Question 1

Three years ago Andrew, Boysie, Carlyle and Devon all graduated from Back Yard Tech

University. They decided to pool their resources and talents to incorporate a private

limited company with pre-emption rights bearing the name More For Less Limited. The

objective of the company was to purchase used cars for resale at affordable prices as well

as servicing of motor vehicles.

The Company was incorporated with 1,000 ordinary shares. Andrew as the majority

shareholder holds 400 shares, Boysie holds 300 shares, Carlyle the Managing Director

holds 200 shares and the remaining 100 shares are held by Devon who is the Company

Secretary. Prior to the incorporation of More for Less Limited, Andrew entered into a

contract on behalf of the Company with Brite Lite Electricity Company (BLEC). Andrew

advised BLEC that all subsequent bills should be sent to the company at its registered

office. After the company was issued its certificate of incorporation, it paid two bills;

however, business has taken a downward turn and is currently operating at a loss. BLEC

sent a letter addressed to Andrew threatening legal action against him for the outstanding

bills owed by the company.

After a heated argument with Carlyle, Rez, who was employed as the Service Manager of

More For Less Limited, walked off the job. A term of his employment contract included a

non-compete clause which stated that if he should decide to open a similar business, he

would not solicit the clients of More for Less Limited. It has now been brought to the

companys attention that the ex-employee (Rez) has contacted a number of the companys

clients and solicited them to leave More For Less Limited and instead have their vehicles

serviced by his company.

Carlyle has not been getting along with Andrew, neither is he in agreement with some of

the decisions that the Company has made over the past two (2) years. He stopped

attending meetings and hardly shows up for work. In addition, he is experiencing financial

difficulties and intends to sell his shares in the company to a family member, who has

recently come into a large sum of money.

Boysie, to the knowledge of the other directors but without their express authority acted

as the managing director (in the absence of Carlyle) in concluding a contract with one of

the large hotels to service their vehicles. He had engaged the services of an attorney to do

the legal documentation involved in the contract.

The company refused to pay the attorneys fees on the ground that Boysie who acted as

managing director had no actual or apparent authority to enter in a contract with the

attorney.

Using Common Law Principles and Statutory Provisions, advise More For Less Limited on

all legal issues arising from the facts given.

(35 Marks)