ASSIGNMENT TWO

Solomon incorporated his business as a limited company, which consisted of $7$ members of his

family and himself. He held all the shares except k$100,000$ representing a loan which the

company borrowed from him. The debentures entitled him to a first charge on the assets of the

company. Thus, when the company went liquidation, Solomon claimed that, as a debenture

holder, he was a "secured" creditor. The other creditors claimed that Solomon and the

company were the same person, and that a man could not use money to himself. The House of

Lords however, held that a company, once incorporated had a legal existence of its own, which

was quite independent of the existence of any individual member

$($a$)$ Discuss how you can apply the separation of the owners from the management of the

company. $(12\mathrm{.}5$ marks$)$

Paul Chanda runs a business under the name of "House of Paul". The latter became a

partnership between Kabuswe, Mpasa, and Dumisani but instead continued to operate under

the same name, "House of Paul". The partnership arranged for printing of advertising materials

with Chanda Kabwe lithographing Co$.$ making a contract on three separate occasions for such

printing. During the cause of these dealings, the "House of Paul" became corporation when the

printing bills were not yet paid in full; Chanda Kabwe sued the partners as individuals. They

claimed they were not liable because the partnership had made the contracts.

b$).$ Explain and advice the plaintiff, as well as citing decided cases within the Zambian

jurisdiction, $(12\mathrm{.}5$ marks