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Assume that you are working for a renowned law firm and have been asked by management to review the following case;
a. Al Sawadi Ltd is a property development company. Before its incorporation 12 months ago, its business was carried by Salim Ali, as a sole trader. On the formation of Al Sawadi Ltd, Salim expanded the business by asking three of his business contacts to supply additional capital in return for which they, together with Salim, became its directors. Although never formally appointed, Salim took the role and title of chief executive and the other directors left the day to day running of the business to him and were happy simply to receive feedback from him at board meetings.
Six months ago Salim entered into a contract, on behalf of Sawadi Ltd, with Muskaan, to draw plans for the redevelopment of a particular site that Al Sawadi hoped to acquire. However, Al Sawadi Ltd did not acquire the site due to its current precarious financial position and fear of potential losses and the board of directors refused to pay Muskaan, claiming that Salim did not have the necessary authority to enter into the contract with her.
b.Clean Ltd., established five years ago, manufactures industrial solvents and cleaning solutions, and Abdullah is appointed managing director.
The company’s main contract is with Sohar LLC a large industrial conglomerate.
In the course of its research activity, Clean Ltd.’s scientists developed new super glue. Abdullah is very keen to pursue the manufacture of the glue but the board of directors overrule him and decide to stick to its core business.
The managing director of Sohar LLC is a friend of Abdullah who informs him that Sohar LLC will not be renewing its contract with Clean Ltd owing to poor performance. However, he conveys the message that he would be interested in continuing his business relations with Abdullah if only he can severe his relations with Clean Ltd.
Following the discussion, Abdullah resigns from his position as managing director of Clean Ltd and sets up his own company, Flush Ltd., which later enters into a contract with Sohar LLC to replace Clean Ltd. Flush Ltd now manufactures the new glue discovered by Clean Ltd’s scientists along with the core products and this has turned out to be highly profitable.
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