learns the ins and outs of the law and fights injustice based on his knowledge. When a wealthy plantation owner GK(Ashish Vidyarthi) arranges the death of Surya's brother-in-law Sakthivel(Nasser) after losing a case, Surya vows to bring GK to the streets through legal means.

Taking a cue from Shankar's Mudhalvan , Director Majeed cleverly picks a message that is close to the heart of the common man. So he is able to tackle everyday issues that resonate with the viewer. Viewers will definitely cheer when characters they probably meet everyday, like the rude conductor or the traffic policeman expecting some extra income, get their comeuppance from individuals who are now well versed in the law. But like most directors, he too goes to the extreme in depicting the changed situation, resulting in some scenes turning comedic.

But barring the scenes portraying Vijay's attempts to popularise basic law, there is little left to admire, or even enjoy, in the movie. Both the romance and comedy, which together occupy a hefty portion of the running time, are difficult to endure. Though the romance starts off promising to be cute, with both Vijay and Priyanka being in love but not conveying it to the other, it doesn't deliver on this promise. The sequences with the balloon are more silly than romantic and Vivek's intrusions don't help either. Its funny how Priyanka all but disappears once Vijay begins his social crusade but reappears at regular intervals to pave the way for a duet!

Director Majeed earns come points by not stopping with highlighting a key social issue but actually suggesting some concrete solutions to remedy the situation. Vijay's monologue in the court in the climax does have some intelligent(though Utopian) suggestions about increasing the quality of justice in the country.

Vijay does a neat job though his youth does work against him when he starts delivering advice while looking at the screen. Priyanka Chopra is likely to join the long line of single-movie heroines in Tamil cinema recently. Nasser and Revathi have little to do while Ashish Vidyarthi doesn't add much to another routine villain role. New music director Imaan composes some peppy and youthful tunes that help Vijay show off some impressive steps in the song sequences.