Several rules for fraudulent trading, Business Law and Ethics

Assignment Help:

Several rules for Fraudulent trading:

Various rules have been established to determine what is fraudulent trading:

(a) Only persons who take the decision to carry on the company's business in this way or play some active part are liable.  An employee who is aware that the debts incurred may not be paid and who merely fails to inform the directors of the situation is not a "party" to carrying on business since it is not a decision or action on his part.

                                                  Case: RE MAIDSTONE BUILDING PROVISIONS (1971)

The secretary of the company also acted as financial adviser to the directors.  The secretary was aware but did not tell the directors that in carrying on its business the company was incurring debts which it was not likely to pay.  Proceedings were brought against the secretary for fraudulent trading.

Held:

As the secretary did not take the decision to continue trading he was not a "party" to fraudulent trading.  In so far as he had failed to provide information and advice which it was his duty to give he might have been negligent but that was not an issue in these proceedings.

(b) "Carrying on business" can include a single transaction and also the mere payment of debts as distinct from making trading contracts.


Related Discussions:- Several rules for fraudulent trading

Members voluntary winding up, Members voluntary winding up: In a membe...

Members voluntary winding up: In a members' voluntary winding up the creditors play no part since the assumption is that their debts will be paid in full.  There is no committ

Estate planning , Estate Planning Case Study Rich and his wife, Ruby, ...

Estate Planning Case Study Rich and his wife, Ruby, heard that you are an expert in the field of Estate Planning as a result of the superior education you received at WPU.  The

Advantages of stare decisis - flexibility, Advantages of Stare Decisis - ...

Advantages of Stare Decisis - Flexibility Since of the freedom that final Court of Appeal always has to depart from a previous decision of its own whether the social condi

State article 30 of international law, State Article 30 of international la...

State Article 30 of international law Article 30 further states that his or her private residence and papers, correspondence and property are all inviolable.

Discuss the ethical issues, An employee at the supermarket you manage moppe...

An employee at the supermarket you manage mopped one of the aisles in the store and placed signs at the ends of the aisle to warn people not to use the aisle until the floor dried.

Correspond with description - terms used in contract, Correspond With Descr...

Correspond With Description - Terms Used In Contract With S.15 provides that, where goods are sold through description whether is an implied matter that the goods correspond w

What is the theory of contracts, What is the Theory of Contracts The sp...

What is the Theory of Contracts The specialized relationship between principal and agent and between agents themselves in the policy process has been explained with the economi

Extraordinary universal meetings, Extraordinary Universal Meetings: S....

Extraordinary Universal Meetings: S.132(1) provides for the convening of "extraordinary" general meeting but does not define it.  Neither is the word "extraordinary" defined i

What are the organisations made up by united nations, What are the organisa...

What are the organisations made up by United Nations? The United Nations was set up to make international public law after the Second World War. This is represented by nearly e

Companys debts, Companys debts: In case a company is unable to pay its...

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

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd