Tsitsi, Tim and Ike are directors and equal shareholders of Harst Private Limited. Harst Private Limited...
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Tsitsi, Tim and Ike are directors and equal shareholders of Harst Private Limited. Harst Private Limited enters a contract to supply food to a local restaurant for six years. Just about the same time, Harst Private Limited is approached by a popular fast foods chain to supply frozen vegetables. In a board meeting, Tsitsi, Tim and Ike reject the contract with the fast foods chain due to lack of capacity to fulfil two separate huge contracts. Tsitsi and Tim have an argument with Ike about the way in which Harst Private Limited is being managed. After deciding that they cannot work with Ike anymore, Tsitsi and Tim incorporate a new company, Delicious Private Limited. They then pass a resolution at a board of directors meeting of Harst Private Limited that Delicious Private Limited will take over the business contract from Harst Private Limited. To ensure that Ike has no chance to complain, they use their majority shareholding in Harst Private Limited to pass a resolution ratifying their board resolution to allow Delicious Private Limited to take over the food business contract. Tsitsi and Tim then have discussions with the fast foods chain and conclude a contract for Delicious Private Limited to supply it with frozen vegetables on the same terms as those which the fast foods chain had originally offered to Harst Private Limited. Ike is aggrieved and wants to commence a court action against Tsitsi and Tim for acting improperly. i. Explain whether Ike is likely to succeed in his action against Tsitsi and Tim in relation to the contract to take over the contract to supply the local restaurant. (6 marks) ii. Explain whether Ike is likely to succeed in his action against Tsitsi and Tim in relation to the contract to supply the fast foods chain.(4 marks) Tsitsi, Tim and Ike are directors and equal shareholders of Harst Private Limited. Harst Private Limited enters a contract to supply food to a local restaurant for six years. Just about the same time, Harst Private Limited is approached by a popular fast foods chain to supply frozen vegetables. In a board meeting, Tsitsi, Tim and Ike reject the contract with the fast foods chain due to lack of capacity to fulfil two separate huge contracts. Tsitsi and Tim have an argument with Ike about the way in which Harst Private Limited is being managed. After deciding that they cannot work with Ike anymore, Tsitsi and Tim incorporate a new company, Delicious Private Limited. They then pass a resolution at a board of directors meeting of Harst Private Limited that Delicious Private Limited will take over the business contract from Harst Private Limited. To ensure that Ike has no chance to complain, they use their majority shareholding in Harst Private Limited to pass a resolution ratifying their board resolution to allow Delicious Private Limited to take over the food business contract. Tsitsi and Tim then have discussions with the fast foods chain and conclude a contract for Delicious Private Limited to supply it with frozen vegetables on the same terms as those which the fast foods chain had originally offered to Harst Private Limited. Ike is aggrieved and wants to commence a court action against Tsitsi and Tim for acting improperly. i. Explain whether Ike is likely to succeed in his action against Tsitsi and Tim in relation to the contract to take over the contract to supply the local restaurant. (6 marks) ii. Explain whether Ike is likely to succeed in his action against Tsitsi and Tim in relation to the contract to supply the fast foods chain.(4 marks)
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