Monday 2 September 2024
Dear Subscriber,
I hope you had a great weekend. Please see below for the question, the answer to the previous question and associated resources. This is the web version of this newsletter.
Question: Mark is an artist who agrees to sell a unique painting, “The Blue Horizon,” to Laura for £10,000. The contract specifies that the painting must be delivered to Laura within 30 days, upon which Laura will make payment. The contract does not contain any specific terms about risk or what happens if delivery becomes impossible. However, 15 days into the contract period, Mark’s studio is destroyed in a fire caused by a neighbouring business’s negligence, and “The Blue Horizon” is irreparably damaged. Mark immediately informs Laura of the destruction, stating that he is unable to fulfil the contract due to the unforeseen event and argues that the contract is frustrated. Laura disputes this, arguing that Mark should be liable and compensate her for the loss of profits from a planned resale.
Which of the following statements best describes the legal position of Mark and Laura?
- The contract is frustrated because the destruction of the painting, a unique object, makes performance impossible, and no payments are due.
- The contract is not frustrated because Mark assumed the risk of the painting’s destruction and is therefore liable for any consequential losses.
- The contract is frustrated, but Mark must compensate Laura for her loss of future profits.
- There was no valid contract, as Laura had not paid, therefore Mark has no obligation to compensate.
- The contract is not frustrated because Mark can sue the neighbouring business for negligence and fulfil his obligation to Laura by providing equivalent compensation.
Study Material: For more on the topic of this week’s question see the video linked here and if you are looking for a relevant* title, see here.
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Answer and feedback to last week’s question: AlphaTech Ltd. is a private company with a board of directors that has recently come under criticism from a group of shareholders who are dissatisfied with the company’s performance. The shareholders believe that the directors are not acting in the best interests of the company and should be removed. They decide to call for a general meeting (GM) to vote on a resolution to remove two of the directors. The company’s articles of association do not contain any special provisions regarding the removal of directors, so the shareholders plan to proceed under the standard rules of the Companies Act 2006. What percentage of the votes cast at the general meeting is required to pass the resolution to remove the directors under the Companies Act 2006?
- 50% of the votes cast
- 75% of the votes cast
- 75% of the total number of shares
- 100% of the votes cast
- 50% of total number of shares
Correct Answer: 1. 50% of the votes cast. Feedback: Under section 168 of the Companies Act 2006, a resolution to remove a director requires a simple majority, meaning that more than 50% of the votes cast at the general meeting must be in favour of the resolution. This straightforward majority ensures that shareholders can exercise their right to remove directors when they believe that the directors are not acting in the best interests of the company. The other percentages mentioned (75%, 100%, 80%) are not applicable in this context, as they relate to special resolutions or other voting requirements not pertinent to the removal of directors under the Companies Act 2006. Also, the requirement for majorities is relevant to the votes cast, not the total number of shares with the right to vote.
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All the best
Dr Ioannis Glinavos
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