Brief Introduction According to Salomon Principle, Company is not liable for the director’s act. In Part A, Potomac Ltd will be liable for Rob’s act if the court treats them as the same person. However, Potomac Ltd has no criminal liability for pedestrian injury but there are few established cases where the court adopts some tortuous liability. If the court applies these cases then Potomac Ltd will be liable for Rob’s act. The second part raises some issues from the doctrine of the ultra vires act. In Part B, the constitution of Falcon Ltd particularly prohibits financial speculation activities. In this context, Falcon Ltd will be bound by the contract if the contract is ratified by a special resolution. It is essential to mention that under the Companies Act 2006 Falcon Ltd is bound by the contract. Though the contract is valid Tom and Jerry can’t avoid their liability for their activities. If their activity is approved by a special resolution then they can avoid their liability. Answer Part A From the Salomon1 principle, a company is a separate legal entity different from its members and it can therefore sue and be sued in its name. The first problem arises from the nature of legal personality that is from the Salomon principle, the problem arises from lifting the veil of incorporation. In this case, Rob, a director of Potomac Ltd, and His car mounted the pavement and seriously injured a pedestrian. Here it needs to consider whether Potomac Ltd has any vicarious liability in tort for Rob’s act or not. Potomac Ltd will be liable for Rob’s act if the court decides that the separation of legal personality of the company and the members is not to be maintained. This question raises also some issues from negligence. To answer this question it is necessary to discuss negligence, the duty of care, and breach of duty, causation, and remoteness. Rob as a road user had a duty of care to the pedestrian. He became distracted as he was driving along and talking into his mobile phone. In Caparo Industries, v Dickman2 provides the current test to show a duty of care. It needs to prove that it was reasonably foreseeable that a person in the claimant’s position would be injured. There was sufficient proximity between the parties and it is fair, just, and reasonable to impose liability. In this case, Rob breaches the duty and the injury was foreseeable. If we consider but-for-test it can be found that the accident is caused by talking into his mobile phone and his negligence not for Potomac Ltd. In The Wagon Mound3, The Privy Council held that defendant would be liable only if it was the foreseeable consequence. So Rob was criminally liable for this accident but Potomac Ltd is not criminally liable for the injury of the pedestrian though he was involved in the company’s work. Now it needs to consider whether Potomac Ltd has any tortuous liability or not. In Campbell v Paddington4 it was accepted that companies could commit torts and the courts have subsequently applied the principle of vicarious liability to the company as an employer. As a result, Potomac Ltd can be vicariously liable in tort for the acts of its employees, even though they may not be specifically authorized to carry out the act th