company law

Total Marks: 30 [answer both questions]
Due Date: Friday 20 December 2013 by 1.00pm
Word Limit: Minimum 1,500 words – Maximum 1,800 words [excludes bibliography]
Question 1 [15 Marks]
Dozey, a sole trader, is the owner of a very successful business called ‘Sleepy Head’ which specialises in selling mattresses and bed-ware. He has insured the business with Risk Ltd against fire, theft and the like in the sum of $1,000,000.
Some five years later, Dozey decided to conduct the business via a corporate structure. He incorporated a company called ‘Sleepy Head Pty Ltd’ which is validly registered with ASIC. Immediately thereafter, in February 2013, Dozey enters into a sale contract with Sleepy Head Pty Ltd which purchases the business from him. As consideration for the purchase price, the company issued the following to Dozey:
? a substantial block of shares as fully paid; and
? debentures for a further substantial sum secured by a charge (security) over all of the company’s assets.
After incorporation, Dozey caused the company to take out workers compensation insurance policy with Compo Ltd.
A series of ‘bad luck’ accidents followed. In June 2013, burglars broke into the premises of ‘Sleepy Head Pty Ltd’ and stole stock valued at $250,000. In July 2013, Dozey fell from a ladder in the store while trying to retrieve some stock and injured his back. He has incurred substantial medical costs. As a result of the Global Financial Crisis, business has declined and Sleepy Head Pty Ltd is now insolvent and under the care of the liquidator.
The liquidator has rejected Dozey’s claim against Sleepy Head Pty Ltd in relation to the enforcement of the charge (security). Compo Ltd, which has underwritten Sleepy Head Pty Ltd’s worker compensation policy, has rejected Dozey’s claim for payment of his medical bills. Risk Ltd has also refused the insurance claim of Sleepy Head Pty Ltd to recover the value of the goods stolen.
Advise fully, with reference to legal authority, whether Dozey can:
(a) enforce his charge against Sleepy Head Pty Ltd; [5 marks]
(b) enforce the claim of Sleepy Head Pty Ltd against Risk Ltd to recover the value of the goods stolen ; [5 marks] and
(c) enforce his claim against Compo Ltd for the payment of his medical bills. [5 marks]
Question 2 [15 Marks]
Lee, a sole trader, has a successful computer business in Sydney. He used the profits to buy himself an expensive home, car and an investment property. Lee wishes to expand his business. His income and his tax are rising. Lee comes to you advice. He wants to know whether he should reconsider the type of business structure he has. Lee is currently single, but wishes to marry soon and would love to have children.
Advise Lee, with reference to the facts above, what type of business structure would best suit his needs. Your answer must offer full reasons for the advice. Your answer must also give full details on the formalities required to implement the advice given. Your answer can be structured in the form of an essay [with the use of headings and sub-headings]
End of Question.
1. Submission Procedure: TOP Office; to be handed to QingQing Ho)
2. Assignment Cover Sheet must be submitted with student signature and with word count
3. Plus Copy of assignment to be lodged at turnitin
4. Late submission will attract penalty (mark deduction of 5 % for each day late)
Most Important: Plagiarism is a serious academic offence and can result in failure of this course. Students are expected to submit answers based on individual effort (this is not a group project).
Requirements for a pass/good mark:
1. A legal analysis of the question with reference to relevant principles of corporations law (case law) and, where appropriate, relevant statutory provisions of the Corporations Act.
2. Students are expected to reference the relevant chapters in the prescribed textbook and to draw supporting information from there (Hint: read Chapter 5 of the prescribed textbook for the legal issues raised in Question 1; read Chapter 3 of your textbook which deals with the legal issues raised in Question 2).
3. You are strongly advised not to use the internet for resource materials (as it is unnecessary and you run the real risk of drawing on irrelevant information). Your prescribed textbook is more than adequate to answer the question.
4. Students are expected to footnote references1 and to provide a bibliography.2
5. Marks will be deducted if the answer does not meet the minimum word count – a word count must be indicated on the cover sheet.
1 Salomon v Salomon & Co Ltd [1897] AC 22 (hereinafter Salomon’s case) discussed in Harris, Hargovan & Adams, Australian Corporate Law (4th ed, LexisNexis, 2013) pp 164-167.
2 Harris, Hargovan & Adams, Australian Corporate Law (4th ed, LexisNexis, 2013).
6. A good answer will do the following (adopt the following structure) with respect to the question:
(a) Identify the material (relevant) facts – and NOT simply repeat the question;
(b) Identify the legal issue (or issues);
(c) Identify the relevant case law;
(d) Apply the legal principles and case law to the given facts;
(e) Offer legal reasons (with legal authority) as to whether Dozey can enforce the various claims identified in Question 1 (a simply Yes or No answer with personal views is inadequate);
(f) Be proof-read to eliminate spelling and grammatical errors;
(g) Be referenced, with a bibliography;
(h) Meet the minimum word length requirement and
(i) Not simply copy/reproduce the textbook (answer must show own understanding)

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