Chow Ltd Vs. Salomon's Case

1623 Words 7 Pages
Issue :
To determine Chow Ltd can be sued by Gigi because of her sickness.
Rules : A company needs to register in order to exist through ASIC under S 119. Once company is registered it becomes separate legal entity under section 124. Salomon v A Salomon's case where a company is separate legal entity. A parent company has no liability to cover up its subsidiary's debt because of those principle.
S 46 states that if the share of subsidiary company is hold by other company more wholly owned shares. Tort Liability is obtain from the salomon's case that a group company is no liable from all debts subsidiary and generally is separate from holding company because it not under control directly from its company. Application : Both companies
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A parent company might face in obligation to subsidiary's employees based on the parent company itself that have duty of care to the employee under the law of negligence. This duty might emerge without an immediate business relationship between the controlling company and the employee and is well on the way to appear where the controlling company practices a high level of control throughout the everyday exercises of its auxiliary out of which the tort claim emerged. This requires both foreseeability and a relationship of vicinity between the parties as for both the significant class of act or oversight and the applicable sort of harm. According to CSR Ltd v Wren A parent company is liable over subsidary's tort if it is held that the parent owes a duty of care to the victims of the subsidiary's negligence. Otherwise, company might have liability to subsidiary's employee towards duty of diligence if it has a high level of control over the subsidiary's activities CSR Ltd v Young. Biggs v James Hardie.

Conclusion : Gigi is able to sue the company because the director is for both of them and the director is liable a duty of
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Hence, a person might believes that the company's agent or officer do well on their duties. An agent who has no authority cannot enter into contract. Therefore, it will not bind to the company. It also created to protect outsider who agree a business with person in good faith. Indoor management rule is generally related to the law principles of agency. In this rule, a company may apply replaceable rules even though is already has constitution so a company is able to use both. Connected to Turquand's case that an agent does not need to ask prescription that had been passed. They are innocent parties because they are not in the point to understand some internal rule has not been complied with. A person is eligible to assume that the company's internal operations have been accomplished with. This is a way to solving problems encountered by outsiders because an outsider might have barrier to figure out what is happening in the firm. Under S128(4) Outsiders cannot made the assumption of agent's compliance if they found out any non compliance of the agent. Northside Development case where the outsider has to make enquiry to the company and will be fail if there is in ability on

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