Business Law

Name of Case: Mallory vs. Milhouse

Facts:

Mallory was a major share holder of Techno-Corp, which had issued a total of 60,000 shares. Mallory considered himself as being and entrepreneur and considered the corporation to be his business, considering the fact that he was a major share holder of the corporation. The 60,000 shares he had were divided among six of his associates, who bought equal number of these share, i.e. 10,000 shares each. Though, he was not an official member of the board of Director, but, considering the same fact of being a major share holder, he considered himself to be the member of the board of directors. As he was faced with some financial problems, he had his loans covered by the corporation. Furthermore, as the financial situation of the organization was not good, he bought a loan of $ 1 million from Milhouse who was a major investor. He did not inform Milhouse of the financial crisis that Techono Corp was facing. He informed Milhouse that the loan was being taken for the corporation, whereas, the loan was taken for personal use. Furthermore, the loan was in the name of the corporation and was also unsecured; due to which Milhouse is facing issues in recovering the amount of loan.

Action:

Business customers are mostly general merchants. The rules of the consumer protection are not applicable here. The transitions between debt financing and other financing are blurred, because the larger companies in part to the capital market are directly accessible to the possibilities of direct use of the capital asset-market range from overnight to listed bonds (Pieters, Dempsey, p. 33-38).

Investment loans are loans to finance fixed assets.

Working capital loans are cash advances for financing of current assets, which are often given as lines of credit on current accounts. In general, they are ...