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MGT612 GDB 1 Solution and Discussion
Total Marks 5
Starting Date Friday, June 12, 2020
Closing Date Thursday, June 18, 2020
Question Title Piercing the veil of Incorporation
Through this exercise, the students are expected to learn:
This question requires the students to explain what is meant by the veil of incorporation of a company When and under what circumstances can veil of incorporation be lifted by the courts? To develop an understanding on Incorporation doctrine, its legal effects and consequences that exists in the form of veil of incorporation amongst the corporation and its associates.
Mr. Smith has been working as a manager in a well known audit firm, ‘The Oasis’, for twenty years. The company renewed Mr. Smith’s contract for another five years after the expiry of his previous contract. The terms prohibited Mr. Smith to set-up alike business and solicit company’s clients till the expiry of his contract tenure or after leaving “The Oasis”. Mr. Smith obliged to that and signed the contract. Due to mismanagement, Mr. Smith was terminated from his services with ‘The Oasis’ in third year of his five year contract.
After termination, Mr. Smith established his own company and started soliciting his new as well as clients from the previous company.
The Oasis came to know Mr. Smith’s activities after sometime and sued Mr. Smith of breach of contract. Mr. Smith, in contrast, pleaded not to be guilty as he has not been in contract with his previous company ‘The Oasis’ and had establish his own company with a new name, as he had no obligation from his past employer.
You are required to establish whether any veil has been pierced and whether Mr. Smith could be held responsible of any breach against his previous employer, ‘The Oasis’? Your answer should be very precise and according to the above objectives.
Be brief & precise and write in your own words. Be honest. Prepare the solution yourself. Do not copy-paste from any source.