Directors liability, Business Law and Ethics

Directors liability:

This was fraudulent preference and the bank must repay the sums received. The directors' liability under their guarantee to the bank then revived.

A payment made or charge created under threat of legal proceedings is not voluntary and so it cannot be treated as fraudulent preference even though its purpose and effect is to treat one creditor more favorable than the rest.

An ordinary commercial payment of debts made without intention of giving an advance may not amount to fraudulent preference: Re Paraguassu Steam Tramway Co (1974). However, it has recently been held that a payment will constitute a fraudulent preference if the debtor, at the time of making it, knew that he could not pay his debts as they arose and intended to pay one of his creditors in full ahead of the others.

Case: RE MATHEWS (1982)

The proprietors of an insolvent small company (who were aware of the insolvency) paid cheques into the company's bank account. Two days later the company ceased trading and two days after that the proprietors notified the bank of the termination of their personal guarantees of the company's borrowing.

Held:

Banking cheques after a decision to stop trading was a fraudulent preference in favour of the bank since at that time the proprietors knew that the other creditors would not be paid (even though they honestly believed that they would eventually be paid).

Posted Date: 1/15/2013 5:41:16 AM | Location : United States







Related Discussions:- Directors liability, Assignment Help, Ask Question on Directors liability, Get Answer, Expert's Help, Directors liability Discussions

Write discussion on Directors liability
Your posts are moderated
Related Questions
1. a.  Read this summary of a journal article about education and the recent uprisings in the Middle b.    Model the decision whether to participate in a rally like our two peri

Inflationary Bias Another potential problem with the coordination of monetary policy is that it can worsen the inflationary bias within each country. If the costs associated wi

Estoppel - Law of Agency and Partnership Further the basis of estoppel was explained through the court like Spiro v. Lintern  in giving such; "Where a man is below a duty -

Qualifications of Advocates Conversely for qualify to admission as an advocate one must as; Be a US citizen or can say Possess a law degree from a recognized

Explain two scenarios in which a restraint of trade clause would typically be used.

Companys debts: In case a company is unable to pay its debts the creditors, or a creditor, may petition the High Court for an order to wind it up. During the winding up the me

Law of Agency - Lawful Rules Though the law of agency prescribes the lawful rules to ascertaining as:           (a) How a person possibly will become an agent; and one is

QUESTION 1 (a) What are the essential elements for a valid contract as stipulated by article 1108 of the Civil Code (CCM)? (b) How can consent be vitiated in relation to con

Strong and Weakness of Acts of Parliament: There an Act of Parliament may be said to possess the giving advantages: as; (i) Democratic in nature Now here it is democrati

Advantages of Arbitration (a) First is, Speed : It is a faster scheme of dispute resolution (b) Second is, Convenient : Parties are free for determine as; Th