Liability , Business Law and Ethics

Liability:

Liability under the section may arise on the death of a member if the death reduces the membership below the statutory minimum for the particular company and:

          (i) no transferee is registered as a new member, and

          (ii) the personal representative of the deceased member  does not elect to be registered as a member, within the prescribed six months.

It should be noted that the section limits a member's  liability to debts contracted after the six months. It does not make the member liable for any debts incurred during the six months which follow the reduction of  membership. Neither does it make a member liable for any tort committed by the company during the relevant time.

Subsection (1) of Section 109 of the Act requires a company's officers and other agents to write its name on its seal, letters, business documents and negotiable  instruments. This is to be done primarily for the benefit of third parties who might contract with a limited company without realising that it is a limited  company.

Subsection (4) of the section provides that any officer   or agent of the company who does not comply with the aforesaid statutory requirements shall be liable to a  fine not exceeding one thousand shillings, and shall further be personally liable to the holder of any bill of exchange, promissory note, cheque or order for goods which did not bear the company's correct name, unless the amount due thereon is duly paid by the company. The  imposition of personal liability on the company's agent is what is regarded, in a somewhat loose sense, as  "lifting the veil of incorporation". A probably better view would be to regard the section as a codification of the common law rule which makes an agent personally  liable under a contract which he enters into with a third party without disclosing that he is acting for a  principal. That, in effect, is what happens if a  company's agent does not comply with the statutory  requirement.

Liability under this section is illustrated by Nasau  Steam Press v Tyler & Others (7) and Penrose v Martyr  (8). In the latter case the plaintiff told the court  that she was NOT aware that the company was limited till after the bills were accepted. She had therefore been misled as to the legal status of the company. It should however be noted that the section does not require that the third party suing the company's officer should have been misled by the officer's failure to write the company's name correctly.

Posted Date: 1/12/2013 2:06:15 AM | Location : United States







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

Write discussion on Liability
Your posts are moderated
Related Questions
Imagine yourself in a situation of being encouraged to inflate your expense account. Do you think your choice would be most affected by your individual moral development or by the

Question 1: (a) Briefly outline the role of the State in Employee Relations. (b) Write short notes on any three of the following: (i) The Ministry of Labour and Industrial

QUESTION 1 (a) Describe the main stages of money laundering? (b) Is the current Mauritian Banking Act strong enough to protect depositors and maintain financial stability gi

Ahtesh is the promoter to a company not yet incorporated. As promoter he bought two excavators on behalf of the company as the latter would be building and running a hotel. While t

Explain the first kind of treaty Under international law, treaties primarily serve three separate purposes, though any one treaty may perform more than one function. The first

Question : (a) Show how a party can terminate a forward transaction prior to maturity? (b) Suppose a forward Rate Agreement that: Expires in 30 days Is based on a n

QUESTION 1 The use made of decision-making bodies such as commissions, boards, tribunals and statutory bodies for the purpose of achieving celerity in public affairs opens the

Explain whether Mike should be excused from not performing under the contract with Jim: Facts Mike ran an excavation business whereby he was contracted by builders to use his exca

QUESTION 1 What are the individual and situational factors that influence ethical decision making in the workplace QUESTION 2 (a) How is unemployment socially distribut

The  defendants, while sympathetic, may believe that the ultimate responsibility of a child's safety and welfare belongs to the parent themselves. To the extent that the parents we