Family Fair' is a limited liability company registered under the Companies Act. The company operates from a building which was purchased in the name of Mr. Artie Cunningham et al (his family members were listed as the other owners) as tenants in common of 1/5 share in the building. The Authorised Capital of the Company is One Million Dollars. At the time of issue each share was valued at $1 each. The paid up capital of the company is Eight Hundred Eighty Thousand Dollars while the number of shares issued is one million. Mrs. Cunningham and her 3 children were each issued 50,000 shares. Each has 30,000 unpaid shares. Mr. Artie Cunningham had 800,000 fully paid up shares. 

The company borrowed money from Wize Creditors Limited (hereinafter referred to as 'the Bank') to purchase stock, equipment and a motor vehicle for the business. Bills of Sale were registered by the Bank for the equipment and the Motor Vehicle. A debenture was issued by the company to the bank for the mount loaned for the purchase of the stock. Mr. Cunningham, the key player in the Company has died. Mrs. Cunningham and the other family Members informally closed both locations of the company. Three Million Dollars is still outstanding to the bank. The equipment and the vehicle are now valued at $5, 00,000.00 . The bank alleges that Mr. Cunningham had signed a personal guarantee for the loans utilizing his 1/5 ownership of the office building. The Company is insolvent.

State the issues, principles, application and advice.

Answer rating: 100% (QA)

The issues in this case are 1 Whether or not Mr Cunningham signed a personal guara... View the full answer