Business Law Final

David Ghraize
20178098
Simia Abi Khalil
Spring 2020

I. The decision that KCAB took did not take into account the COVID-19 pandemic
situation that the entire planet is currently going through. Also, it completely
ignored the fact that the Lebanese economy is on the verge of collapse. The goods
offered by LG are mostly electronics, which means that they are not first
necessities. Thus, the sales and revenues related to this industry have dropped
enormously worldwide. For reasons out of his control BE is not able to provide
LG with $5,000 of net profits per month.
Although the contract mentions that any disputes that may arise between the two
parties should be fixed in the Korean court (KCAB), according to the Lebanese
law the competent authority is the one located where the commercial
representative operates its activities. In this case, BE operates in Lebanon, which
means that the competent authority should be the Lebanese court.
Legitimacy: it would be unethical for the court as well as for LG to terminate the
contract knowing the bad situation that the company is going through. We can
understand that LG will not feel the graveness of the situation in Lebanon since
they are not present here; but the COVID-19 situation is happening all around the
world, especially in Korea where the cases have almost reached a total of 11,000.
Legality: the Lebanese law prohibits LG from terminating the contract and/or
demand compensation from BE since this last did a poor performance following
the economic situation of its country (unless LG wanted to pay indemnities).
Potential remedy: BE can go to the Lebanese court and protest its right, or it can
object the decision taken by KCAB.

II. Sami’s check:

a. The advice that Adam had given to Sami was not reliable: Sami’s seller has \
endorsed the check already, meaning that he had written on the check made to
his own name, which shoes that the check was not lost. As a plus, the only two
reasons for objection of payment of a check are loss and bankruptcy of the
drawer, which means that theft is not included.
b. According to the criminal code, the seller is as responsible as the drawer since
he knew about the insufficient provision related to the check and yet accepted
it anyway. This was made clear in the case since he promised Sami that he was
not going to present the check before 10 days. As a result, the seller risks 3
months to 3 years of prison and/or a fine. In general, the drawee (seller) has
the right to endorse a check, however, in this case, he knew that there weren’t
sufficient provisions, so he shouldn’t have.
c. Yes, checks can be endorsed multiple times.
 d. The last holder has the right to protest again the drawer first since this last
knew his account did not have sufficient provision; second against the seller
who knew about this issue, yet still endorsed the check to a third party. Since
the drawer does not have enough provision in his bank account, the payment
will not be made to the last holder.

III. Bank Intra S.A.L.:

a. The three conditions for Bank Intra S.A.L. bankruptcy are available in this
case. They are as follows:
1. Bank Intra S.A.L. has the form of a joint stock company.
2. Stopped paying: Bank Intra S.A.L. is in a situation of shortage in its
financial abilities to pay its commercial liabilities: it did not pay its
debts and bills, it laid off many employees for failing to pay their
salaries, and the checks that were issued from it were without sufficient
provisions.
3. The bank’s debts are commercial debts. They were due, and the
amount is agreed upon (in the bills) and known by both the creditors
and the bank.
b. A joint stock company limits liability to the company and not the
shareholders. However, we can declare the bankruptcy of Youssef and his
three other partners under one condition: if they caused a serious management
mistake which led to the poor financial state that caused in the bankruptcy of
the bank.

c. The claim that the Mass of Creditors made which objected the actions of Bank
Intra is right: since the bank is bankrupt, it does not have the right to manage
its assets and/or receive payments, neither to establish commercial activities
such as selling buildings and receiving payments for them. As a result, the
court will cancel this transaction as if it has never happened and it will return
the properties back to Bank Intra.

d. Five large bankruptcies in the past decade:

1. The supermarket chain A&P went bankrupt in 2015. It sold its stores
to its competitors Stop&Shop and Acme. It had $1.6b total assets.
2. In 2015 as well, RadioShack filed for bankruptcy after large debts. It
liquidated its stores and let its creditors benefit from them. The
company’s total assets were $1.59b.
3. Borders went bankrupt in 2011. The company did not adapt well to the
e-books trend and this caused its failure. It had $1.42b total assets
 4. Residential Capital LLC (also known as ResCap), is a real estate
finance company. It is a subsidiary of GMAC Mortgage Group. It went
bankrupt in 2012 with $15.7b total assets and $15.3b worth of debt.
5. In 2019, the large retail store Forever 21 went bankrupt as well. It had
$475m total assets and $380m debts.

IV. Joint Stock Company:

a. The constitution of the board is not valid as per the commercial rules. By
naming these 4 members of the board for 6 years, they breached 2 laws which
are the following:
1. The law states that 1/3rd of the board members should be Lebanese,
whereas in this case, Rami was the only Lebanese member against
three other foreigners, making the total ¼ Lebanese members which is
lower than 1/3rd.
2. The commercial rules also state that the BOD should be appointed for
5 years only. However, in this case, they were named members for 6
years.

b. The Lebanese law states that if a joint stock company loses more than 75% of
its capital, it is required to arrange a special meeting with the shareholders so
they can find a way to fix the issue, dissolute, or decrease the capital. In this
case, the company lost 85% (>75%), thus a special meeting must be arranged.

c. The law requires the presence of 3/4 th of the BOD members in special
meetings (extraordinary meetings). However, in this case, only 66% attended,
which resulted in the commercial register to refuse this meeting.

V. If I were Rola’s lawyer, I would notice that all partnerships are out of question
since she doesn’t want any partners. Additionally, she does not want to jeopardize
her car and house which means that she wants liability limited to the company
only. As a result, her best option is to form a limited liability company. In this
type of company, Rola can be the only owner, and can only be responsible to the
extent of the sum that she has invested in the company, meaning that her personal
assets (house and car) will not be touched, even if the company goes bankrupt.