HAAGA-HELIA LAW FOR A NEW BUSINESS 1
Satu Pitkänen Final assignment
Take a review on the course. Contemplate the following 8 cases and write clear solutions with reasoning. After the cases, on the last page there are five multiple choice questions which you must answer.
Submit your typewritten paper by 1 March into the mailbox 143 in the lobby, not by email. Please note the deadline because after the due date the solution instructions will open up on Moodle and therefore delayed papers will be downgraded.
The solution instructions will open up on 2 March.
Evaluation: 1-5 points, weigh 30% of the final grade
CASES
1. Sailing boat
Mr. Tuohi and Mr. Koivu made yesterday a contract whereby Mr. Tuohi sold his sailing boat to Mr. Koivu at 5,000 euros. Before reaching the contract, however, Mrs. Liisa Tuohi had told Mr. Koivu that she will tell Mr. Koivu’s wife about his love affair with her in case Mr. Koivu would not make the contract.
Because Mr. Koivu considers the sale disadvantageous from his perspective he now asks you for advise concerning the binding effect of the contreact, which he has mainly done because of the fear that Mrs. Tuohi might break his marriage. Explain Mr. Koivu, his legal rights as regards the validity of the contract.
2. Car deal
Marja Koski has given a letter of attorney to Jussi Vainio authorising him to buy her a car. The letter of attorney does not contain any more information of Jussi’s authority. Maria has, however, told Jussi that she wants an Audi Quattro, unused, and bought directly from the importer.
Jussi meets his old friend, Petteri, who owns a rather new Skoda. Because Petteri is in need of money Jussi, acting as the agent of Maria buys Petteri’s car for Maria at a very reasonable price. Explain whether the contract binds Maria.
3. Timo’s enterprise
Timo Muhos is an entrepreneur. His firm is in financial problems and his wife worries what will happen to their property if the enterprise goes bankrupt. Timo says there is no reason to worry, their private property will not be at risk. What do you say?
4. Problems in a partnership
Toppinen & Co was a Finnish general partnership owned by Finnish Jukka Toppinen and an Irish friend of his, John Smith. Jukka and John had invested an equal amount of money in the company, EUR 9,000 each, and agreed that the line of business was “importing and installing computer technology”. They also had agreed that Jukka would manage the company making all strategic decisions while John would just take care of marketing.
However, thanks to his very good contacts in Ireland, John received one day a tempting offer of 5000 desk top scanners from an Irish company. The offer was extremely good but valid only for a few hours; There would be plenty of other companies interested. John had no time to consult Jukka and he ordered the products by himself. To be able to handle the payment he signed a bill of exchange in the name of the company. When Jukka learned this he was furious. He left Finland for Ceylon, where he bought a lodge for the company, and stayed there for five weeks.
Meanwhile, John had closed several deals with suppliers concerning the future production. He was also considering diversifying the company’s business. John had employed an assistant, a charming Irish lady, Jessica Porr. When Jukka returned, John told him that he is going to make Jessica a partner if she proves to be a good worker since Jukka travels too much and John doesn’t like to have all responsibility on his own. Jukka is scared the company might go bankrupt. Explain the legal facts to him.
5. New partner
On August 1, 1993, as the partnership was entering its third financial year, Jessica was accepted as a new partner. Jessica, however, had strong disagreements with the other partners and indicated on January 31, 1994 that she would resign on July 31, 1994. Her resignation was entered into the trade register, with public notice given on December 20, 1994. Later, she asked you to help her sort out her debts to the company. Jessicaa understood that she was liable for trade debts from August 1, 1993 to July 31, 1994. However, she doesn't know whether she is also liable for trade debts before August 1, 1993 and after July 31, 1994. What is your answer?
6. Setting up a Limited Company
Jukka Toppinen dissolved the general partnership. However, he still wants to carry on his business in importing and installing computer technology, and he wonders if he could manage better in the form of a limited company. He would like to continue co-operation with the charming Jessica Porr but no more with John Smith. However, also John would like to participate to the business and he regrets the disagreement he had with Jukka. John has one big benefit: he has money.
Jukka worries about potential bureaucracy connected with registering a limited company, about how much time it will take before he can start doing business and about the share capital. He also worries about extending the company too much; he would like to keep the decision-making power to himself as much as possible. He wonders who shall be in the board of directors making decisions concerning his business.
7. Matchbox Oy
Shareholders of Matchbox Oy were concerned about administration of the company during the passed financial year.
a) Mr. Smith, Managing Director had given a sailing boat as a present to a German company which is an important customer. The financial situation of the company looked bad and shareholders Martinsen and Brown were considering whether Smith was entitled to make a decision like this. How would you advice them?
b) The bookkeeping was seriously defective while the accounts of several months were missing entirely. However, the auditors proposed to the Annual General Meeting that the Balance Sheet be approved and that release from liability be granted. Who is responsible?
8. Mrs. Clive’s rights
The shareholders’ meeting of Matchbox Ltd. decided on a provision guaranteeing valuable retirement benefits to the five shareholders who had founded the company and to their spouses. The decision was made by a majority of votes cast but a shareholder, Mrs. Clive objected saying the decision was not valid. What do you think?
9. Check your knowledge
In each of the following questions, there is only one correct option. Choose the one and circle it:
1. In the General Partnership, each partner may represent the company
a. Independently, without any restrictions
b. Only with consent of the other partners
c. Independently within the company’s line of business
d. Independently despite being objected by another partner
2. In the General Partnership
a. There is no capital requirement
b. The partners’ agreement on liability restrictions always has binding effect
c. There must be at least 3 partners
d. All the partners must live in Finland
3. In the Limited Liability Company
a. The share capital must always be at least € 8 000
b. The share capital may not exceed € 80 000
c. The Shareholders’ meeting delegates to and supervises the Managing Director
d. The Managing Director is accountable to the Board of Directors
4. In the Limited Liability Company
a. The Board of Directors is responsible for administration and organisation of company operations
b. The Board of Directors can only be appointed by the Shareholders’ meeting
c. The Board of Directors is appointed by the Managing Director
d. Each Board member is liable for damages caused in company administration only if his negligence can be proven
5. In the Limited Liability Company
a. The shareholders are personally liable for debts of the company
b. The Board of Directors decides on approval of final accounts
c. Articles of Association can be amended only by a qualified majority of the shareholders’ meeting
d. By virtue of law, each shareholder can sign on behalf of the company
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