Mark worked as route manager for United Trucks Pty Ltd in Queensland from 2003-17. A term...

Mark worked as route manager for United Trucks Pty Ltd in Queensland from 2003-17. A term of his contract was that if he should leave the company, he could not engage in the trucking industry in Queensland for five years. In 2018 he registered a company called Sunshine Trucks Pty Ltd. Mark owns 99% of the shares in the company. The other 1% is owned by his brother, Greg, whom he elected as sole director and CEO. Sunshine Trucks operates from Townsville and carries goods all over Queensland. Greg also signs a contract on behalf of the company, taking out a loan of $ 2 million from Grasping Bank in 2018 as start-up capital. The company did well during 2018, 2019 and the first half of 2020, but in July 2020 was not able to repay a loan instalment of $ 100 000 owing to Grasping Bank Ltd. Mark comes to you for advice after receiving two letters: One from United Trucks Pty Ltd requiring Sunshine Trucks Ltd to cease operating in Queensland, the other from Grasping Bank Ltd threatening to sue him for $ 100 000. Advise him, citing all relevant legal authority. Please note that you should assume that the restraint of trade clause in the contract that Mark had with United Trucks is valid under the law of contract. You should therefore not discuss that issue.

Advice Mark using ILAC.

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Expert Solution

in above both cases Mark is legaly bound i.e not to engage in the truck industry for 5 years after leaving his service with United trucks in Queensland only and on the other hand Mark is legaly bound to repy the Loan taken from Grasping Bank.

His liability is limited with the bank is to the extent of the $ 2 Million, which bank can recover by sale of his assets along with personal guarantee, if given. however his liability towards United Trucks may go Unlimited if company sue's him for breach of contract i.e to the extent of the loss incurred by the company due to competetion given by him by forming the new company.

Mark company has done well during 2018,201 and first half of 2020. that means company has created the assets and part of the loan has also been repayed. if we assume that contract for restraining of trade clause is valid then it is advisabe to Mark as follows:

1. Marks's company "sunshine truck" to operate their business outside the Queensland and no need to close the business.

2. Sunshine Truck company to submit their business financial details to the bank with request to restructure the loans or deffer the Installment for short period and mean time should try to repay the installments.

jeff jeffy answered 1 year ago

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