The factual scenario raises issues regarding enforceability of contract and in order to advise the parties, it will be necessary to evaluate the company law requirements regarding authority.
With regard to the property purchase, the issue arises as to whether this forms part of the Fresher Limited's assets. Whilst Barbara and Angela had entered into an agreement to incorporate a company, the company was not incorporated until December 2007 and the Vinacre plot was purchased in August 2007 in Angela's sole name. At this point, Angela and Barbara had a contractual agreement to set up a company and as the company had not been incorporated, the land will belong to Angela.
With regard to Peter's rights regarding the supply of the grape press, the central issue arises as to who is liable for the breach under the executory contract. Firstly, Angela explained to Peter that she was forming a company called Wino Limited and purported to be entering into the contract with Peter on behalf of the Wino Company.
[...] However, group company structures often create problems of effective regulation and accountability, yet existing principles of law have arguably been stretched to ignore separate legal personality within a group[7]. For example, large corporate groups commonly operate as an MNE, which are effectively, a number of individually incorporated companies related to each other through common ownership and policy control in various jurisdictions[8]. From a plaintiff's perspective, they will often be in a better position if legal action is instituted against a parent company as opposed to the subsidiary. [...]
[...] Cases and Materials in Company Law. 8th Edition Oxford University Press. Companies Act 1985 Insolvency Act 1986 Companies Act 1989 Companies Act 2006 www.companieshouse.gov.uk www.opsi.gov.uk G Morse (2007) Palmer's Company Law: Annotated Guide to the Companies Act 2006. Sweet & Maxwell at p.1 Section 40(2) of the CA 2006. [1897] AC 22. Peter T Muchlinski., (2007). Multinational Enterprises and the Law. 2nd Edition Oxford University Press at p.3 Peter T Muchlinski (2007) ibid at 7. Peter Nygh (2002). The liability of Multinational Corporations for the Torts of their subsidiaries. [...]
[...] Accordingly, Kuldip has a binding contract with Sub Limited and can claim directly against the company for breach of contract. However, the problem is that Sub Limited has gone into liquidation and has no assets therefore Kuldip could alternatively pursue a claim against the directors of Sub Limited for wrongful trading under section 214 of the Insolvency Act 1986 (IA). Alternatively with regard to a potential action against holding company Littlemarch Limited, as Gertrude was on the board of both Sub Limited and Littlemarch and there appears to be an overlap between the two companies in terms of corporate strategy, Kuldip may be able to pierce the corporate veil and bring an action against Littlemarch Limited in line with the rationale in Scottish Co-operative Wholesale Society v Meyer[35]. [...]
[...] Alan is a minority shareholder and company law offers added protection to minority shareholders[48]. The circumstances of the case will render it difficult for Alan to establish a fraud on the minority for the purpose of the exception established in Foss v Harbottle,[49]which has been further limited by the ability of companies to ratify any acts that are ostensibly ultra vires. However, section 994(1) of the CA (which came into force on October 2007) enables a company member to “apply to the court by petition for an order under this Part on the ground of . [...]
[...] This in turn clearly questions the efficacy of the current law as a tool for the regulation of group companies, thereby undermining the sentiments of the Company Law Review. With regard to fraud, the exceptions have been formulated by judicial extrapolations of For example, in the case of Gilford Motor Company Limited v Horne[20] it was held that the incorporation of a company the sole purpose of which was intended to breach a restraint of trade clause with a previous employer, rendered the company's status as a corporate personality a justifying the piercing of the veil. [...]
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