Adidas Paperss Essay

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ABBL 3044 Company Law TUTORIAL 2 (Rev.2) WEEK 3 Suggested answers (Note: This is only a suggested answer for tutors). LEGAL PERSONALITY & NATURE OF A COMPANY 1. Discuss with relevant cases the situations in which the veil of incorporation may be lifted by the courts. The corporate veil may be lifted by the courts in the following situations: a. Where the corporate form was used to avoid or evade an existing legal duty or to commit fraud. In the case of Gilford Motor Co. Ltd. V Horne (1933), Horne was employed as the managing director of GM. His employment contract contains a ‘non-compete’ clause, the purpose was to prevent him from operating a competing business with GM when he leaves employment. H resigned and set up a business in competition with GM. To cover himself he incorporated a company in which the shareholders were his wife and a business associate. GM succeeded in getting the court to lift the veil of incorporation and to recognized that the person behind the new company was none other than Horne and that he was personally bound by the non-compete agreement in the contract. b. Where the corporate form was set up to avoid a contractual duty, i.e. to avoid performance of the contract. In Jones v Lipman (1962), the owner of land contracted to sell it to J, but then changed his mind. In order to ‘keep’ the land, the owner set up a company and sold the land to it. He hoped that, although he personally would have to pay damages to J, the land would still be owned by ‘his’ company which was a separate person. Specific performance was awarded against both him and the company to transfer the land to Jones. c. Where the veil of incorporation was lifted in order to identify the nationality of the Company. Where the law prevents people from trading with the enemy, the

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