Question

ABC Insurance Ltd has received an application from Curtin Pty Ltd to take out an insurance policy covering the motor vehicles driven by the employees of Curtin Pty Ltd.

Explain whether a company has the legal capacity to:

1. own assets (such as motor vehicles);

2. enter into a contract (such as an insurance policy);

3. employ people.

Answer 1

The Question argues whether a company has the legal capacity to own assets, enter a contractual agreement and employ people.

Under Companies Act a company is a separate legal entity and have the power as of an individual. S119 states that companies are able to own assets, conduct business and incur debts. As provided in S124, a company has the legal capacity of an individual, the power to issue shares and debentures, the power to grant options and authorized to do anything lawfully. S126(1) states that whether with the use of a common seal or not, a company has the capacity to enter a contract through agents.Addressing the question, Cur tin pvt Ltd has the legal capacity as an individual to own assets such as motor vehicles. It is a separate legal entity with the capacity to enter a contract and the power to do anything lawfully authorized, as an artificial person with an insurance company as well as with another individual, in the purpose of employment.