Sam's Liability for SamCom Ltd's Obligations Essay

Sam's Liability for SamCom Ltd's Obligations - Essay Example Promoters also have a fiduciary duty to the shareholders, as he stands in the same position as a company director. As such, Sam cannot make a secret profit and he must have full disclosure with any transaction that he takes while he is the promoter of the company. He also cannot serve himself at the expense of the shareholders (Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1218). The facts state that the business that became SamCom Ltd was valued at ?50,000, yet the business was sold to SamCom Ltd for ?90,000. This might be a breach of Sam’s fiduciary duty to his shareholders (Cahn & McDonald, 2010), if he did not disclose that his company was worth substantially less than what SamCom Ltd. paid for it. The solicitor who Sam hired to take the necessary steps for incorporation, however, is not considered a promoter, as Re Great Wheal Polgooth Co. Ltd. (1883) 53 LJ Ch 42 established that persons who are acting as a professional capacity at the behest of the promoter, such as solicitors, do not become promoters. As for the contract to buy the silicon chips for ?5,000, this is a pre-incorporation contract, and the company would not be bound on this contract. This was established in the case of Kelner v Baxter (1866) LR 2 CP 174, which established that pre-incorporation contracts do not bind the company. ... was incorporated, so the company would not be bound by this contract. Separate Personality of the Company and Lifting the Veil On the facts, it may be assumed that this is a closely held corporation. This does not, however, negate the separate legal personality of SamCom Ltd. According to established English law, a corporation is a separate legal personality who has the ability to sue and be sued and hold debts in its name (Wild & Weinstein, 2011). Moreover, the fact that only one person is a corporation does not defeat the separate legal personality of the corporation. This was established in the seminal case of Salomon v. Salomon & Co. [1897] AC 22. In this case, Salomon made leather boots, and he was basically the sole bona fide shareholder of his company. The company went into liquidation, and the creditors attempted to make Salomon personally liable for the company's debts. The Salomon court held that, as long as a company is a legal entity, then the business, and the debts, bel ongs to the company, not to the shareholder(s). In this case, the lower courts had attempted to say that Salomon himself was liable, because he was the only interested shareholder – the other shareholders were his family members, and they were disinterested. The House of Lords held, however, that this does not defeat the claim of corporate personality. Therefore, this case may be applied to the facts, in that SamCom Ltd. is a closely held corporation, but, as per Salomon, the corporation would still have a separate legal personality and Salomon further demonstrated that corporations, because they are separate legal entities, will be liable for the debts incurred by

Major reasons behind the United States'entry into World War I Essay

Major reasons behind the United States'entry into World War I - Essay Example As the US was supplying arms and financial assistance to the allies, Germany became poised to violate the terms with the US government to stop its submarine attacks. While the then German Chancellor Theobald von Bethman-Hollweg was against this decision fearing the US entry in to the war and the subsequent downfall of Germany, the German government however, decided to resume its attacks. President Wilson, thought shocked by the developments, hesitated to immediately declare war on Germany as he was not sure about the public support of his opinion. And in case the German attacks did not target US ships he decided to negotiate with the German government. But the submarine attacks by Germany destroyed several US ships, passengers and naval officials. Following this Wilson decided to arm American merchant ships with naval personal and equipment’s by exercising an executive order. Wilson also received a German telegram sent to officials in Mexico which was intercepted by the Britis h. This telegram sent by the German Foreign Minister promised assistance to Mexico to recover the territory that it had ceded to America during a previous war. In return it requested Mexican support for the war. This telegram along with the continued attacks by Germany on American merchant ships forced President Wilson to declare war against Germany which marked its entry in to World War