Company Law Essay Example | Topics and Well Written Essays - 2250 words - 1

Company Law - Essay Example They have a liability over the customers who were taken seriously ill for consuming a test product. Since at this time the company ownership had not been legally completed, it is the real Ale that should take legal responsibility for this action. It is additional to the fact that real ale had been registered to produce ale only. As such, it was a legal mistake when as a director, Grace decided to produce lager and test it using the consumers of the company. The sole object4 of the company was to produce and sell Real ale only and desist from the production and brewing of lager. It can be considered that she, on behalf of the company, acted beyond its capacity by getting involved in an activity other than that which was expressed as the main commercial purpose for which the company was formed. Her action thus acted as a breach of an express term5 that was included in the in the document as an â€Å"Article of Association†6 during the formation of the agreement. She, together wi th Realale, subsequently bear legal liability against the patients involved in the â€Å"sick seven† episode since the brewing of larger is in this case deemed to be ultra vires and void. It is because it was done in contrast to what the scope of the company’s objects clause describes. In addition, as a consumer, the affected individuals bear the legal right to purchase products that have been proven to be safe and not likely to cause any harm to their health7. As such, since the supervision was done by Grace on behalf of the company it is legally unethical to produce a test product without consulting the other board members and presenting it to the consumers. In this case, it can be established that she used the company as a mere facade to enhance her interests to surprise her fellow directors. As a director, she is liable to the rest of the shareholders by making the company to act against its objects. Moreover, this action was not valid between the company and the t hird party who constitute its customers. It is on these grounds that the company can be held liable for the violation of consumer rights. In this case, Realale should be considered liable for negligence by the company and one of its directors should take responsibility for any costs incurred by the company over the void transaction. As partners in the company, Realale lack a limited liability for the liabilities and debts in the firm. Since there was a legally binding agreement between Real Ale and Elena’s father; Harry, during the purchase of the cars, it is the responsibility of its shareholders to ensure that the payment is made as expected. This would ensure that the agreement is converted into an executed and complete contract8. Additionally, the time indicated in the agreement for payment should be appropriately observed. In this sense, Big Brew has a legal right to claim this payment from the assets possessed by Realale. Nonetheless, as was revealed in Lee v Lee Air Fa rming Ltd the shareholders of a company are not liable for the debts and liabilities of the company9. It is for this reason that the Realale shareholders are not liable to the creditors of the subsequent Big Brew Company. They only owe liability to the company and not to the individual creditors of the company. This is because they are