1 | P a g e
Faculty of Business and Law
Curtin Law School
Fundamental of Business and Corporations Law BLAW5016
Semester 1, 2023
Copyright Curtin University
FUNDAMENTAL OF BUSINESS AND CORPORATIONS LAW BLAW-5016
MODULE 8 – Worksheet Questions
COMPANY INCORPORATION AND ITS CONSEQUENCES
QUESTION 1
For many years Ali has been the chief chemist with the Pop-a-Pill Drug Company Ltd. His
employment contract in clause 33 requires that in the event of Ali leaving his employment, he
will not work “in competition with the Pop-a-Pill Drug Company Ltd for 1 year”. Ali resigns
from Pop-a-Pill.
Pop-a-Pill discovers that Ali’s spouse, Julie Gee a well known TV actor, has registered Gee
Chemicals Pty Ltd. She is the managing director and sole director/member of the company.
Pete Pop from Pop-a-Pill visits Gee Chemicals and encounters Ali, whilst Julie is away
filming. Ali tells Pete that he is only working on an adviser’s contract.
Pop-a-Pill claims Ali is in breach of contract. Ali says that Gee Chemicals is in competition
with Pop-a-Pill Drug, but he personally is not. He is not employed by the company and has
no shareholding interest.
Julie has to return to Gee Chemicals to sign some documents but is late leaving the TV
studio. She drives too quickly and knocks down a pedestrian. The police plan to charge her
with dangerous driving but she claims she was engaged in company business at the time and
the company should be the one charged.
Who is competing against Pop-a Pill Drug Company?
QUESTION 2
With reference to the facts in Question 1, Ali says Gee Chemicals is a separate legal entity
and as such separate from him and Julie. What is this concept referred to as?
QUESTION 3
With reference to the facts in Question 1, Pop-a-Pill claims that Ali is sheltering behind Gee
Chemicals. What legal concept can Pop-a-Pill use to succeed in its argument?
2 | P a g e
Faculty of Business and Law
Curtin Law School
Fundamental of Business and Corporations Law BLAW5016
Semester 1, 2023
Copyright Curtin University
QUESTION 4
With reference to the facts in Question 1, state a case that Pop-a-Pill can rely upon to
substantiate their legal argument.
QUESTION 5
With reference to the facts in Question 1, what case can be relied upon to counter Julie’s
argument that it is the company who should be charged for dangerous driving?
QUESTION 6
Mick and Jag decide to go into business together, manufacturing and selling lipstick. The
company will need $200,000 to start. Mick is able to contribute $100,000 but Jag only has
$80,000. Mick refuses to put in any more than Jag. Jag convinces Mick that they should
register a company Mickjag Lippy Pty Ltd and take 100,000 $1 shares each. Jag will put in
all the money he has ($80,000) for the shares at this time and Mick should do the same. Jag
assures Mick that if anything goes wrong and the company cannot pay its debts, they will
both lose the same maximum amount of $80,000.
Later, when the company needs more funds, Jag has his brother Harry lend $20,000 to the
company. Jag persuades Mick to give a personal guarantee to Harry. Jag tells Mick that he
will make sure that the company always has at least $20,000 in assets; that Mick as a
shareholder is owed his share investment back by the company so he would be entitled to
take the necessary company assets, sell them and give the money to Harry.
How much money would Mick lose if Mickjag Lippy Pty Ltd cannot pay its debts?
3 | P a g e
Faculty of Business and Law
Curtin Law School
Fundamental of Business and Corporations Law BLAW5016
Semester 1, 2023
Copyright Curtin University
QUESTION 7
With reference to the facts in Question 6, how much money would Jag lose if Mickjag Lippy
Pty Ltd cannot pay its debts?
4 | P a g e
Faculty of Business and Law
Curtin Law School
Fundamental of Business and Corporations Law BLAW5016
Semester 1, 2023
Copyright Curtin University