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LML4806 Assignment 01 sem2 Due 20 Aug 2024 Qualify $3.47   Add to cart

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LML4806 Assignment 01 sem2 Due 20 Aug 2024 Qualify

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The statutory business judgment rule is a legal principle designed to protect directors and officers of a corporation from liability for decisions that could be seen as detrimental to the company, provided those decisions are made in good faith, with due care, and in the best interests of the compa...

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  • August 8, 2024
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  • 2024/2025
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QUALITY ANSWER 2024 ASSIGNMENT 01
COMPANY LAW
ASSIGNMENT 01
MODULE CODE : LML4806
SEMESTER 2 ASSIGNMENT 1 – 2024
Question 1
Nancy must prove that the Touring Africa by Bicycle (Pty) Ltd is bound by the contract
concluded by James on behalf of the company, if the company
relies on Jame's lack of authority therefore
Nancy must prove the requirements for Estoppel. She must prove:
*That Touring Africa by Bicycle (Pty) Ltd misrepresented (i.e the misrepresentation
was made by the
company).
* The misrepresentation was made intentionally or negligently that James in fact had
the necessary authority to represent the company.
*That she, as a reasonable third party, was induced to deal/ conclude the contract
with James on the basis of the misrepresentation.
*That she was prejudiced/ suffered damage due to the misrepresentation.


Estoppel applies only when the agent did not have actual authority to bind the company.
Take
particular note of the fact that the misrepresentation (i.e. that the agent had the
necessary authority
when, in fact, he or she did not) must have been made by the company as principal.
Based on such misrepresentation, the company will be prevented (estopped) from
denying liability if
the third party can prove that
(a) the company misrepresented, intentionally or negligently, that the agent concerned
had the

, necessary authority to represent the company
(b) the misrepresentation was made by the company
(c) the third party was induced to deal with the agent because of the misrepresentation
(d) the third party was prejudiced by the misrepresentation
In Freeman and Lockyer v Buckhurst Part Properties (Mangal) Ltd, the court decided
that estoppel
could not only arise from the Articles (note that this would be the Memorandum of
Incorporation in
terms of the current Companies Act), but also because the company with full knowledge
and
approval allowed an ordinary director to act as the managing director and, in this
manner, culpably
represented that he was entitled to act.




QUESTION 2
2.1 The statutory business judgment rule is a legal principle designed to protect
directors and officers of a corporation from liability for decisions that could be seen as
detrimental to the company, provided those decisions are made in good faith, with due
care, and in the best interests of the company. This rule essentially recognizes that
business decisions inherently involve risks and uncertainties, and it encourages
directors to make bold and thoughtful choices without the constant fear of facing legal
repercussions for such decisions.
Directors must act honestly and with the sincere belief that their actions are in the best
interests of the company. Any evidence indicating that decisions were made with an
ulterior motive or for personal gain could undermine the defence provided by the
business judgment rule.
The directors must demonstrate that they took reasonable steps to inform themselves
about the relevant facts and circumstances before making a decision. This means they
should engage in thorough research, seek expert advice if necessary, and evaluate

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