Shirley and Laverne Case Study - Business Assignment Help

Assignment Task :

QUESTION 3
Company A (which markets computer software) and company B (which runs a computer training college) enter into an agreement to form a new company, company C. Company C is to provide onsite computer training for retail businesses that use company A's software. Shirley (a director of company A) and Laverne (a director of company B) are authorised by the boards of directors of their respective companies to, as a matter of urgency, take whatever steps are necessary to form company C and to secure training contracts on its behalf.
Shirley and Laverne instruct solicitors to register a company. More quickly than they anticipate, they manage to attract a large training job from company Y. Purportedly on behalf of company C, they execute a contract with company Y. They have told the company Y representatives that company C is not yet registered. The parties agree to include a clause that provides that if company C (or a company reasonably identifiable with it) is not registered within two months of the date of the contract, then company Y can rescind the contract.
 

Consider these facts in the light of each of the following scenarios and questions.
1. Assume company C is registered a month after the contract is executed. What steps must Shirley and Laverne take to ensure that:

• the contract with company Y is binding on company C; and
• neither of them is personally liable for the actions of company C under the contract.

2. Assume company C is not registered within the two-month period. What remedies does company Y have and against whom?
3. Assume Shirley and Laverne do procure the registration of company C. Company A, company B and two individuals, C and D, become its shareholders. Shirley and Laverne organise the transfer of assets from their own company, company SL, to company C at grossly inflated values. Company C becomes insolvent and a liquidator is appointed. Once registered, neither Shirley nor Laverne have taken any role in the management of company C. Despite this, what remedies might the liquidator still pursue against Shirley and Laverne?

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