Writing a legal scenario

Tip:You need to EXPLAIN the Law not just state and then APPLY it to the facts
 
 

Use the following IRAC structure as a guide to answer case study questions

When answering a Company Law problem it is useful to apply the IRAC structure so that you address all areas required. The IRAC method has four steps:
  • Identify the issue.
  • Relevant Law - Here you need to EXPLAIN the law not just state it. This could be sections/s of the Corporations Act or case law.
  • Application to the facts - the law is applied to the facts of the problem.
  • Conclusion.
Rollover the inverted triange to see an explanation of the IRAC Structure.

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Example question and answer

Question

Bingo Ltd is a manufacturer of electrical goods. It entered into a contract with Melvin Ltd a large discount retailer. Under this contract, Bingo Ltd was to supply its goods exclusively to Melvin Ltd. The directors of Melvin Ltd subsequently discover that a wholly-owned subsidiary of Bingo Ltd is selling identical electrical goods to competitors at cheaper prices. It appears that the subsidiary was incorporated to enable Bingo Ltd to avoid the effects of the contract with Melvin Ltd. Advise the directors.
( This a 5 mark question )

The issue in this case is whether the corporate veil can be lifted. Issue
The legal principle to apply, established in Saloman's case is that a company is a separate legal identity from its directors and members. However, there are exceptions when the corporate veil can be lifted. In the case of Guildford Motor Co Ltd v Horne it was decided that the veil of incorporation can be lifted if a wholly owned subsidiary was set up by a company to avoid a legal obligation under contract. Relevant Law
In this case it appears that Bingo Ltd set up the subsidiary company to avoid its contractual obligations to supply its goods exclusively to Melvin Ltd. Application to Facts
Therefore the directors can ask the court to lift the veil of the wholly owed subsidiary of Bingo and sue Bingo for breach of contract. Conclusion

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Please note: This is a simple low mark answer (5 marks) to illustrate the use of IRAC only. Many Company Law problems will involve multiple issues. In these scenarios each issue would need to be addressed. For example: The first issue is....The second issue is whether...

Practice activities

Activity one -Question

Gerald was appointed one of the directors of Mars Pty Ltd a couple of months ago. The company does not have a constitution. Gerald's responsibilities as a director means that he has to travel to the company's other offices in Queensland to sort out some company matters. Gerald did not enter into a separate contract of employment with the company. Gerald has tried to claim from the company his travelling and other expenses related to those trips to Queensland but the company refuses to reimburse him.
Advise Gerald.


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Activity two- Question

Douglas holidays Pty Ltd is a company, which owns two holiday villas in Port Douglas. There are twenty members who contribute an amount of $500 per annum for the general upkeep of villas. At a general meeting, the members resolved to acquire a small piece of land adjacent to one of the villas so that a tennis court could be built on it. The meeting also passed a special resolution to change the constitution to increase the annual contribution to $1,500 per annum to enable the land to be purchased and the tennis court to be built on it.
You were one of the dissenting votes at the meeting. Are you bound by the change in the constitution? Explain

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