Business structures and regulations

119. Business structures and regulations

ASSESSMENT 2
INSTRUCTIONS
This is the second piece of coursework in the module. It is worth 60% of the module.
MAXIMUM 3,600 WORDS (excludes footnotes, references, bibliography and attachments, graphs, images and addendums)
Hand-in Deadline: Between 9am Monday 24 March 2014 and 5pm Friday 28 March 2014
Hand-in Process: Through Blackboard TurnitIn ONLY. The first page of the coursework must be the completed assignment FRONT SHEET which is made available to students within the module assessment folder on blackboard and at the end of this document.
Referencing: Students must utilise Harvard Style of referencing.
Learning Outcomes to be achieved:
After completing the module the student should be able to:
• Identify and critically compare the main business organisational structures within
England and Wales in terms of legal personality, status, formation and
Administrative requirements
• Research and analyse the decision making processes within various organisations
and critically assess the legal requirements surrounding such processes
• Demonstrate through oral presentation, reasoning skills and the ability to apply to
a realistic scenario, company law principles.
• Appraise the concept of corporate governance and its importance, appreciating the
Role of the Companies Acts and precedents in creating a legal system for companies
• Examine the various duties, rights and forms of liability within the business
Context
Grading/ Marking Criteria: Students are requested to familiarise themselves with the
ASSESSMENT 2 QUESTION
In January 2010, Fone4U Plc formulated a scheme to sell mobile telephones. The price that customers would pay for the mobiles would be very high, but these customers would be entitled later to reclaim 60% of that price, provided they applied within three days of the second anniversary of purchasing the mobile. The profitability of the scheme depended upon many customers failing to reclaim the cost of the purchase, either at all or in accordance with the strict time-limit for doing so. Fone4U calculated that the scheme was potentially very profitable, but also very risky. It therefore decided to form a subsidiary company, Telephony Ltd, to operate the scheme. Customers purchasing the mobile phones would buy them directly from Telephony Ltd. Fone4U subscribed for one £1 share in Telephony, but also lent Telephony £200,000. Telephony had three directors, Mayo, Charles and Sandra. It purchased most of the mobiles it sold on to its customers from Carfone Garage Plc.
For the first two years of the scheme, Telephony was very profitable, with all profits being paid out as dividends to Fone4U. After two years, however, it became clear that the vast majority of customers would indeed seek to reclaim the purchase price for their mobiles, and ould comply with the strict time limits for doing so. This rendered the scheme wholly unprofitable. Fone4U instructed the directors of Telephony Ltd to continue trading for as long as possible. Wherever possible, claims for repayment were to be disputed with customers, and all repayments were to be delayed. Mayo objected to this strategy. However, rather than challenging Fone4U’ instruction, Mayo simply resigned from Telephony’s board.
Telephony continued to trade. In July 2012, Fone4U demanded repayment of its loan of £200,000 to Telephony, which Telephony immediately repaid. In August 2012, a liquidator was appointed to wind up Telephony. Few of Telephony’s customers will recover the refunds of 60% of the purchase price of their mobiles to which they are entitled.
Advise:
(a) Customers of Telephony whether they could take proceedings against Fone4U to recover the 60% refunds to which they are entitled? (48 marks)
(b) The liquidator of Telephony whether he can recover the loan repaid to Fone4U? (20 marks)
(c) The liquidator of Telephony whether he can take proceedings for wrongful trading against Mayo, Charles, Sandra or Fone4U? (32 marks)
(Total: 100 marks)
GRADEING CRITERIA 70+ (A) 60-69 (B)
CRITERIA 1
(%)
Demonstration of legal knowledge and
understanding
Have I demonstrated my understanding of the
Salient legal points raised by the topic? Have I
applied my knowledge appropriately to the
question Detailed, accurate, and
Relevant. Key points
Highlighted. Demonstrates
systematic understanding of
all key aspects of topic and
excellent breadth and depth
of knowledge. Appreciating
any ambiguities in the area
of legal study.
Strong ability to apply legal
knowledge to the key issues
of the task Detailed, accurate,
Relevant.
Shows thorough
understanding of key
Aspects of topic.
Discussion of more
complex legal issues often
tackled successfully

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CRITERIA 2
(%)
Critical analysis, development of legal
argument and use of authority to support
reasoning
Are the points that I have made well-reasoned
And supported by reference to legal authority?
Have I shown appreciation of alternative
perspectives and identified possible flaws in
arguments, counter-arguments and defences
Where appropriate?
Have I evaluated the arguments and provided
reasons or evidence for my conclusion or
Advice?
Analytical and clear
conclusions well-grounded in
legal doctrine and authority,
possibly showing
development of new and
innovative solutions to legal
problems
Key points supported with
legal authority, and
alternative perspectives are
critically evaluated.
Comments perceptively on
the application of legal
authority to practical
problems
Able to undertake detailed
legal analysis,
Good development of
arguments which are
substantiated
Most points illustrated
with relevant evidence.
Good evidence of
evaluation and ability to
make appropriate