Ms. Gillian Foster was asked to form a company on behalf of some partners. The company, Mask Ltd, would manufacture face masks. Before the company was formed, Ms. Foster took raw materials valued at $500,000 on credit from Leeds Ltd in her own name. She had insisted that the following term be included in the contract: “Ms. Gillian Foster will in any event not be bound by the contract nor entitled to its benefits.” Ms. Foster also acquired a sewing machine from Keros Ltd for $50,000, which she paid for by cash and sold it to Mask Ltd for $75,000, after the company was formed but did not tell the company about the details ofthe acquisition of the sewing machine.
Ms. Foster went ahead and filed the necessary documents with the Companies Office of Jamaica
and formed the company, Mask Ltd. The company adopted the contract with Leeds Ltd.
Mask Ltd faced immense competition from the beginning and failed without selling a single
mask.
Leeds Ltd is suing Ms. Foster for full payment of $500,000, stating that she was the one who
they contracted with and the clause that she insisted on, will have no effect based on the common
law rule relating to this matter.
Mask Ltd later found out about the cash purchase of the sewing machine by Ms. Gillian Foster
and the company is suing Ms. Foster for $25,000.
Ms. Foster comes to you for advice as to the likelihood of success, of the claim made against her
by:
(a) Leeds Ltd. (13 Marks)
(b) Mask Ltd. (12 Marks)