November 25, 2012 at 12:04 am #55712
Sir I came across this question from past papers (June 2009), I understood the facts as well as the case, But I am facing difficulty in determining the conclusion because of 3 cases
In case you don’t know the facts of clean limited, I’ll Summarize it,a person named Des was an M.D of Clean Ltd, which were already in contract with Dank plc. One day scientist of clean Ltd developed a special glue which Des thought would be very profitable for the company but other directors refused to manufacture this glue and told Des to carry on orignal business as to manufacture industrial solvents. The M.D of Dank plc was a friend of des and they both agreed that Dank will not renew their contract with clean anymore once it’s finished and will work with Des only. Des formed his Own Company Flush Ltd and contracted with Dank plc by replacing Clean Ltd and manufactured the same glue made by Clean’s scientist and made profits.
Now the Confusion Arises here:
1)(Industrial Developments consultants Ltd v Cooley) which states that even If director acting in another capacity to form contract with other company specially with intention to make profits for himself, then he is liable to pay all profits which he earned even he is no more a director of former company.
2)(Peso Silver Mines v Cropper) It states that Directors are not liable If company explicitly rejected the opportunity they took up. so des is not liable under this case?
3)(Gilford Motor v Homes)You already know the decision that court looked behind the Veil of Incorporation that Mr.Homes cheated and played tricked with his former company by stealing its customers, Don’t you think that Des did the same thing by stealing Technology from Clean’s company which they itself rejected?
The only Conclusion Which I Drawn is that Des will be liable to pay the profits he earned but Flush Ltd cannot be granted injunction by court as Directors of Clean Ltd. explicitly rejected the opportunity to make profits from Glue.
Please do Explain that I am right or Wrong?November 25, 2012 at 9:54 am #108619
I seem to think that we have two separate issues here.
With reference to the cleaning contract, it seems that IDC v Cooley should apply. Des should have worked ceaselessly to persuade Dank to renew the Clean contract and should not therefore have taken personal advantage of a corporate opportunity
The second problem, the glue, is a sticky issue. Applying Peso Silver Mines, it appears that the company has specifically rejected the opportunity to manufacture the glue and therefore it’s open season and available for any person to step in. In the Peso case, it involved an area of land. However, in the Clean case, we’re looking at intellectual property and simply because the company said “no glue, stick with cleaning activities”, this in itself would not have prevented them from later changing their minds and using their intellectual property to manufacture the substance.
My initial take on this question was to draw the parallel with Peso but, on further reflection, I believe that Des could in fact be at fault. A way around it would possibly have been for Des formally to BUY the intellectual property from Clean. That then would have put the Peso comparison much closerNovember 25, 2012 at 6:21 pm #108620
Thank you sir, It was a tricky question at first but now I understoodNovember 25, 2012 at 7:50 pm #108621
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