Yaw Artus (Yaw), a renowned lawyer has been engaged by Kofi Manu (Kofi) and Kwame Fui (Kwame) to help them in setting up a proposed company to be called K& K Limited. Yaw’s duty is to provide Kofi and Kwame with legal advice on the steps required to form the company, as well as perform any other legal duties required of him for a fee of GHS30,000.00. Prior to the incorporation of the company, however, Kofi and Kwame entered into several contracts on behalf of the yet to be formed company. In the course of entering into those contracts on behalf of the yet to be formed company, Kofi and Kwame made a profit of GHS 50,000.00. K &K Limited was eventually formed with five (5) directors. At a meeting held between Kofi and Kwame and the board of directors in respect of the contracts entered into before the formation of the company, Kofi and Kwame did not disclose the profit that they had made on those contracts. The board of directors of the company ratified those contracts. The board members have now gotten to know of the profit made by Kofi and Kwame and they are unhappy about the situation. Kofi and Kwame argue that when they made the profit the company was not yet in existence and so the company is not entitled to the profit.

The board has come to see you for legal advice on the following:

1. (i) Whether Kofi and Kwame had the right to make profit while entering into those contracts on behalf of the company;

2. (ii) Whether the company which was not in existence when the profit was made by Kofi and Kwame can subsequently, after ratifying the contracts, claim the profit; and

3. (iii) Whether Yaw Artus can be considered as a promoter of the company

Answer rating: 100% (QA)

Answer 1 Kofi and Kwame made profits before the consolidation of t... View the full answer