Prepare a legal opinion regarding a contract signed by Ms. Mutinta Chembe for Clay Colours Limited, which she is a promoter of, in relation to furniture purchased from Chembe Furni... Prepare a legal opinion regarding a contract signed by Ms. Mutinta Chembe for Clay Colours Limited, which she is a promoter of, in relation to furniture purchased from Chembe Furniture Limited, where she is a shareholder and director. Include case law and relevant provisions of the Companies Act of 2017.
Understand the Problem
The question is asking for a legal opinion on a situation involving a potential conflict of interest due to Ms. Mutinta Chembe's dual role as a promoter, shareholder, and director. It requires referencing a case law and the Companies Act of 2017 to advise the directors of Clay Colours Limited on whether to honour the contract made by Ms. Chembe.
Answer
The contract may be voidable due to potential breach of fiduciary duties and lack of ratification by directors.
The contract signed by Ms. Chembe may be voidable if it is found to breach fiduciary duties or if the directors of Clay Colours Limited refuse to ratify it. Relevant case law would likely examine conflicts of interest and duties of promoters and directors under the Companies Act 2017.
Answer for screen readers
The contract signed by Ms. Chembe may be voidable if it is found to breach fiduciary duties or if the directors of Clay Colours Limited refuse to ratify it. Relevant case law would likely examine conflicts of interest and duties of promoters and directors under the Companies Act 2017.
More Information
The Companies Act 2017 likely contains provisions regarding promoters' and directors' duties, particularly concerning transactions that might benefit insiders or conflict with directors' duties.
Tips
A common mistake is not assessing whether ratification by the board of directors is needed for the contract. Always check for conflicts of interest.
Sources
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